Servicing

Class B of MESA Trust asset-backed certificates, series 2001-2, has been downgraded from B-plus to CCC by Fitch Ratings.Fitch also affirmed the rating on class M of the transaction. The downgrade was attributed to a deterioration of the relationship between credit enhancement and loss expectations. All the mortgage loans were acquired or originated by Option One Mortgage Corp. and later purchased by Bear, Stearns & Co., Fitch said. "Substantially all of the mortgage loans have certain appraisal, document, fraud or misrepresentation, or other deficiencies or exceptions that exceed the scope of Option One Mortgage Corp.'s usual underwriting guidelines," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Delta Financial Corp., Woodbury, N.Y., has reported the pricing of a private placement of 2.5 million shares of its common stock at $8.25 per share.Delta, an originator and securitizer of nonconforming mortgage loans, said it expects net proceeds to total approximately $19.3 million. The company can be found on the Web at http://www.deltafinancial.com.

Franklin Credit Management Corp., New York, has announced that it will restate its earnings for 2003, 2004, and three quarters of 2005 to expense certain fees and costs related to the acquisition of residential mortgage loans.Franklin said it had been deferring and amortizing the fees and costs over the estimated life of the acquired assets based on an accounting interpretation reached in consultation with Deloitte & Touche LLP. But the company said it has now changed its interpretation based on further consultations with the accounting firm regarding Statement of Financial Accounting Standards No. 91 on nonrefundable fees and costs. Franklin said its restatements (for the full years 2003 and 2004, all quarterly periods in 2004, and three quarterly periods in 2005) will also include certain other adjustments. The aggregate effect of the adjustments is estimated to result in reductions to after-tax income of $771,000 ($0.11 per share) in 2004 and $439,000 ($0.07 per share) in 2003, the company said. In other news, Franklin said its wholly owned mortgage origination subsidiary, Tribeca Lending Corp., entered into a new $100 million master credit and security agreement with BOS (USA) Inc., an affiliate of the Bank of Scotland. Franklin can be found online at http://www.franklincredit.com.

The boards of The Bond Market Association and the Securities Industry Association have endorsed the concept of merging the two associations into a new entity that "will more effectively represent the member companies and industry while enhancing the public's trust and confidence in the markets."The two associations' boards said in a joint statement that "once the organizational details are decided" they plan to vote on the merger by June 30 and then bring the matter to their full memberships for a vote. "The combined organization is intended to meet the needs of the member financial services firms in their roles as broker dealers, investment advisers, and asset managers, as well as representing the interests of private client and institutional investors," the groups said.

Two classes of Merit Securities Corp. residential mortgage-backed securities series 12-1 have been downgraded by Fitch Ratings.Class 3A-1 was downgraded from AAA to AA, and class B-2 was downgraded from A to BBB. The rating on one other class in the transaction was affirmed. Fitch said the downgrades reflect a continued deterioration in the relationship between credit enhancement and expected loss levels. The collateral consists of conventional first-lien mortgage loans and manufactured housing installment sales contracts. Fitch can be found online at http://www.fitchratings.com.

The Federal Agricultural Mortgage Corp., Washington, D.C., has announced the issuance of a long-term standby purchase commitment that boosted its portfolio of loans, guarantees, and commitments to a record level of $6 billion.The standby purchase commitment was made to a Farm Credit System institution on a $479 million pool of agricultural real estate mortgage loans, Farmer Mac said. "The transaction is a product of Farmer Mac's ongoing efforts to diversify its marketing focus to include large program transactions that emphasize high asset quality, with greater protection against adverse credit performance and commensurately lower compensation for the assumption of credit risk and administrative costs," said Henry D. Edelman, chief executive officer of the government-sponsored enterprise. Farmer Mac can be found online at http://www.farmermac.com.

The risk of price declines over the next two years has risen in 48 of the nation's 50 largest housing markets, but the rate of appreciation has slowed in 21 of the markets, according to PMI Mortgage Insurance Co., Walnut Creek, Calif.The average score in the PMI U.S. Market Risk Index rose from 261 to 287, the company reported. This means the company's estimate of the probability of experiencing a home price decline in the next two years has risen from 26.1% to 28.7% in the 50 largest metropolitan statistical areas. According to the index, there are now 14 markets with a greater than 50% chance of price declines over two years, up from 11 in the fourth quarter. PMI also reported the results of a study of the value of homeownership from 1986 through 2005. "What we found was that across the nation's 50 largest MSAs, owning a home for 10 years or more resulted in a positive return in 100% of the cases," said Mark Milner, chief risk officer of PMI Mortgage Insurance. "This dropped to 95% with a seven-year ownership term and to 92% with a five-year ownership term -- still a pretty impressive rate." PMI can be found online at http://www.pmigroup.com.

Two classes of BCF LLC mortgage-pass through certificates, series 1997-R2, have been downgraded by Fitch Ratings.Class B-4 was downgraded from BB to B-minus, and class B-5 was downgraded from B to C. In addition, Fitch affirmed the ratings on 10 other classes in the transaction. The rating agency said the deal consists of three mortgage groups, each of which has component certificate classes B4 and B5. Mortgage group 2 has the poorest performance, and therefore its components determine the ratings for the total class, Fitch said. The downgrades were attributed to the performance of classes 2B-4 and 2B-5, in which 55.3% of the loans are 60-plus days delinquent, according to the rating agency.

Three classes of GS Mortgage Participation Securities mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades, from GSMPS Mortgage Loan Trust 2003-3, were as follows: class B-3, from BB to B; class B-4, from B to CCC; and class B-5, from CCC to C. In addition, the ratings on three other classes from the deal were affirmed. The downgrades were attributed to higher-than-expected collateral losses and a deterioration in the relationship between loss expectations and credit support levels. The collateral for the deal consists of reperforming loans backed by the Federal Housing Administration or the Department of Veterans Affairs, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Matrix Bancorp, Denver, has sold its servicing advisory group to Security National Holding Co. and former employees of the unit for about $4.1 million.The advisory group, Matrix Bancorp Trading, evaluates and sells residential servicing portfolios. It also manages an active whole-loan trading desk. The former MBT will be housed under a limited liability company called SN Capital Markets LLC. MBT employed 31 full-timers, all of whom will shift over to SNCM.