Servicing

Three classes of HSI Asset Securitization Corp. 2006-WMC1 mortgage pass-through certificates have been placed on Rating Watch Negative by Fitch Ratings.The affected securities are classes M-8, M-9, and M-10. In addition, Fitch affirmed the ratings on eight other classes in the transaction. The negative rating actions were attributed to a deterioration in the relationship between credit enhancement and expected losses, and the fact that the overcollateralization amount is approximately 30% short of its target amount. Fitch can be found on the Web at http://www.fitchratings.com.

Nine tranches from several deals with loans originated by Option One Mortgage Corp. have been downgraded by Moody's Investors Service, and four have been placed under review for possible downgrade. The transactions were issued from 2002 to 2004 by Option One Mortgage Loan Trust, Asset Backed Funding Corp., Merrill Lynch Mortgage Investors Trust, and MASTR Asset Backed Securities Trust. In addition to the negative rating actions, Moody's upgraded four tranches and placed two under review for possible upgrade. "Although the deals' losses are performing within the area of original expectations, the subordinate certificates are being downgraded and placed on review for possible downgrade based on existing credit enhancement levels relative to the current projected losses on the underlying pools," Moody's said. "Overcollateralization amounts in most of the transactions are currently below their targets, and pipeline losses could cause further depletion of the overcollateralization and put pressure on the most subordinate tranches." The transactions consist primarily of first-lien, adjustable- and fixed-rate subprime mortgage loans. Moody's can be found online at http://www.moodys.com.

Luminent Mortgage Capital Inc., a real estate investment trust based in San Francisco, has announced the pricing of $90 million in aggregate principal amount of 8.125% convertible senior notes due 2027 in a private placement.The REIT said it will use approximately $18 million of the net proceeds of the offering to repurchase shares of its common stock at a price of $9.13 per share. Luminent granted the initial purchaser an option to buy up to an additional $20 million in aggregate principal amount of notes. The REIT can be found online at http://www.luminentcapital.com.

Mortgage companies dropped 10,500 full-time employees from their payrolls in April as the contraction in subprime lending is finally showing up in the government's employment reports.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banking/broker sector fell from 481,200 in March to 470,700 in April. Surprisingly, mortgage brokers seem to be staying on the job. The BLS report shows that 140,700 brokers were employed in April, down only 500 from the level of the previous month. So the jobs report appears to be picking up closings and layoffs at subprime companies. According to preliminary survey results compiled by National Mortgage News, subprime production fell 30% in the first quarter compared with that of the same quarter last year. Overall production was down by about 10%. The Bureau of Labor Statistics can be found online at http://stats.bls.gov.

Class B-4 of CSFB Home Equity Asset Trust series 2006-4 has been placed on Rating Watch Negative by Fitch Ratings.In addition, Fitch upgraded one class and affirmed the ratings on 22 classes in four Credit Suisse First Boston mortgage-backed securitizations. The negative rating action was attributed to "early negative trends in the relationship between serious delinquency and credit enhancement." The rating agency can be found online at http://www.fitchratings.com.

Four classes of Securitized Asset Backed Receivables mortgage pass-through certificates have been placed on Rating Watch Negative by Fitch Ratings.The affected classes were as follows: class B5 of series 2006-HE1; class B-5 of series 2006-FR2; class B-5 of series 2006-FR3; and class B-4 of series 2006-WM1. In addition, Fitch affirmed the ratings on 69 classes in eight SABR securitizations. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and expected losses. The collateral in the transactions consists primarily of closed-end subprime residential loans secured by first- and second-lien mortgages, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Two classes of Asset Backed Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings.Class 1-M4 of series 2002-HE3 group 1 was downgraded from B to B-minus/DR1, and class 2-M4 of series 2002-HE3 group 2 was downgraded from B to B-minus/DR1. In addition, Fitch upgraded two classes in two ABSC deals, affirmed the ratings on six classes, and lowered the Distressed Recovery rating of class B1F of series 1999-LB1 group 1 from DR1 to DR2. The rating agency attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses.

Three classes of notes issued by Mid Ocean CBO 2000-1 Ltd., a collateralized debt obligation that includes mortgage-backed securities, have been downgraded by Fitch Ratings.Class A-1L has been downgraded from BB to B-minus/DR2, and classes A-2 and A-2L have been downgraded from CCC/DR4 to C/DR4. The rating agency attributed the downgrades to "poor collateral performance and substantial interest rate swap costs" that have caused the portfolio to generate insufficient interest proceeds to fully cover the interest obligations on Mid Ocean's liabilities. The transaction, a CDO managed by Deerfield Capital Management, is composed of residential MBS, commercial MBS, asset-backed securities, and other CDOs.

Four classes of Specialty Underwriting & Residential Finance asset-backed certificates have been downgraded by Fitch Ratings, and two have been placed on Rating Watch Negative.The downgrades were as follows: series 2003-BC1, class B-1, from BBB-plus to BB (and placed on Rating Watch Negative), and class B-2, from BB to C/DR6; and series 2003-BC2, class B-1, from BBB-plus to BB (and placed on Rating Watch Negative), and class B-2, from BBB to CC/DR3. In addition, Fitch affirmed the ratings on 11 classes from three SURF transactions. The negative rating actions were attributed to a deteriorating relationship between credit enhancement and loss expectations. SURF acts as program administrator for the seller, Merrill Lynch Mortgage Lending Inc., and its loan acquisition program facilitates the purchase by the Merrill Lynch company of eligible nonconforming loans from various SURF-approved originators, Fitch said.

Ten classes of Residential Asset Securities Corp. subprime transactions have been downgraded by Fitch Ratings, and 10 other classes have been placed on Rating Watch Negative.In addition, Fitch affirmed the ratings on over 175 classes in 47 RASC issues. The negative rating actions were attributed to a deteriorating relationship between expected losses and credit enhancement. The underlying collateral in all the transactions consists of fully amortizing 15- to 30-year fixed- and adjustable-rate mortgages secured by first liens extended to subprime borrowers.