Servicing

Moody's Investors Service has downgraded Long Beach Asset Holdings Corp. CI 2006-WL2NIM notes, series 2006-WL2, class N-2, to A3 from Aa3. "These securities have been downgraded based upon performance of the underlying transactions that has negatively impacted future residual payments to the NIM holders as well as the downgrade of the insurance provider," Moody's said. The deal's performance "relies on excess spread and prepayment penalties generated by the underlying residential mortgage-backed securities and an insurance policy provided by Radian," according to the ratings agency.

The California Reinvestment Coalition says mortgage servicers and lenders are still not working with borrowers who need loan modifications in order to keep their homes. In a third survey of California mortgage counseling agencies servicing homeowners statewide, CRC said it found that despite lenders' promises to help borrowers, foreclosure is still the most common outcome for homeowners struggling to make mortgage payments. "With little accountability, obligation, or oversight, home loan servicers are not doing enough to keep borrowers in their homes," says Kevin Stein, CRC associate director. "For some borrowers, this may mean that they will be doubly victimized by predatory lending practices on the front end, and now by unhelpful loan servicing practices that lead to foreclosure on the back end. We must work immediately and diligently towards solutions to avoid this result." CRC released the report "The Continuing Chasm Between Words and Deeds III," at a press conference held at counseling agency in Stockton, Calif. The report analyzes a survey of 42 mortgage counseling agencies that served 11,062 borrowers in April 2008.

Hope Now servicers helped nearly 170,000 at-risk borrowers stay in their homes in May, but they could not keep up with the record pace of workouts (185,000) completed in April. Nevertheless, Hope Now executive director Faith Schwartz says the pace of workouts is accelerating and the second quarter tally will exceed first quarter workouts. The second quarter results are going to "blow away" the first quarter, said Hope Now advisor Stan Collender. The May data shows that the servicers completed 67,300 loan modifications for prime and subprime borrowers in May, compared to 77,400 in April. Hope Now also reported that 83,000 families lost their homes in foreclosures in May. The Center for Responsible Lending claims that the Hope Now initiative is failing to keep up with the accelerating foreclosure crisis. "Delinquencies and foreclosures keep going up and tens of thousands of loans 'fixed' voluntarily by the industry have already gone bad," CRL executive director Debbie Goldstein said.

Mortgage companies hired 1,500 full-time employees in May, ending 14 consecutive months of workforce reductions, and it could be a sign that the jobs drain may be ending soon. The U.S. Bureau of Labor Statistics reported Friday that employment in the mortgage banker/broker sector rose from 356,300 in April to 357,800 in May. A Mortgage Bankers Association economist expects to see more layoffs over the next few months. However, MBA senior director of economic forecasting Orawin Velz says industry employment could bottom out around 348,000. The previous uptick in mortgage jobs was in February 2007 when the industry had 489,800 employees. Since then, 132,000 people have lost their jobs or left the industry.

Five classes of notes in North Street 2000-2 Ltd., a subprime mortgage-related collateralized debt obligation, have been downgraded by Fitch Ratings. The downgrades were as follows: tranche A, from AA-minus to B; tranche B, from BBB-plus to CCC; tranche C, from BBB-minus to CC; tranche D, from BB-plus to CC; and tranche E, from CCC/DR4 to CC/DR4. Fitch said the downgrades stemmed from higher loss expectations in the subprime residential mortgage-backed securities portion of the partially funded synthetic CDO portfolio. Fitch can be found online at http://www.fitchratings.com.

Seven classes from six net-interest-margin securities issued by Nomura Asset Acceptance Corp. have been downgraded by Moody's Investors Service. The downgrades were as follows: Cayman Nomura Asset Acceptance Corp. NIM series 2005-S3, class A, from A3 to C, and series 2006-S5, class N1, from A1 to C, and class N2, from Baa1 to C; Nomura Asset Acceptance Corp. Trust NIM 2005-S4, class A, from Baa2 to C, NIM 2006-S1, class A, from Baa2 to C, NIM 2006-S3, class A, from Baa2 to C, and NIM 2007-S1 class N1, from A1 to C. The downgrades were based on "high levels of delinquency and loss in the underlying second-lien mortgage-backed transactions that [have] rendered any future residual payments to the NIM securities unlikely," Moody's said. The transactions rely on excess spread and prepayment penalties generated by the underlying residential mortgage-backed securitizations.

Sixteen tranches issued from four transactions issued by C-BASS Mortgage Loan Asset-Backed Certificates have been downgraded by Moody's Investors Service. The collateral consists primarily of first-lien adjustable-rate and fixed-rate "reperforming" and seasoned mortgage loans. Moody's said the actions are part of the rating agency's wider review of all residential mortgage-backed securities. "Many 'reperforming' pools originated since 2004 are exhibiting higher-than-expected rates of delinquency, foreclosure, and [real estate owned]," the rating agency said. Moody's can be found on the Web at http://www.moodys.com.

The percentage of bank home equity lines of credit that were more than 30-days past due rose 14 basis points to 1.10% during the first quarter, according to the American Bankers Association's quarterly delinquency bulletin. That was the highest HELOC delinquency rate since 1997, although HELOC delinquencies remained lower than all other consumer credit categories. For closed-end home equity loans, the delinquency rate actually fell five basis points from the fourth quarter of last year to 2.39% in the first quarter. In addition to housing weakness, overall economic problems also weighed on consumer credit performance in the first quarter, ABA chief economist James Chessen said. "Faced with rising food and gas prices and little income growth, fewer resources have been available to manage debt."

Downey Financial Corp. - which has seen its non-performing assets rise in recent months - said it has "terminated" Frederic R. McGill as president of the holding company and its thrift affiliate, Downey Savings and Loan Association. No reason was given for his departure. Based in Newport Beach, Downey's NPAs (as a percentage of total assets) totaled 14.3% in May compared to 13.2% in April and 1.3% a year earlier. In connection with his dismissal the S&L will make a $900,000 lump sum payment to him. According to Downey, he has agreed "not to solicit any employees, consultants, customers or suppliers of the bank for a period of one year following termination of his employment." Among residential lenders Downey ranks 39th nationwide, according to the Quarterly Data Report.

Reverse Mortgage Solutions, Houston, has reported the completion of a $25 million Ginnie Mae fixed-rate home equity conversion mortgage-backed securitization on which it served as issuer, servicer, and master servicer. Bob Yeary, chief executive officer of RMS, told MortgageWire that Ginnie Mae has identified the transaction as the first reverse MBS on which a single company has taken on all three of the aforementioned roles, something the Houston-based firm's automation helped it to do. World Alliance Financial, the Melville, N.Y.-based affiliate of KBC Bank, Brussels, originated the reverse mortgages in the transaction, Mr. Yeary said.