Servicing

Eight classes of mortgage securities issued by Morgan Stanley series 2006-5AR have been downgraded by Fitch Ratings.The downgrades were as follows: class M-4, from A-plus to A; class M-5, from A to A-minus; class M-6, from A to A-minus; class M-7, from A-minus to BBB-plus; class M-8, from BBB-plus to BBB-minus; class M-9, from BBB to BB; class B-1, from BB to C/DR4; and class B-2, from B to C/DR5. Fitch also affirmed the ratings on four other classes in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses. The collateral consists of fixed- and adjustable-rate, first-lien, alternative-A loans. Fitch can be found on the Web at http://www.fitchratings.com.

Foreclosure.com, Boca Raton, Fla., has announced the formation of a partnership with IndyMac Bank to market and facilitate the sale of thousands of real-estate-owned properties via the Internet.Foreclosure.com said it maintains a nationwide database of more than 1.2 million listings that includes foreclosures, preforeclosures, bankruptcies, for-sale-by-owner homes, and tax liens. Potential homeowners can view the REO listings and foreclosed properties owned by IndyMac Bank online and set appointments with listing agents/brokers to view the properties. "Our research indicates that only 17% of a traditional real estate marketing budget is spent online," said Brad Geisen, Foreclosure.com's founder, president, and chief executive officer. "That means sellers are spending 83% of their marketing dollars chasing only 20% of the buyers. Put simply, times are changing, and the practices of lenders and others involved in the sale of real estate need to change along with it." The companies can be found online at http://www.foreclosure.com and http://www.indymacbank.com.

Fidelity National Information Services Inc., a Jacksonville, Fla.-based provider of technology services to financial institutions, has announced a plan to spin off its Lender Processing Services division as a publicly traded company.The plan, recently approved by the company's board of directors, contemplates that FNIS will contribute the assets of the division to a newly formed subsidiary in exchange for 100% of the new company's common stock and approximately $1.6 billion of its debt securities. If approved by the Securities and Exchange Commission and favored with a tax-free ruling by the Internal Revenue Service, FNIS would distribute 100% of the new company's common stock to FNIS shareholders in a tax-free spinoff, the company said. William P. Foley II, executive chairman of FNIS, said the reason for the spinoff is that the company's Transaction Processing Services and Lender Processing Services divisions are "distinct and unique businesses that serve different customers, operate in different markets, and attract different investors." The company can be found online at http://www.fidelityinfoservices.com.

Fitch also downgraded four classes from First Franklin Mortgage Loan Trust series 2005-FFH2 as a result of changes in the rating agency's subprime loss forecasting assumptions.The downgrades were as follows: class M-8, from BBB to BBB-minus; class M-9, from BBB-minus to BB-plus; class B-1, from BB-plus to B; and class B-2, from BB to C/DR5. Fitch also affirmed the ratings on eight other classes in the deal. The revised assumptions in Fitch's subprime loss model "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness," the rating agency said.

Twenty classes from five First Franklin Mortgage Loan Trust transactions issued in 2002, 2003, and 2004 have been downgraded by Fitch Ratings.Fitch also placed three of the downgraded classes on Rating Watch Negative, removed three classes from Rating Watch Negative, and affirmed the ratings on 13 other classes in the deals. The downgrades were attributed to a deterioration in the relationship of credit enhancement to loss expectations. The collateral consists primarily of fixed- and adjustable-rate first-lien and fixed-rate second-lien subprime mortgage loans. Fitch can be found on the Web at http://www.fitchratings.com.

EMC Mortgage Corp., Lewisville, Texas, has announced an emergency response and crisis management plan to assist customers affected by the catastrophic wildfires in Southern California.The company said it will cease all foreclosure and bankruptcy proceedings for the next 30 days, as well as negative credit reporting activity, the imposition of late fees, and the placing of collection calls. "Automatic adjustable-rate mortgage resets may be modified as needed," EMC said. The company said it will contact customers deemed likely to have been affected by the fires, encourage affected borrowers to contact EMC on its customer service line, and assess whether customers need further assistance when the fires have been extinguished. EMC, a wholly owned subsidiary of The Bear Stearns Cos., can be found online at http://www.emcmortgagecorp.com.

Stewart Lender Services Inc., Houston, has announced the introduction of the Pre-Foreclosure Report, which is designed to help attorneys and lenders determine the condition of a property title when the borrowers are in financial distress.The new report provides a quick "snapshot" of the subject residential property, including a two-owner search, vesting information, open liens, judgments, pending lawsuits, tax information, and other data, the company said. Stewart Lender Services, a subsidiary of Stewart Information Services Corp., can be found on the Web at http://www.stewart.com.

Personal computer giant Dell Inc. has cut off credit to a small mortgage banking firm in New Jersey, citing what it calls "the overall creditworthiness of the mortgage lending industry."Fred Catelli provided MortgageWire with a copy of a letter sent to him by Dell Financial Services, the financing arm of the computer firm. Mr. Catelli, who runs a small net-branch mortgage firm called Diamond Mortgage Services, told MortgageWire that, "We had a $35,000 credit limit with them. We had it for years." He said his firm currently owes Dell nothing. He said when Dell Financial sent him a letter about cutting off credit, he called Dell in disbelief. "They confirmed that they have suspended issuing credit to all companies listed by Dunn and Bradstreet as a mortgage company," he told MW. At deadline time, a Dell spokesman could not be reached for comment. (See the actual Dell letter by visiting: http://www.nationalmortgagenews.com/documents/dell2diamond.html.)

Wall Street giant Merrill Lynch & Co. took a stunning $7.9 billion writedown on subprime and collateralized debt obligation assets in the third quarter -- 75% more than it forecast just a few weeks ago.Announcing its earnings before the market opened on Wednesday, Merrill -- at one time a major financer of subprime mortgage firms -- hinted that more writedowns are to come. "We expect market conditions for subprime mortgage-related assets to continue to be uncertain, and we are working to resolve the remaining impact from our positions," said company chairman and chief executive Stan O'Neal. Even though Merrill took $7.9 billion in mortgage/CDO writedowns, its overall loss for the quarter was a more modest -- but still awful -- $2.3 billion. Merrill said its fixed-income (mortgage) revenues were a negative-$5.6 billion in the quarter. This includes trading positions, warehouse lines, and other businesses tied to the asset-backed market. In February National Mortgage News broke the news that Merrill was conducting margin calls on several nondepository subprime clients, eventually driving some of those mortgage firms into bankruptcy. Merrill Lynch can be found online at http://www.ml.com.

Fitch also downgraded three classes from Securitized Asset Backed Receivables series 2005-FR3 as a result of changes in the rating agency's subprime loss forecasting assumptions.The downgrades were as follows: class B-2, from A-minus to BBB-plus (and placed on Rating Watch Negative); class B-3, from BBB-plus to BB-plus; and class B-4, from BBB-minus to B-plus. Fitch also placed classes M-3 and B-1 on Rating Watch Negative and affirmed the ratings on three other classes in the deal. The revised assumptions in Fitch's subprime loss model "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness," the rating agency said.