Servicing

Two classes of Residential Asset Securities Corp. home equity transactions have been downgraded by Fitch Ratings and removed from Rating Watch Negative.Class M-I-3 of RASC series 2001-KS2 group 1 was downgraded from BBB to BB, and class M-I-3 of RASC series 2001-KS3 group 1 was downgraded from BBB to BBB-minus. The rating actions were attributed to a decline in overcollateralization caused by monthly losses that exceeded monthly excess interest.

Nine classes from three IndyMac Home Equity Mortgage Loan Asset Backed Trust securitizations have been downgraded by Moody's Investors Service.The downgrades were as follows: series SPMD 2000-C, class MF-2, from B2 to Ca, and class BV, from B2 to Caa2; series SPMD 2001-A, class AF-5, from Aa2 to A1, class AF-6, from Aa2 to A1, class MF-1, from Baa3 to Ba3, class MF-2, from Caa3 to Ca, class MV-2, from Baa2 to Ba3, and class BV, from Ba2 to B1; and series SPMD 2001-B, class BF, from Baa2 to B2. Class BF of series 2001-B will remain on review for downgrade pending the liquidation of loans classified as real estate owned, Moody's said. The securitizations are backed by subprime mortgage and manufactured housing loans that were originated by IndyMac Bank FSB. The downgrades are due to higher-than-anticipated rates of default on the underlying loans and low rates of recovery on the sale of repossessed manufactured homes, the rating agency said. "The erosion of credit support and continued pipeline of seriously delinquent loans will likely contribute to ongoing weak pool performance," Moody's said.

Eleven mezzanine and subordinated tranches from five fixed-rate mortgage securitizations issued by Credit Suisse First Boston Mortgage Securities Corp. in 2002 have been by Moody's Investors Service.The downgrades were as follows: series 2002-9 group 1, class I-B-3, from Baa2 to Baa3, class I-B-4, from Ba2 to B1, and class I-B-5, from B3 to Caa2; series 2002-10 group 2, class II-B-4, from Ba3 to B2, and class II-B-5, from B3 to Ca; series 2002-18 group 1, class I-M-1, from Aa2 to A1, and class I-M-2, from Baa2 to Caa2; series 2002-19 group 2, class II-M-1, from Aa2 to A2, and class II-M-2, from A2 to Caa1; and series 2002-26 group 3, class III-M-3, from A2 to Baa2, and class III-B, from A3 to Ba1. In addition, Moody's upgraded 29 classes from seven CSFB securitizations and confirmed the ratings on 12 classes from four deals. The downgrades were attributed primarily to cumulative losses that have exceeded original expectations. "Existing credit enhancement levels may be low given the current projected losses on the underlying pools," Moody's said. The rating agency can be found online at http://www.moodys.com.

Prepayment rates for 30-year Fannie Mae mortgage-backed securities were little changed in December, while 30-year Freddie Mac MBS speeds rose modestly, according to Bear Stearns.For Fannie 30-year MBS issues, the aggregate prepayment rate increased by a constant prepayment rate of 0.1 CPR in December, compared with 0.7 CPR for Freddie Mac issues, Bear Stearns analyst Dale Westhoff reported. "These small changes in prepayments reflect the stable mortgage rate environment over the last few months," he said. Speed differentials between Fannies and Freddies decreased in the December report. Freddie Mac MBS speeds were still slower than Fannie Mae's on most new cohorts, but "speeds on seasoned cohorts converged," Mr. Westhoff said. Meanwhile, Ginnie Mae speeds held steady or fell modestly in December. Ginnie Mae "continues to pay faster than conventionals across the entire coupon spectrum, with the biggest gap observed in the lowest coupons," the Bear Stearns analyst reported. Bear Stearns can be found online at http://www.bearstearns.com.

Growth in first-lien home equity loans and in borrowing by senior citizens were among the findings of the annual Consumer Bankers Association Home Equity Lending Study, according to BenchMark Consulting International.Among the study's 23 participants, 37% of originations were first-lien positions rather than the historically dominant second liens. "The growth of these first-lien positions in home equity portfolios indicates this is a good time to ensure specific risks have not been overlooked," said Jim Leath, manager of BenchMark's consumer lending and mortgage banking practice. The finding that seniors represent a growing segment of home equity borrowers, and at higher amounts, was "a bit of a surprise," Mr. Leath said. "Most people think of seniors as nonborrowers," he noted. "The pattern we found here was that rather than drawing on invested, fixed income for non-need spending, seniors are looking more to home equity for vacations, luxury items and other purchases." The survey also found an increase in 90-day-plus delinquencies, which "implies that we may be taking on some hard-core risk," Mr. Leath said. BenchMark, a division of Fidelity Information Services Inc., has dual headquarters in Atlanta and Munich, Germany. It can be found online at http://www.benchmarkinternational.com.

Fannie Mae has announced that it will pass through mortgage-backed securities payoffs (involving 169 MBS pools) that were delayed due to a servicer's failure to report and remit payments to Fannie Mae.The principal payoffs, relating to 234 loans, will be reflected in Fannie Mae's January pool factors, and the government-sponsored enterprise said it will pass through the amount of the principal prepayments on Jan. 25, the next distribution date for the pools. Fannie Mae said some of the 169 MBS pools have been resecuritized into Mega transactions and real estate mortgage investment conduits. "With respect to all affected Fannie Mae REMIC transactions, we have determined that the payoff from the affected MBS pools will reduce the aggregate outstanding principal balance by less than 1%," Fannie Mae said. The same is true of most Mega deals, but Fannie said the payoffs will reduce the balance in 20 Mega transactions by 1% or more. Fannie Mae can be found online at http://www.fanniemae.com.

Mortgage lenders added 4,300 full-time employees to their payrolls in November, according to the December employment report released Jan. 7 by the U.S. Bureau of Labor Statistics.The BLS report shows that jobs in the mortgage banking/broker sector rose from 464,500 in October to 468,800 in November. (There is a one-month lag in BLS reporting of mortgage-sector employment data. The December data will not be released until Feb. 4.) Employment in the mortgage finance sector has been rising since August, and Friday's jobs report indicated that the hiring would continue in December. "Over the year, strength in the housing market continued to stimulate hiring in the [financial services] industry," the BLS said. "Credit intermediation added 9,000 jobs in December, bringing the total to 64,000 for all of the year." Meanwhile, the BLS report showed that the U.S. economy generated 157,000 new jobs in December, and the unemployment rate was unchanged at 5.4%. The BLS can be found online at http://stats.bls.gov.

Class B-1 of Lehman ABS manufactured housing contracts, series 2001-B, has been downgraded from BBB-minus to BB by Fitch Ratings.Fitch also affirmed the ratings on nine other classes in the deal. The downgrade was prompted by high losses and delinquencies and declining credit enhancement, the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla., says the number of foreclosure properties available for sale in the U.S. reached a 2004 peak in December.The company reported that 34,446 new foreclosed residential properties were listed for sale during December, and the total number of residential foreclosure properties available for sale rose to 83,573. Despite the spike in the foreclosure inventory near the end of 2004, Foreclosure.com president Greg Sullivan predicts that declining delinquency rates and strong economic indicators "will likely result in a dip in new foreclosure inventory during 2005." The company can be found online at http://www.foreclosure.com.

Home equity loan delinquencies increased to 2.82% in the third quarter of last year, up from 2.50% three months earlier, according to the American Bankers Association.While overdue payments rose on closed-end home equity loans held by banks, the delinquency rate for home equity lines of credit remained unchanged at 0.38%, according to the ABA's quarterly consumer delinquency bulletin. "Moreover, with mortgage refinancings hitting a four-year low, consumers' ability to consolidate debt at lower interest rates and take advantage of equity appreciation in their homes was severely limited," he said. The ABA can be found on the Web at http://www.aba.com.