Servicing

An analyst that closely covers Countrywide Financial Corp. says in a new report that it is "highly unlikely" that Lehman Brothers will buy the Calabasas, Calif.-based company.In a research note, Sandler O'Neill analyst Mike McMahon says that, "Unless CFC's management has undergone a dramatic change in thinking," a sale to Lehman is not in the works. Countrywide, the nation's largest mortgage banker, was the subject of takeover rumors on Tuesday, sending its stock up about 1% in a down market. (The takeover talk was sparked by heavy buying in call options.) Over the years Countrywide has sporadically been the subject of takeover rumors. The suitors have usually been large depositories. A few years back, Countrywide obtained a bank charter and now boasts $34 billion in federally insured deposits.

Two classes of Merrill Lynch Mortgage Investors mortgage-backed securities have been downgraded by Fitch Ratings.Class BF-1 of MLMI series 2002-AFC1 group 1 was downgraded from BBB to BB, and class BV-1 of group 2 of the same series was downgraded from BBB to BBB-minus. In addition, Fitch upgraded one class in the transaction and affirmed the ratings on four classes. Losses have exceeded excess spread in 11 of the last 12 months for group 1 and eight of the last 12 months for group 2, preventing the overcollateralization from maintaining its target amount, according to the rating agency. The deal's performance triggers have failed since the stepdown date and locked out the subordinate bonds from principal cash flow. Fitch said it expects the performance triggers to fail for the remainder of the deal's life. Group 1 is collateralized by fixed-rate mortgages, group 2 by adjustable-rate mortgages. The loans were initially originated or acquired by Superior Bank and later sold to Merrill Lynch.

Class B-4 of Bear Stearns Mortgage Securities Inc. mortgage pass-through certificates, series 2001-4, has been downgraded from CCC to CC by Fitch Ratings.The rating agency also upgraded eight classes and affirmed the ratings on 23 other classes in five Bear Stearns deals. The downgrade was attributed to credit enhancement levels relative to loss expectations. The underlying collateral consists of 15- to 30-year adjustable-rate and fixed-rate mortgages extended to prime borrowers, Fitch said.

Three classes of United Companies Financial Corp. manufactured housing transactions have been downgraded by Fitch Ratings.The downgrades were as follows: series 1998-2, class M-1, from B to B-minus, and class M-2, from B-minus to C; and series 1998-3, class M-2, from B-minus to CCC. Fitch also affirmed the ratings on six classes in three UCFC manufactured housing deals. The downgrades were attributed to the poor performance of the collateral. The loans were originated by United Companies Funding Inc., which was formed in 1995 as a wholly owned manufactured housing lending subsidiary of UCFC. In 1998, UCFI announced plans to close down its manufactured housing business. In 1999, UCFC filed for Chapter 11 bankruptcy protection, and in December 2000, the MH portfolio, servicing rights, and residual interests were acquired by EMC, a wholly owned subsidiary of Bear Stearns Cos. Fitch can be found online at http://www.fitchratings.com.

Classes A-1 and A-2 of Diversified Asset Securitization Holdings I LP have been downgraded from A-minus to BB by Fitch Ratings.Fitch attributed the downgrades to deterioration in the credit quality of DASH's collateral portfolio. DASH I is a collateralized debt obligation managed by AAM Co. Fitch said 47.2% of the portfolio backing the CDO consists of residential mortgage-backed securities, and the remainder consists of commercial MBS (34.9%), asset-backed securities (13.2%), and other CDOs (4.7%).

Three classes of Citigroup Mortgage Loan Trust series 2003-1 have been downgraded by Fitch Ratings.The downgrades were as follows: class WB-3, from BBB to BB-minus; class WB-4, from BB-minus to CCC; and class WB-5, from CCC to CC. Fitch also affirmed the ratings on eight other classes in the transaction. The downgrades reflect deterioration in the relationship between credit enhancement and expected losses, the rating agency said. "Given the high outstanding delinquencies for pool W, Fitch does not feel that the protection offered by the subordination of the WB-6 bond is adequate to prevent a principal writedown of the WB-5 certificate from occurring," Fitch said. In addition, losses could exceed the protection offered by both the WB-5 and WB-4 bonds, eventually causing a principal writedown on the WB-3 bond. The loans consist of fixed-rate prime mortgages secured by first and second liens, primarily on one- to four-family residential properties.

Four classes from two issues of Wells Fargo Alternative Loan Trust mortgage-backed securities have been downgraded by Fitch Ratings.The downgrades were as follows: class B-4 of series 2002-1 and series 2003-1, from BB to BB-minus; and class B-5 of series 2002-1 and series 2003-1, from B to CCC. Fitch also affirmed the ratings on eight other classes from the two issues. The rating agency attributed the downgrades to a deterioration in the relationship between credit enhancement levels and expected losses. The securities are backed by 15- and 30-year fixed-rate mortgage loans secured by first liens, chiefly on one- to four-family residential properties. Fitch can be found online at http://www.fitchratings.com.

Popular Inc., a Puerto Rico-based financial services company, has announced the acquisition of substantially all the assets of Infinity Mortgage Corp., Parsippany, N.J., for an undisclosed purchase price.The acquired operations -- which serve New York, Connecticut, Maryland, Massachusetts, and Pennsylvania as well as New Jersey -- are now part of Equity One Inc., a subsidiary of Popular Financial Holdings Inc., which is a Popular Inc. subsidiary based in Marlton, N.J. Popular Inc. said the transaction expands its penetration into the U.S. market and "will complement the company's existing nonprime mortgage lending business through direct mail." It will also enable the company to expand its loan servicing business, Popular said. The company can be found on the Web at http://www.popularinc.com.

Class B-5 of Morgan Stanley Capital I Inc.'s series 1996-1 mortgage-backed securities has been downgraded from B to CCC by Fitch Ratings.In addition, the ratings on five other classes in the transaction were affirmed. The downgrade stemmed from deterioration in the relationship between credit enhancement and expected losses, Fitch said. "Given approximately $221,000 in outstanding foreclosures and historic loss severities, Fitch does not feel that the protection offered by the subordination of the B-6 (approximately $61,000) bond is adequate to prevent an eventual principal writedown of the B-5 certificate from occurring," the rating agency said.

Class B-3 of Nomura Asset Acceptance Corp. mortgage pass-through certificates, series 2001-R1, has been downgraded from BBB to BB by Fitch Ratings.Fitch also affirmed the ratings on five other classes in the deal. The downgrade was attributed to higher-than-expected collateral losses and deterioration in the relationship between loss expectations and credit support. As of October, the pool had incurred cumulative losses of 0.22% of the original collateral balance, and approximately 27% of the remaining pool balance was 90 or more days delinquent, the rating agency reported.