Servicing

Four classes of notes issued by Oceanview CBO I Ltd. have been placed on Rating Watch Negative by Fitch Ratings.The affected securities are classes A-2, B-F, B-V, and C. The transaction, a collateralized debt obligation managed by Deerfield Capital Management, is supported by a diversified portfolio of residential mortgage-backed securities, CDOs, commercial MBS, asset-backed securities, corporate debt, and real estate investment trusts, according to the rating agency. Fitch attributed the watchlist placement to deteriorating collateral quality that has reduced overcollateralization. Fitch can be found online at http://www.fitchratings.com.

Two classes of MESA 2002-1 Global Issuance Co. have been downgraded by Moody's Investors Service.Class B-1 of the deal was downgraded from Baa2 to Ba1, and class B-2 was downgraded from Ba2 to B3. In addition, Moody's confirmed the rating on one certificate in the deal. The downgrades were based on "the weak performance of the underlying security as well as the reduced level of credit enhancement provided by the overcollateralization and the subordinated classes relative to the current projected losses," the rating agency said. The transaction is a resecuritization backed by another residential mortgage-backed security.

Citing a significant increase in the number of rated loan servicers and the amount of data the servicers provide to the rating agency, Moody's Investors Service is augmenting its servicer ratings with "plus" and "minus" signs to provide further differentiation.When added to Moody's SQ (servicer quality) ratings, the new plus modifier will indicate that the servicer ranks at the higher end of the designated rating category, while the minus modifier will indicate that a servicer ranks in the lower end of the category, the rating agency said. The changes apply to all Moody's SQ ratings across all asset classes within asset-backed securities and residential mortgage-backed securities. Moody's currently rates more than 40 servicers on a scale from SQ1 (strong) to SQ5 (weak).

Three classes of subordinated tranches from three mortgage-backed securitizations issued in 2002 by Credit Suisse First Boston Mortgage Securities Corp. have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2002-AR8, class C-B-4, from Ba3 to B1; series 2002-AR28, class III-M-2, from A2 to Baa2; and series 2002-AR31, class VII-M-2, from A2 to Baa2. In addition, Moody's upgraded 35 classes of mezzanine and subordinated tranches from nine CSFB transactions and confirmed the rating of one subordinate tranche. The downgraded classes "suffer primarily from the performance of the underlying loans, with cumulative losses exceeding our original expectations," Moody's said. The pools are jumbo-A/alternative-A first-lien adjustable-rate loans. The rating agency can be found on the Web at http://www.moodys.com.

The Washtenaw Group Inc., a holding company for Washtenaw Mortgage Co., a wholesaler based in Ann Arbor, Mich., has reported a net loss of approximately $1.7 million ($0.37 per share) for the first quarter, compared with a net loss of $3.1 million ($0.69 per share) a year earlier.Mortgage origination volume totaled $169 million in the first quarter, down 57% from $394 million in the first quarter of 2004. Charles C. Huffman, chairman and chief executive officer of Washtenaw, noted that the company has introduced "many of the newest mortgage products," such as zero-downpayment, interest-only, and alternative-A loans. "In fact, we are expanding the criteria for alt-A mortgages to cast a wider net and attract additional borrowers," he said. "We are well positioned from product, personnel, and technology standpoints to take advantage of any uptick in business activity."

The variable-rate class A insured notes of seven GMACCM Mortgage Trust I deals have been downgraded from AAA to AA-plus by Fitch Ratings as a result of a downgrade of the insurance company that provided credit enhancement for the transactions.The affected transactions were as follows: series 1999-A, 1999-B, 1999-C, 1999-D, 1999-E, 1999-F, and 1999-G. Fitch said the ratings reflect the credit enhancement provided by insurance policies issued by American International Specialty Lines Insurance Co., an indirect wholly owned subsidiary of American International Group Inc. The subsidiary was downgraded by Fitch, and the ratings on the transactions are "solely dependent upon the underlying credit of the insurance policy provider," Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Meanwhile, RealtyTrac, another online foreclosure marketplace based in Lake Forest, Calif., has reported that the number of new properties in some stage of foreclosure accelerated in March.The company's Monthly U.S. Foreclosure Market Report indicates that approximately 62,400 new foreclosure properties were added to the rolls in March, a 17% increase from the February number. "While some of the increase can be attributed to new counties in our coverage area, foreclosures clearly increased from February to March," said Jim Saccacio, RealtyTrac's chief executive officer. "We'll be watching the April numbers very carefully to see if this is the beginning of a trend, or a one-month aberration." The company said five states accounted for more than 45% of all March foreclosures: Florida, Utah, Georgia, Texas, and Colorado. RealtyTrac can be found online at http://www.realtytrac.com.

The nationwide inventory of foreclosed residential properties declined 5% in April, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.There were 27,417 new foreclosed residential properties listed in the United States in April, and such properties totaled 76,786 overall, the company reported. "The slight decrease in foreclosure inventory represents a stabilization in the housing market over the last month," said Brad Geisen, president and chief executive officer of Foreclosure.com. "The continued high inventory reflects the current interest rates and the leveling off of home values. Foreclosures remain prevalent in areas of the country where home values continue not to rise, such as Georgia, Indiana, Ohio, Texas, and Michigan." The company can be found online at http://www.foreclosure.com.

The Securities and Exchange Commission's disclosure rules for asset-backed securities, which servicers must comply with beginning Jan. 1, 2006, were adopted to deal with the fact that "one size does not fit all asset classes," according to Jennifer Williams, an attorney adviser with the SEC's Office of Rulemaking.Speaking at the Mortgage Bankers Association's Asset Administration and Technology conference in Chicago, Ms. Williams noted that while the rules were effective as of March, a transition period is in effect during which the disclosures are voluntary. Ms. Williams clarified that servicers need not disclose all their procedural details and that disclosures are limited to "what a reasonable investor would find material." For instance, facts relating to a servicer's operating policies that are immaterial to investors need not be disclosed. In addition, "sensitive pricing information" doesn't need to be disclosed. This means that a servicer has to make a judgment call, she noted. If a servicer does not disclose something that turns out to be material, she advised that the best course of action would be to contact the SEC staff in the post-offering period.

If the Terrorism Risk Insurance Act is not extended this year, there could be a bigger impact than was felt immediately after 9/11, according to Daniel Rubock, a vice president/senior credit officer with Moody's Investors Service.Speaking at a panel session at the Mortgage Bankers Association's Asset Administration and Technology conference in Chicago, Mr. Rubock noted that about 50%-75% of properties have conditional terrorism coverage and so a large chunk of it could disappear, creating a market disruption. If they want borrowers to get stand-alone coverage, servicers could cite court decisions favoring lenders, he said. Erin Stafford, a senior vice president with Dominion Bond Rating Service, said her company is adopting a "cautious approach," taking into account the possibility that the coverage may not be extended. Stephanie Petosa, a senior director at Fitch Ratings, said the rating agency is reviewing fusion deals (which combine large deals with smaller ones) and finding that larger trophy properties do have stand-alone terrorism coverage. Kathy Marquardt, senior vice president at GMAC Commercial Holding Corp., said the servicer community "doesn't want to deal with this." Some pooling and servicing agreements are requiring special servicers of "B" pieces to make decisions, she said.