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Four classes of Asset Backed Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings, and two classes have been placed on Rating Watch Negative.The downgrades were as follows: series 2002-HE1, class B, from BBB to BBB-minus; series 2002-HE2, class B, from BBB to BBB-minus; series 2002-HE3, pool 1 class I-M4, from BBB-minus to BB, and pool 2 class II-M4, from BBB-minus to BB. Classes M-3 and M-4 of series 2003-HE1 were placed on Rating Watch Negative. Fitch also removed four classes of series 2002-HE3 from Rating Watch Negative: classes I-M3 and I-M4 of pool 1 and classes II-M3 and II-M4 of pool 2. In addition, Fitch upgraded four classes and affirmed the ratings on 55 classes in 12 ABSC deals. The rating agency attributed the downgrades to a deterioration in the relationship between loss expectations and credit enhancement. The transactions consist of fixed- and adjustable-rate subprime mortgage loans on one- to four-family properties. Fitch can be found online at http://www.fitchratings.com.

ForeclosuresMass, Framingham, Mass., has announced the launch of ForeclosuresConn, a new division that will offer Connecticut foreclosure data.The new company will obtain its data from the 15 Judicial District Courts in Connecticut's eight counties. "Until today, investors, real estate professionals, and mortgage brokers had no reliable central point of access to accurate and up-to-the-minute foreclosure information," said Jeremy Shapiro, president and co-founder of ForeclosuresMass. The new company can be found online at http://www.foreclosuresconn.com.

Almost 76,000 homeowners in Louisiana and Mississippi were seriously delinquent on their mortgages at the end of last year, four months after Hurricane Katrina devastated the region, according to the Mortgage Bankers Association.The MBA found that at the end of last year, 20.8% of home loans in Louisiana and 16.9% of those in Mississippi were delinquent. Serious delinquencies -- those more than 90 days past due -- have spiked, however, even as delinquencies of 30 days or less have fallen, the MBA said in a preview of its of national mortgage delinquency data, due to be released on March 16.

Tax return giant H&R Block has received final approval to start a savings and loan, a move that will allow the depository to purchase mortgages from its subprime affiliate, Option One Mortgage, a top-10-ranked nonconforming lender.The Office of Thrift Supervision gave H&R Block final approval on March 15, noting that it had received "numerous" comment letters on the application, most of them opposed. "Commenters expressed concerns about the ability of the mortgage companies' borrowers to receive the best loan product for which they qualify," the agency said. The thrift will be headquartered in Kansas City, Mo., which will serve as the bank's Community Reinvestment Act designation area. (For more details, see the March 20 issue of National Mortgage News.)

Two classes of Structured Finance Advisors Collateralized Asset Backed Securities Trust II CDO Ltd. have been downgraded by Fitch Ratings.The class notes were downgraded from BB to B, and the class C notes were downgraded from CC to C. The triple-A rating on class A was affirmed. SFA CABS II is a collateralized debt obligation supported by residential and commercial mortgage-backed securities, asset-backed securities, and CDOs, Fitch said. The downgrades were attributed to the declining credit quality of the collateral and the decline in the coverage of the notes, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Capital One Financial Corp., McLean, Va., is buying North Fork Bancorporation in a cash and stock transaction valued at $14.6 billion.Under the agreement, North Fork shareholders will receive $31.18 per share, which represents a 22.8% premium over the closing price of North Fork shares on March 10. The combined company will have a managed loan portfolio of more than $143 billion and more than 50 million customers. GreenPoint Mortgage Funding, a subsidiary of North Fork, was the 20th-largest originator of home loans through the first nine months of last year, with funding volume of $32.9 billion in that period.

Fitch Ratings has announced that it will adjust its treatment of interest-only affordability features on two- and three-year subprime hybrid adjustable-rate mortgages to reflect higher odds of default.Fitch analyzed the payment shock potential for 2005 subprime IO and non-IO ARMs and found that the payment increase for an IO at the rate reset is "significantly larger than the increase from principal amortization and is high even if rates do not rise due to the high margins and low initial rates." The credit performance of subprime IOs has been strong due to a favorable economic climate, but newer vintages "may not exhibit the same strong performance because more borrowers could face a payment increase as home price appreciation slows," said Fitch director Grant Bailey. Subprime borrowers are sensitive to the rate of home price appreciation because they tend to use accumulated home equity to pay off additional debt to lower their debt-to-income ratio. "If their DTI is too high to qualify for a new mortgage before the rate reset, they become vulnerable to payment shock risk," Mr. Bailey said. The report, "Rating Subprime RMBS Backed by Interest-Only ARMs," is available on Fitch's website at http://www.fitchratings.com.

Freddie Mac, which is still toiling with the remnants of a $5 billion accounting scandal, will release full-year 2005 earnings in May.On March 30 the company will provide a quarterly market update on its business, but will not release earnings estimates, according to a spokesman for the government-sponsored enterprise. In August the congressionally chartered mortgage giant released first-half 2005 earnings, but then restated those numbers a few months later. Its chief competitor, Fannie Mae, last reported earnings for the second quarter of 2004. Fannie Mae is expected to revise past earnings downward by about $11 billion. Freddie has restated upward by $5 billion.

Mortgage companies trimmed 2,900 full-time employees from their payrolls in January, marking the third consecutive month in which employment in the mortgage banker/broker sector has declined.The U.S. Bureau of Labor Statistics reported that employment in the mortgage industry declined from 500,700 in December to 497,800 in January. The decline in industry jobs occurred even though the 30-year mortgage rate hovered near 6.00% in January and refinancings constituted over 40% of mortgage applications. Since then, mortgage rates have gone up and the refi business has cooled. But the purchase-mortgage market has remained strong. Friday's employment report shows that construction jobs increased by 55,000 in January and 41,000 in February. "What housing slowdown, right?" asked Stephen Stanley, RBS Greenwich Capital's chief economist. "Home sales may be slowing down, but builders have plenty of orders in the pipeline to keep them busy for a long time."

Three classes from three issues of CDC Mortgage Capital Trust mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-HE2, class B-2, from BB to B-plus; and series 2002-HE3, class B-1, from BBB-minus to BB-minus, and class B-2, from BB-plus to B-plus. In addition, Fitch affirmed the ratings on eight classes from three CDC deals. The rating agency attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses. The pools consist of fixed- and adjustable-rate subprime mortgages for one- to four-family residential properties.