Servicing

Eleven classes of GE Home Equity mortgage pass-through certificates have been downgraded by Fitch Ratings, and one class has been placed on Rating Watch Negative.The downgrades were as follows: GE Home Equity 1996-HE4, class B-1, from CCC to D; series 1997-HE2, class B-1, from BB to CCC; series 1997-HE3, class B-1, from A to A-minus, and class B-2, from BB to B; 1997-HE4, class B-1, from A to BBB, class B-2, from BB to B, and class B-3, from CCC to D; series 1999-HE1, class B-2, from BBB to BBB-minus, class B-3, from BB to B-minus, and class B-4, from CCC to D; and series 1999-HE3, class B-4, from B to CCC. Class B-3 of series 1999-HE3 was placed on Rating Watch Negative, and class M of series 1996-HE4 remains on Rating Watch Negative. In addition, the ratings on 13 classes of the six deals were affirmed. The rating agency attributed the actions to loss levels and high delinquencies in relation to applicable credit support levels. Fitch can be found online at http://www.fitchratings.com.

Freddie Mac plans to take a $225 million ($0.21 a share) pretax charge in the fourth quarter for a donation to its charitable foundation and other causes. The charge reflects operating earnings, not net earnings.The company, which is having a spectacular year, will release fourth-quarter earnings by the end of January. In the third quarter, Freddie Mac posted net earnings of $1.37 billion. It's quite likely that even with the $225 million charge, the company will earn well over $1 billion in the fourth quarter. Of the $225 million, $205 million is going to the Freddie Mac Foundation (which focuses solely on "children at risk" issues), while the balance is going to charitable causes in the greater Washington metropolitan area. In the fourth quarter of last year, Freddie Mac's chief competitor, Fannie Mae, took a similar charge ($300 million/$0.21 a share) to fund its charitable arm. Freddie Mac's chairman and chief executive officer, Leland Brendsel, serves as chairman of the foundation's board. Freddie Mac can be found on the Web at http://www.freddiemac.com.

Prepayment rates for agency mortgage-backed securities were mixed in the November reporting period, suggesting that speeds have peaked and should begin to slow broadly in December, according to the Bear Stearns Prepayment Commentary.Speeds of 30-year 6.0% coupons and 2002 vintage 6.5% coupons rose by 5%-10%, while those of other coupons either held steady or slowed modestly, said analysts Dale Westhoff and Bruce Kramer. "Given that a top in the numbers is established with today's report, we anticipate a positive reaction by MBS investors as they gain a much clearer perspective as to the timing and magnitude of future cashflows," the analysts said. The fastest-paying cohort continued to be the 2000 vintage Freddie Mac 7.0% coupon, which peaked in October at a constant prepayment rate of 77 CPR and slipped to 73 CPR in November, they reported. The Bear Stearns analysts said the lag time between peak application flow and peak prepayments apparently increased from four weeks to five weeks in this cycle, a little less than expected. But they predicted that prepayments may decline more gradually than in the past "as lenders increase their commitment periods to handle the massive application volume." Bear Stearns can be found online at http://www.bearstearns.com.

First Republic Bank, San Francisco, has completed the sale of approximately $374 million of asset-backed securities supported chiefly by adjustable-rate residential mortgage loans.The securitization was managed by RBS Greenwich Capital. The co-managers were Salomon Smith Barney; Keefe, Bruyette & Woods; Sandler O'Neill & Partners; and First Republic Securities Co. The bank can be found on the Web at http://www.firstrepublic.com.

Martin F. Leibowitz, vice chairman and chief investment officer of TIAA-CREF, has been elected to the board of directors of Freddie Mac.Before joining TIAA-CREF in 1995, Mr. Leibowitz was employed by Salomon Brothers for 26 years. His last position there was managing director and director of research. TIAA-CREF is an investor in equity and fixed-income securities, including Freddie Mac's. The government-sponsored enterprise also reported the resignation from the board of James F. Montgomery, one of Freddie Mac's original board members. Freddie Mac can be found on the Web at http://www.freddiemac.com.

The limited-guarantee B-2 classes of 45 securitizations of manufactured housing contracts by Conseco Finance Corp. and Green Tree Financial Corp. have been downgraded to C by Fitch Ratings.One of the classes (from CFC 2000-1) was downgraded from CCC to C, and the other 44 (from various GTFC deals) were downgraded from CC to C, the rating agency said. Conseco Finance was downgraded from CC to D (default) by Fitch on Dec. 4. "The rating action follows Conseco Finance's failure to make required guarantee payments to 10 of its MH transactions on Dec. 2, 2002," Fitch said. "Conseco Finance has indicated that it intends to suspend all such future guarantee payments relating to MH trusts until there is resolution to the restructuring of its MH business." The rating agency can be found online at http://www.fitchratings.com.

Fairbanks Capital Corp., Salt Lake City, and Consumer Credit Counseling Service of San Francisco have announced an agreement to provide free counseling to homeowners whose loans are serviced by Fairbanks and have become delinquent.Fairbanks, a leading subprime mortgage servicer, will refer the homeowners to CCCS's Housing Education Program for a financial assessment, debt and income analysis, and a budgeting and payment plan, Fairbanks said. The PMI Group Inc., which holds a majority interest in Fairbanks, will support the arrangement with a two-year, $100,000 grant to CCCS to cover start-up and other expenses. "Because Fairbanks frequently handles loans that have a higher risk of default or a history of delinquency, we wanted to find an innovative way to not only get these loans on track, but provide a real benefit to our homeowners," said Tom Basmajian, chairman and chief executive officer of Fairbanks. Fairbanks can be found on the Web at http://www.fairbankscapital.com.

Eight classes in five CWMBS Countrywide Home Loans mortgage pass-through deals have been downgraded by Fitch Ratings, and five have been placed on Rating Watch Negative.The downgrades were as follows: class B-4 of CWMBS 2000-2, from B to CCC; class B-3 of CWMBS 2000-4 (Alt 2000-1), from BB to BB-minus and placed on Rating Watch Negative; class B-4 of CWMBS 2000-4 (Alt 2000-1), from B to C; class B-3 of CWMBS 2001-4 (Alt 2001-3), from BB to B and placed on Rating Watch Negative; class B-4 of CWMBS 2001-4 (Alt 2001-3), from B to D; class B-4 of CWMBS 2001-8 (Alt 2001-5), from B to CC; class B-3 of CWMBS 2001-14, from BB to B and placed on Rating Watch Negative; and class B-4 of CWMBS 2001-14, from B to C. In addition, the B-3 classes of CWMBS 2000-2 and 2001-8 (Alt 2001-5) were placed on Rating Watch Negative. The rating agency said the actions stemmed from loss levels and high delinquencies relative to the applicable credit support levels. Fitch's website address is http://www.fitchratings.com.

The National Association of Professional Insurance Agents has asked the Federal Insurance and Mitigation Administration to seek an executive order from President Bush to keep the National Flood Insurance Program operating after Dec. 31.Because Congress adjourned without reauthorizing the program, the NFIP may not be able to issue new policies, which are required for a mortgage loan for homes located within designated flood hazard areas, after the end of the year. The insurance agents and other groups are seeking ways to keep the flood program operating without interruption.

Fitch Ratings has raised Bank of America Mortgage's residential mortgage servicing ratings.BofA's residential primary servicer rating has been upgraded to RPS1 from RPS1-minus for prime quality loans. Fitch also assigned BofA an RPS1-minus rating for servicing alternative-A loans. Bank of America Mortgage has integrated a Greensboro, N.C., consumer loan platform into its Buffalo, N.Y., and Louisville, Ky., servicing centers to promote cross-selling opportunities and increase its focus on customer service and retention, Fitch said. As of Aug. 31, the company serviced $274.4 billion of home loans for more than 2.5 million customers.