Servicing

Flagstar Bancorp Inc., a major residential mortgage originator based in Troy, Mich., has reported the private placement of a $600 million securitization of asset-backed notes by Flagstar ABS LLC, a wholly owned subsidiary of Flagstar Bank FSB.The notes, issued through Flagstar Home Equity Loan Trust 2005-1, consist of one class and are backed by home equity lines of credit originated and serviced by Flagstar Bank, the company said. The deal, placed with institutional buyers, used a prefunding structure under which approximately $450 million worth of HELOCs were sold Dec. 8 and approximately $150 million more will be sold within 90 days. Flagstar can be found online at http://www.flagstar.com.

Two certificates previously issued by Chase Funding Loan Acquisition Trust, series 2001-C1, have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are classes IM-1 and IM-2. The rating actions were taken because credit enhancement levels may be low given the projected losses on the underlying pools, Moody's said. The collateral has taken losses that have caused a gradual erosion of the overcollateralization. The securitization is backed by fixed-rate and adjustable-rate subprime mortgage loans that have multiple originators.

Eight classes of certificates issued by GE Capital Mortgage Services Inc. have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are: series 1997-HE3, classes B-1 and B-2; series 1997-HE4, classes B-1 and B-2; series 1998-HE1, classes B-1 and B-2; and series 1998-HE2, classes B-2 and B-3. The watchlist placement was attributed to recent losses and diminishing credit enhancement levels relative to projected losses on the underlying pools, Moody's said. The deals are backed primarily by fixed-rate, first- and second-lien subprime residential mortgage loans. The rating agency can be found online at http://www.moodys.com.

Class M-3 of Residential Asset Mortgage Products Inc. series 2003-RP1 has been downgraded from BBB-plus to BB by Fitch Ratings.Fitch also affirmed the ratings on three other classes in the transaction. The downgrade reflects a deterioration in the relationship between the bond’s credit enhancement and Fitch’s expected future losses on the loans, the rating agency said. Losses to date have been higher than Fitch initially expected and have generally exceeded excess spread over the past 12 months, resulting in a reduction of the overcollateralization amount. The collateral consists of fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties. Fitch can be found online at http://www.fitchratings.com.

Foreclosure filings in Massachusetts ran more than a third higher through October than in the comparable period of last year, according to ForeclosuresMass, Framingham, Mass.Statewide foreclosures were 35.1% higher in the January-October period than the level recorded in the same months of 2004, the online data provider reported. "The dramatic increase in foreclosure activity in Massachusetts is continuing unabated," said Jeremy Shapiro, president and co-founder of ForeclosuresMass. Mr. Shapiro said the high foreclosure rate is expected to continue "into the foreseeable future." The company can be found online at http://www.foreclosuresmass.com.

Prime and alternative-A mortgage asset performance will remain stable next year in the United States, but subprime asset performance will decline, according to Fitch Ratings.The refinancing trend is expected to continue, but at a slower pace as rates rise, the rating agency said. The prospect of higher rates on adjustable-rate mortgages will increase the percentage of refis into fixed-rate mortgages, ARMs with longer fixed periods, option ARMs, and 40-year mortgages, Fitch predicts in a report titled "Global Structured Finance: 2006 Outlook and 2005 Review." Noting the "excellent performance" of subprime assets over the past two years, Fitch foresees a dropoff in performance "as higher rates and slower home price growth curtail the cash-out refinancing boom and cause some borrowers to experience payment increases on ARM loans." Delinquencies on subprime assets may rise as much as 10%-15%, but credit enhancement on subprime securities has risen rapidly and "should help protect bonds from the expected decline in loan performance," Fitch declared. The rating agency can be found online at http://www.fitchratings.com.

Four classes of Chase Funding Mortgage Loan asset-backed certificates have been placed on Rating Watch Negative by Fitch Ratings.The affected securities are the IB classes of series 1999-1 group 1, series 1999-2 group 1, series 1999-3 group 1, and series 1999-4 group 1. In addition, Fitch upgraded one class and affirmed the ratings on 13 classes in the four transactions. The watchlist placements were attributed to losses in recent months, which have prevented the overcollateralization from maintaining its target amount. Additionally, the group 1 of each transaction no longer benefits from the cross-collateralized excess spread of the group 2. As a result of the increased losses and the reduction in cross-collateralized excess spread, monthly losses have generally exceeded the monthly excess spread for the past six months. The pools consist of fixed-rate subprime mortgage loans secured by first-lien mortgages or deeds of trust on residential properties.

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-plus to BBB, and class B-2 was downgraded from BBB to BB. Fitch also affirmed the ratings on four classes in the transaction. The downgrades reflect deterioration in the relationship between credit enhancement and loss expectations, the rating agency said. Losses have exceeded excess spread for the past 12 months, which has caused the overcollateralization to decline steadily. The trust consists primarily of one-to four-family, adjustable-rate and fixed-rate mortgage loans, FHA-insured and VA-guaranteed mortgage loans, manufacturing housing installment contracts, and installment loan agreements secured by first and second liens on residential properties. Fitch said the mortgages include loans that had defaulted and are re-performing or performing under the provisions of a bankruptcy or forbearance plan, or loans that are performing under the terms of the related original notes or such notes as modified. Fitch can be found online at http://www.fitchratings.com.

Interactive Mortgage Advisors, Denver, is offering a $432 million bulk package of mortgage servicing rights backed by government-sponsored enterprise and government-insured loans.IMA would not disclose the identity of the seller, but noted in its offering circular that the portfolio "represents the entire servicing portfolio of the seller." IMA added that the seller will "discontinue business" once the sale process is completed. The bid deadline is Dec. 13.

Financial Industry Computer Systems Inc., Dallas, has announced new upgrades to eStatus, a residential mortgage loan servicing product that provides online customer service for borrowers.The upgrades to eStatus (which interfaces in real time with Mortgage Servicer, the FICS residential mortgage servicing system) enable lenders to present "a more unified branding message" on their websites and to create a more user-friendly environment for borrowers, FICS said. A lender can reduce incoming call volume by sending a standardized e-mail message to borrowers encouraging them to view statements and notices on the lender's eStatus website, according to FICS. "Because documents are available for display in eStatus as soon as they are generated in Mortgage Services, borrowers always have access to up-to-date information about their loans," the company said. FICS can be found online at http://www.loanware.com.