Servicing

Mortgage company stocks should react positively to a rate cut by the Federal Reserve, but it will be short-lived because rising credit costs and a "tougher origination environment" will be drag on earnings, according to a Friedman Billings Ramsey report."It will be tough going for mortgage banking companies for the next 12 to 24 months," FBR analyst Paul Miller Jr. says in the Sept. 14 report. And it will be a particularly tough adjustment for companies that generated most of their earnings from gain-on-sale income or hold a large percentage of nonagency products in their portfolios. But banks and thrifts that took a cautious approach to credit risk should benefit from the current environment, according to the FBR analyst. "Additionally, a Fed rate cut should help improve margins as funding costs move lower," Mr. Miller said. The Federal Open Market Committee meets Sept. 18 to consider a cut in the Fed Funds rate.

Countrywide Financial Corp. Chairman Angelo Mozilo said Thursday that rising loan delinquencies are not being caused by adjustable-rate mortgage "resets" but by a combination of job losses exacerbated by falling home values -- particularly in California.In an interview with National Mortgage News, Mr. Mozilo said news media reports that resets are causing delinquencies are being blown out of proportion. "Resets are not the reason for delinquencies and foreclosures," he stressed. He also said that Countrywide is working with customers who are having trouble with resets by not increasing their loan rate. "If they are struggling to make the payment, we will not increase the rate," he told NMN. The Calabasas, Calif.-based company can be found online at http://www.countrywide.com.

Four classes of Securitized Asset Backed Receivables LLC 2005-FR1 have been placed on Rating Watch Negative by Fitch Ratings.The affected securities were classes B-1, B-2, B-3, and B-4. In addition, Fitch affirmed the ratings on three other classes in the deal. Fitch said the securities were placed on watch pending receipt of additional performance information that could affect the ratings. The collateral in the transaction consists of subprime residential loans secured by first- and second-lien deeds of trust on residential properties, the rating agency said.

Class B-2 of C-BASS mortgage pass-through certificates, series 2005-RP1, has been downgraded from BBB to BB by Fitch Ratings.Fitch also affirmed the ratings on nine other classes in the transaction. The downgrade was attributed to recent changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness."

Two classes from C-BASS mortgage loan asset-backed certificates series 2003-RP1 have been downgraded by Fitch Ratings.Class B-1 was downgraded from BBB to BB, and class B-2 was downgraded from BB to CCC/DR2. Fitch also affirmed the ratings on three classes in the transaction. The downgrades reflect deterioration in the relationship between credit enhancement and loss expectations, the rating agency said. The trust consists primarily of one-to four-family, adjustable- and fixed-rate mortgage loans, FHA-insured and VA-guaranteed mortgage loans, manufacturing housing installment contracts, and installment loan agreements secured by first, second, or third liens on residential properties.

Two classes of notes issued by MWAM CBO series 2001-1 Ltd., a collateralized debt obligation composed partly of mortgage-backed securities, have been downgraded by Fitch Ratings.Class A was downgraded from AAA to AA-plus, and class B was downgraded from B/DR2 to C/DR1. The downgrades were attributed to "continued collateral deterioration resulting from negative credit migration." The CDO consists of residential and commercial MBS, asset-backed securities, other CDOs, investment-grade corporate securities, and U.S. government securities, Fitch said.

Three classes of Merrill Lynch Mortgage Investors Inc.'s mortgage loan asset-backed certificates, series 2005-SD1, have been downgraded by Fitch Ratings.The downgrades were as follows: class M-2, from A to BBB-plus; class B-1, from BBB to BB; and class B-2, from BB to B-minus/DR2. The rating agency also affirmed the ratings on two other classes in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses. The transaction consists primarily of subprime mortgage loans secured by first or second liens.

Six classes of Bear Stearns Asset Backed Securities Trust series 2005-1 have been downgraded by Fitch Ratings.The downgrades were as follows: class M2, from A to BBB-minus; class M3, from A-minus to BB; class M4, from BBB-plus to BB-minus; class M5, from BBB to B; class M6, from BBB-minus to CC/DR2; and class M7, from B-plus to CC/DR3. Fitch also affirmed the ratings on two other classes in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses. The transaction consists of fixed- and adjustable-rate mortgage loans secured by first and second liens on residential properties. Fitch can be found on the Web at http://www.fitchratings.com.

Radar Logic Inc., New York, has announced that derivatives trading in the Residential Property Index market will begin Sept. 17.Trading will be based on the RPX Prices, single values representing price per square foot based on actual residential real estate transactions in 25 U.S. metropolitan statistical areas, as well as a 25-city composite. "The launch of the RPX market provides both investors and participants in the real estate industry with sophisticated tools that have not been available to them before," said Michael Feder, chief executive officer and president of Radar Logic. Dealers licensed to offer products in the RPX market include Morgan Stanley & Co.; Lehman Brothers Inc.; Merrill Lynch, Pierce, Fenner & Smith Inc.; Deutsche Bank Securities Inc.; Goldman Sachs & Co.; and Bear Stearns & Co. Radar Logic can be found online at http://www.radarlogic.com.

San Francisco-based Compass Analytics LLC has announced the release of its Mortgage Servicing Rights Analytics to provide loan-level and aggregated modeling capabilities for mortgage servicers and servicing investors.The MSR Analytics, developed with input from Denver-based MountainView Servicing Group, will be released as a fully integrated part of Compass's mortgage analytics platform CompassPoint. The system will include both static and option-adjusted spread valuations and will allow analysts to use loan-level adjusters on all models, include integration to industry-standard prepayment models, integrate accounting functionality, and include speed-enhancing parallel processing. According to the announcement, the MSR Analytics will be available for hosted and installation implementations. A specific MSR Trading option will also be available. The company can be found online at http://www.compass-analytics.com.