Servicing

Classes B-1 and B-2 of GS Mortgage Securities Corp. residential mortgage pass-through certificates, series 2003-HE1, have been placed on Rating Watch Negative by Fitch Ratings.In addition, four classes from two other GSAMP transactions were upgraded, and the ratings on 42 classes from eight GSAMP deals were affirmed. The negative rating actions were attributed to monthly losses that have exceeded excess spread in four of the last six months, causing overcollateralization to fall below its target.

Two classes from two Ameriquest Mortgage Securities Inc. home equity issues have been placed on Rating Watch Negative by Fitch Ratings.The affected securities are class M2 of series 2002-C and class M-4 of series 2002-3. In addition, Fitch upgraded 22 classes from eight Ameriquest transactions and affirmed the ratings on 89 classes from 24 deals. The negative actions were attributed to a deterioration in the relationship between credit enhancement and expected losses, the rating agency said.

Class A of Structured Finance Advisors Collateralized Asset Backed Securities Trust I Ltd. has been downgraded from B to CCC by Fitch Ratings.SFA CABS I is a collateralized debt obligation supported by residential and commercial mortgage-backed securities and CDOs, Fitch said. The downgrade "reflects the continued deterioration of the collateral and the decline in the coverage of the notes," the rating agency said.

Three classes from two Credit Based Asset Servicing and Securitization LLC mortgage loan securitizations have been downgraded by Fitch Ratings, and four classes from two other C-BASS transactions have been placed on Rating Watch Negative.The downgrades were as follows: series 2001-CB3, class B-2, from BB to B-plus; and series 2002-CB2, class B-1, from BBB to BB-plus, and class B-2, from BB-plus to BB. The Rating Watch placements were classes 1B-1 and 1B-2 of series 1999-CB2 group 1 and classes B-2 and B-3 of series 2002-CB5. Fitch also upgraded 16 classes and affirmed the ratings on 178 classes from 26 C-BASS deals. The negative rating actions reflect a deterioration in the relationship between credit enhancement and loss expectations, the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

Fannie Mae acquired $51.1 billion in loans during January, its weakest purchase month since June of last year.According to company figures, its portfolio holdings also slipped during the month -- to $725.3 billion, a 3% decline from the previous month's level. However, compared with the level recorded in January of last year, Fannie's portfolio has fallen by a stunning 19%. The company is working its way through an $11 billion earnings restatement scandal. Currently, Congress is weighing legislation to create a tougher regulator for Fannie Mae and its rival government-sponsored enterprise, Freddie Mac. A key sticking point in the bill is the size of their portfolios. The White House and the Treasury Department are in favor of shrinkage, but Democrats and some Republicans in Congress are against it.

General Electric Co., Fairfield, Conn., has announced that it will complete its total divestiture of Richmond, Va.-based Genworth Financial, the holding company it spun off to own its former life and mortgage insurance operations.In a secondary public offering, GE will sell 71 million shares of Genworth class A common stock in the offering. In addition, Genworth will repurchase 15 million shares of class B common stock from GE at the net price per share of the secondary offering. Afterward, GE will no longer own any shares of Genworth. Genworth will not receive any of the proceeds of the secondary offering. The repurchase will close simultaneously with and be contingent upon the completion of the secondary offering. The global coordinator and bookrunner for the offering is Merrill Lynch & Co. Other bookrunners are Citigroup, Goldman Sachs & Co., J.P. Morgan, and Morgan Stanley.

The refinancing share of loan applications fell to 38.2% for the week ending February 17, according to the Mortgage Bankers Association of America.Adjustable-rate mortgages also dipped as a percentage of all applications, to 29.1% from 29.6%. Overall, loan applications increased slightly for the week due to an increase in applications for home loan purchases. However, total home loan applications were down 20% compared to the same week a year earlier.

Mortgage companies have scored a victory in the bankruptcy court for the Northern District of Illinois, according to the law firm of Stewart Chapman, Pierce & Associates.In the case of CTX Mortgage v. William Graf, the law firm had argued that a forced "reinstatement" of the loan according to a model plan was improper. The court ruled that "a confirmed plan cannot trump a presumptively valid secured claim." That reversed a lower court ruling, and the case has been remanded back to the lower bankruptcy court. The dispute centered on the amount of arrears owed by the borrower.

The Department of Housing and Urban Development has issued Mortgagee Letter 2006-05, extending foreclosure moratoriums that affect FHA loans in areas of Louisiana, Mississippi, Alabama and Florida.The moratoriums in areas hit by Hurricanes Katrina, Rita, or Wilma will be extended by an additional 120 days. The letter requires lenders to assess the status, condition, and habitability of the mortgaged property by March 31 and establish contact with borrowers to evaluate their short term and long-term plans for housing, employment repayment of mortgage debt and home repairs. If, by March 31, the borrower provides a written commitment to work with the servicer to develop a plan to resolve the mortgage delinquency, the time to initiate foreclosure will automatically be extended an additional 90 days to June 30.

Investment banking firm Friedman, Billings, Ramsey Group lost $170.9 million in 2005, with a previously disclosed write-down of its mortgage-backed securities portfolio serving as the main cause of the company's disappointing results.Friedman, Billings, Ramsey said that write downs and losses in the company's MBS and merchant banking portfolios totaled $261.6 million in the fourth quarter. The breakdown of those losses included $180.1 million in write downs, net of hedging gains, related to the MBS portfolio; $7 million of realized losses on MBS; and $74.5 million recognized in the write-down of nine equity investments to reflect "other than temporary" impairments in the merchant banking portfolio." Also contributing to FBR's weakness in the fourth quarter was a $15.5 million loss at First NLC Financial services, a wholly owned non-conforming mortgage lending subsidiary of FBR.