Servicing

Two classes from Option One Mortgage Loan Trust series 2000-3 and 2001-1 have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are class M3 of series 2000-3 and class M2 of series 2001-1. In addition, Moody's placed on review for possible upgrade 30 certificates from 12 Option One deals. The reviews for possible downgrade were prompted by credit enhancement levels that are low in view of projected losses on the underlying pool. "The transaction has taken losses, and pipeline loss could cause eventual erosion of the overcollateralization," the rating agency said. The transactions are backed by first- and second-lien adjustable- and fixed-rate subprime mortgage loans. Moody's can be found online at http://www.moodys.com.

Six classes of Chase Funding subprime mortgage loan asset-backed certificates have been downgraded by Fitch Ratings.The downgrades were as follows: Chase Funding series 2000-1 group 1, class IB, from BBB to BBB-minus; series 2000-2 group 1, class IB, from BBB to BBB-minus; series 2000-3 group 1, class IM-2, from A to A-minus, and class IB, from BBB to BB; series 2001-4 group 2, class IIB, from BBB to BBB-minus; and Chase Funding Loan Acquisition Trust series 2001-C2 group 1, class IB, from BBB to BBB-minus. In addition, Fitch upgraded two classes from one Chase Funding deal and affirmed the ratings on 101 classes from 16 Chase Funding issues. The downgrades reflect worse-than-expected performance by the underlying collateral and concerns about the adequacy of credit enhancement for the remaining subordinate bonds, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

NovaStar Financial Inc., a Kansas City, Mo.-based residential mortgage lender and investor, has priced a public offering of 1.5 million shares of common stock at $35 per share.JMP Securities LLC is the lead managing underwriter of the offering, and Flagstone Securities LLC is the co-manager. NovaStar said it has granted the underwriters an option to buy up to 225,000 additional shares to cover any overallotments. The company's subsidiary NovaStar Mortgage can be found online at http://www.novastarmortgage.com.

Freddie Mac, which has long been the "little brother" to "big sister" Fannie Mae, bought more loans than its crosstown competitor during April, the first time it has out-purchased Fannie in about a decade.During the month, Freddie acquired $48.5 billion in mortgages to Fannie's $45.2 billion. Historically, Fannie Mae's purchases are $10 billion to $25 billion greater than Freddie's each month, but in the wake of Fannie's $12 billion accounting scandal, Fannie has been losing market share and Freddie has been closing the gap. Seller/servicers say Freddie Mac is gearing up to aggressively purchase interest-only mortgages, a product that Fannie Mae, so far, has ignored. Even though Freddie out-purchased Fannie in April, so far this year Fannie has acquired $175.7 billion to Freddie's $159.9 billion, a difference of $15.8 billion. Freddie Mac can be found on the Web at http:///www.freddiemac.com, and Fannie Mae can be found at http://www.fanniemae.com.

The national inventory of foreclosures increased by 2.6% in April, according to RealtyTrac, an online marketplace for foreclosure properties based in Lake Forest, Calif.The company's Monthly U.S. Foreclosure Market Report indicates that the latest foreclosure inventory totaled 64,057, compared with 62,422 in March. "April continues a trend we've seen over the last few months, where Texas and Florida have consistently produced an above-average number of properties in some stage of foreclosure," said Jim Saccacio, RealtyTrac's chief executive officer. Both states' foreclosure rates were more than 2.5 times the national average, the company said. The states with the next-highest foreclosure rates were Arizona, Colorado, and Utah. RealtyTrac can be found online at http://www.realtytrac.com.

Fitch Ratings is advocating the extension of the Terrorism Risk Insurance Act for two more years, arguing that market disruptions are likely if the backstop is not extended beyond its Dec. 31, 2005 expiration."There are no guaranties that availability of coverage will not be as serious a problem as it was before TRIA passed, which underscores the importance of a long-term solution," said Richard Carlson, a Fitch director. Mr. Carlson said he expects that, in the absence of the federal backstop, pricing could become an issue again and cause the price of the insurance to rise. This would especially affect high-profile "trophy" properties in major cities. And commercial mortgage servicers could have a more difficult time enforcing terrorism insurance coverage requirements, he said. The rating agency can be found online at http://www.fitchratings.com.

Two classes of Bear Stearns asset-backed securities, series 1999-1, have been downgraded by Fitch Ratings.Class BF of series 1999-1 group 1 was downgraded from BBB-minus to BB-minus, and class BV of series 1999-1 group 2 was downgraded from BBB-minus to BB. The downgrades were the result of poor collateral performance, incurred losses, and loss expectations in relation to available credit support, the rating agency said. Group 1 of the series is backed by fixed-rate mortgages originated by Amresco Residential Mortgage Corp. and Provident Funding Associates, and group 2 is backed by adjustable-rate mortgages originated by the same companies.

The senior unsecured ratings of General Motors, GMAC, and the majority of affiliated entities have been downgraded from BBB-minus to BB-plus by Fitch Ratings.The long-term and short-term ratings of GMAC, including GMAC Bank and GMAC Commercial Mortgage Bank, were lowered in connection with the downgrade of GM, which reflected a decline in its sales of sport utility vehicles and growing competition in the pickup truck market, the rating agency said. (The short-term ratings were lowered from F3 to B.) "The Rating Watch Evolving on GMAC Bank reflects its position within the newly created Residential Capital Corp. and GMAC's intention to ring-fence its residential mortgage business in order to achieve a higher rating," Fitch said. A Rating Watch Evolving outlook was also assigned to GMAC Commercial Mortgage Bank "in order to assess GMAC's intent to divest a partial stake in this business," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Impac Mortgage Holdings Inc., Newport Beach, Calif., has announced the issuance of $26.25 million of trust preferred securities by its newly formed statutory trust, Impac Capital Trust #3.The company said the securities will require quarterly distributions and bear a fixed interest rate of 8.01% for the first five years, and will reset quarterly thereafter at the prevailing three-month London interbank offered rate plus 3.75%. The company, a real estate investment trust, can be found online at http://www.impaccompanies.com.

Class B of Fidelity Funding Mortgage Finance Corp. has been downgraded from BBB to BB by Fitch Ratings.The rating agency attributed the downgrade to a credit enhancement level of 6.7% that is below the required percentage of 8.4%. In addition, 25% of the pool is 60 or more days delinquent (including loans in bankruptcy or foreclosure or that are real estate owned), Fitch said.