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Rising interest rates and weak real estate fundamentals are unlikely to substantially affect the performance of longer-term hybrid adjustable-rate mortgage loans, according to Fitch Ratings.Noting that the product is "still fairly new" and has not been tested during an extended period of rising rates, Fitch said it "anticipates that longer-term hybrid ARM loans will continue performing on par with their prime jumbo fixed-rate mortgage counterparts." Prime jumbo ARMs with a five-year fixed-rate period or longer have performed comparably to prime jumbo FRMs "due largely to comparable underwriting guidelines and borrower credit characteristics," the rating agency said. Additionally, long-term hybrid ARMs are less similar to standard ARMs because the latter have shorter or no initial fixed-rate periods and are more likely to appeal to borrowers solely for reasons of affordability, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Saxon Capital Inc., Glen Allen, Va., has announced a $1.2 billion securitization of conforming and nonconforming mortgage loans by a subsidiary.The $1.2 billion of notes were issued by Saxon Asset Securities Trust 2004-2. The assets of the trust include three groups of mortgage loans secured by one- to four-family residential properties, Saxon said. The lead manager of the deal is Credit Suisse First Boston, and the co-managers are Merrill Lynch & Co., J.P. Morgan, and RBS Greenwich Capital. Saxon Capital can be found on the Web at http://www.saxoncapitalinc.com.

Nine classes from eight Delta Funding Corp. mortgage-backed securities issues have been downgraded by Fitch Ratings and two classes have been placed on Rating Watch Negative.The downgrades were as follows: series 1997-2, class B-3, from B to CCC; series 1997-3 group A, class B-1A, from B-minus to CCC; series 1999-2, class B, from BBB-minus to B; series 1999-3, class B, from BBB-minus to B; series 2000-1, class B, from BBB-minus to BB-minus; series 2000-2, class B, from B-minus to C; series 2000-3, class B, from BBB to BB-minus; and series 2000-4, class M-2, from A to BB, and class B, from CC to C. Class M-2 of series 1997-2 and class B-1A of series 1998-1 group A were placed on Rating Watch Negative. In addition, Fitch affirmed the ratings on 61 classes from 13 Delta Funding transactions. The rating agency attributed the negative rating actions to high delinquencies and a deterioration of credit enhancement. Fitch can be found online at http://www.fitchratings.com.

Fog Cutter Capital Group Inc., Portland, Ore., has announced the resignation of Ernst & Young LLP as the company's independent auditor, but it stressed that there were no serious accounting disagreements between the two entities.Fog Cutter gave no reason for the auditor's resignation, but it said E&Y's reports on the company's financial statements in the past two years contained no adverse opinions, disclaimers, or qualifications based on uncertainty, the scope of the audits, or accounting principles. The company added that there were no disagreements with E&Y on any accounting principles or practices, or disclosures, that would have caused the auditor to cite the disagreements had they not been resolved. The Audit Committee of Fog Cutter's board of directors has begun a search for a new auditing firm.

Class B of Truman Capital Mortgage Loan Trust series 2002-1 has been downgraded from BBB to BB by Fitch Ratings.The downgrade was attributed to higher-than-expected losses that have reduced overcollateralization. The rating agency can be found online at http://www.fitchratings.com.

The Chicago Federal Home Loan Bank has reported a 4.3% drop in earnings for the second quarter, and the numbers indicate that its mortgage purchase business nearly dried up.The Chicago FHLBank, which developed the Mortgage Partnership Finance program, posted $94.2 million in earnings for the second quarter, compared with $98.5 million in the second quarter of 2003. The bank also reported that the growth of its $49.1 billion MPF portfolio slowed to an annual rate of 3.9% in the first half of the year, and it added only $500 million in single-family loans to its MPF portfolio in the second quarter. Under a supervisory agreement with its federal regulator, the Chicago bank must limit the growth of the portfolio to 10% a year. "Given the low origination volumes, the bank fully anticipates meeting its members' funding demands for MPF loans," the Chicago FHLBank said.

Fives classes of securities issued by E*Trade ABS CDO I Ltd. and E*Trade ABS CDO I LLC and supported in part by residential and commercial mortgage-backed securities have been placed on Rating Watch Negative by Fitch Ratings.The affected securities are as follows: class B third-priority secured floating-rate notes due 2037; classes C-1 and C-2 mezzanine secured floating-rate notes due 2037; $12.5 million of preference shares due 2037; and approximately $4.9 million of composite securities due 2037. The collateralized debt obligation is supported by RMBS, CMBS, CDOs, and asset-backed securities, Fitch said. The rating agency said a June 30 trustee report on the transaction indicates that 0.86% of the portfolio had defaulted. "The portfolio default and rating performance has increased the risk to the notes to a point where the risk may no longer be consistent with their respective ratings," Fitch said.

Four classes of Structured Asset Mortgage Investments mortgage pass-through certificates have been downgraded by Fitch Ratings, and one has been placed on Rating Watch Negative.The downgrades were as follows: series 1999-2 group 3, class 3-B4, from BB to B, and class 3-B5, from B to C; series 1999-4, class B3, from B to C; and series 2000-1 group 3, class III-B5, from BB to B. Class III-B4 of series 2000-1 group 3 was placed on Rating Watch Negative. In addition, Fitch upgraded five SAMI classes and affirmed the ratings on 20 others. The downgrades and Rating Watch placement were attributed to losses and loss expectations on "severely delinquent" loans in the pipeline, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Freddie Mac has announced the deadline for submitting stockholder proposals for inclusion in the proxy statement for its annual stockholders' meeting in November.To be considered for inclusion in the proxy statement, stockholder proposals must be submitted in writing to Freddie Mac and received by Aug. 27, the government-sponsored enterprise said. Submissions should be sent to Corporate Secretary, Freddie Mac, 8200 Jones Branch Drive MS 200, McLean, Va. 22102. Procedural requirements for submissions can be found on Freddie Mac's website.

Freddie Mac's mortgage portfolio grew at a 19.4% annual rate in June, compared with 4.6% in May, which means the giant mortgage company has reported two months of positive numbers after watching its portfolio shrink for several quarters.Freddie reported that loan purchases for its portfolio totaled $27.7 billion in June, up from $21.9 billion in May. The mortgage portfolio had total assets of $645.2 billion as of June 30. Fannie Mae also recently reported its monthly loan volume, which showed that its mortgage portfolio grew at an annualized rate of 19.0% in June, compared with a negative 2.8% rate in May. Fannie said loan purchases for its portfolio totaled $37.2 billion in June, compared with $26.7 billion in May. Fannie's mortgage portfolio had total assets of $891.2 billion at the end of June. The two government-sponsored enterprises can be found online at http://www.freddiemac.com and http://www.fanniemae.com.