Servicing

Eight classes from four Credit Suisse First Boston Mortgage Securities Corp. issues of mortgage-backed pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: CSFB series 2002-5 group 4, class IVB5, from BB to B, and class IVB6, from B to CC; CSFB series 2002-18 group 2, class IIB5, from BB to CCC, and class IIB6, from B to C; CSFB series 2002-22 groups 3 and 4, class DB4, from BB to B, and class DB5, from B to CC; and CSFB series 2002-24 group 1, class IB4, from BB-minus to B-minus, and class IB5, from B-minus to C. In addition, Fitch upgraded seven CSFB classes and affirmed the ratings on 25 classes. The downgrades "reflect the deterioration of credit enhancement relative to consistent or rising monthly losses," the rating agency said. Despite mortgage insurance coverage, the subordinate classes "will not be able to sustain the significantly high monthly losses at the current ratings," Fitch said. The rating agency can be found online at http://www.fitchratings.com.

First American Real Estate Information Services has unveiled LienWatch, a new product designed to help mortgage servicers by providing advance warning of borrower default on second mortgages.Because the first-lien holders take precedence in the event of foreclosure, holders of second liens are exposed to a much greater risk of loss. First American said this is the first tool designed to provide servicers with an early warning to help them manage second-lien portfolios and minimize losses. The service will alert second-lien servicers about any foreclosure action taken on the first lien and provide other data about the first mortgages on the property. The First American Corp., the parent company of First American Real Estate Information Services, can be found online at http://www.firstam.com.

Entrust Financial Services, a Denver-based mortgage banking company, has announced a stock purchase agreement under which Entrust Mortgage will become a subsidiary of BBSB LLC and after which Entrust Financial will have only nominal assets.Entrust Financial said the agreement provides that BBSB will buy all issued and outstanding shares of Entrust Mortgage in exchange for the cancellation of all Entrust Financial's obligations to BBSB and Entrust Mortgage and the assumption of certain obligations of Entrust Financial to third parties. Entrust Financial "has been unable to secure sufficient additional capital or enter into a transaction with a strategic partner that would allow the company to continue its operations," the company said. Entrust Financial said its board will continue to analyze the company's strategic options after the stock sale. The company can be found online at http://www.entrustfs.com.

The nationwide inventory of foreclosed residential properties declined 7% in February, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.There were 18,824 new foreclosed residential properties listed in the United States in February, and such properties totaled 72,877 overall, the company reported. "Following a year of heavy growth in foreclosure inventory in many parts of the country, foreclosures have leveled off in the first two months of 2005," said Brad Geisen, president and chief executive officer of Foreclosure.com. "The 7% drop in both new and total foreclosures in February can largely be attributed to the short month." The company can be found online at http://www.foreclosure.com.

Mortgage companies that favor slashing the Fannie Mae/Freddie Mac minimum servicing fee will look to "alternative" measures to help manage their housing receivables if the two GSEs don't make a change, according to the Mortgage Bankers Association.In a new report that discusses the pros and cons of slashing the fee, the MBA says that among its members there "has been little discussion" about a compromise over the issue. In February, the MBA held a private, members-only forum on whether the government-sponsored enterprises should cut the minimum servicing fee from the current 25 basis points to 12.5 bps. Seller/servicers that favor a cut say they would save millions of dollars a year in hedging costs if more of the servicing "strip" were allowed to be sold into the secondary market. Those who want to maintain the status quo have cited expensive servicing technology maintenance costs that need to be recouped, loan buyback concerns, and compliance costs, among other reasons. Fannie and Freddie are considering reducing the minimum servicing fee, but no action is imminent, industry sources have told MortgageWire.

Class B of Industry Mortgage Corp. home equity loan pass-through certificates, series 1998-1, has been downgraded from CCC to C by Fitch Ratings.The rating agency also affirmed the ratings on 17 other classes from four IMC HEL transactions. The downgrade was attributed to poor collateral performance. "Class B is experiencing monthly writedown as a result of monthly loan losses," Fitch said.

Class B of ABFC mortgage loan asset-backed certificates, series 2001-AQ1, has been downgraded from Baa2 to Ba2 by Moody's Investors Service.Moody's also upgraded four classes and confirmed one class from Ameriquest Mortgage Co. asset-backed securitization deals from 2001. The transactions consist of fixed-rate and adjustable-rate first-lien subprime mortgage loans. Ameriquest is the servicer and the originator on the transactions. The downgrade was attributed to credit enhancement levels that were deemed to be low given the projected losses on the underlying pools. "The transaction has taken losses, and pipeline loss could cause eventual erosion of the overcollateralization," Moody's said. The rating agency can be found online at http://www.moodys.com.

Fitch Ratings has upgraded the residential primary servicer ratings of Select Portfolio Servicing Inc. (formerly Fairbanks Capital Corp.), Salt Lake City.The servicer ratings were upgraded as follows: for alternative-A loans, from RPS3 to RPS2-minus; for subprime and home equity loans, from RPS3-minus to RPS2-minus; and for special servicing, from RSS3 to RSS2-minus. The upgrades "reflect sustained improvements based on process and procedural changes initiated by SPS to correct deficiencies noted during Fitch's prior reviews in addition to those detailed in the November 2003 settlement with the Federal Trade Commission and the Department of Housing and Urban Development," Fitch said. Among the changes cited by Fitch are the restructuring of the senior management team; systems upgrades; compliance training; increased frequency and scope of internal audits; and the development of a consumer assurance review department, which reviews each loan prior to foreclosure referral.

Prepayment rates for 30-year Fannie Mae and Freddie Mac mortgage-backed securities rose modestly in February, according to Bear Stearns & Co.For Fannie 30-year MBS issues, the aggregate prepayment rate increased by 4.7% in February, compared with an increase of 10% for Freddie Mac issues, Bear Stearns analyst Dale Westhoff reported. "The biggest surprise in Friday's numbers was that [Fannie Mae] prepayments on premium coupons (6.0s and higher) were virtually unchanged from January levels," Mr. Westhoff said. He added that the 7% rise in the speeds of Freddie Mac premium coupons was more in line with expectations. The analyst said the recent rise in the 30-year mortgage rate and the flattening of the yield curve augurs a retreat in the Mortgage Bankers Association's Refinance Index to the 1700 level. "Barring another rally, we expect the mortgage prepayment curve to flatten as well (beginning with the April report), with discount speeds supported by strong spring/summer seasonal effects while premium speeds compress under a flatter curve and diminished refinancing demand." Bear Stearns can be found online at http://www.bearstearns.com.

General Electric, Fairfield, Conn., has announced that it will sell 82 million class A shares of the common stock of Genworth Financial, Richmond, Va.In addition, Genworth will purchase between $400 million and $500 million of class B common stock directly from GE. The sales will leave GE as the 51% share owner of Genworth, whose mortgage insurance subsidiary is headquartered in Raleigh, N.C. GE said the sale proceeds will be used to eliminate the "parent-supported" debt at its GE Capital unit and enable GE Capital to increase the dividend it pays to GE from 10% of its earnings to 40% starting in the second quarter. The global coordinator and bookrunner for the offering is Morgan Stanley, with J.P. Morgan and Merrill Lynch as joint lead managers and bookrunners. The initial public offering in May 2004 spun off 30% of Genworth to the public. As of 11 a.m. on March 7, the day the companies made the announcement, Genworth's shares were trading at $28.58, $0.17 down on the day, after opening at $0.50 down.