Servicing

Freddie Mac has announced the renewal of an alliance agreement with the Credit Union National Association. The alliance provides participating credit unions with a comprehensive set of technological services, mortgage products, and correspondent lending, such as Freddie Mac's borrower outreach initiatives, according to the government-sponsored enterprise. "With the current economic climate, this renewed alliance ensures that credit unions will continue to have options to succeed in the mortgage lending market, including affordable lending solutions to meet the needs of low- to moderate-income borrowers," said Wes Millar, senior vice president of CUNA Strategic Services. The alliance provides expanding execution and mortgage product options; customized learning opportunities, such as assistance and training on low-downpayment mortgages; and technological advantages such as Freddie Mac's Loan Prospector automated underwriting service and a business-to-consumer website for online mortgage lending. Freddie can be found online at http://www.freddiemac.com.

Fasthold Capital Inc., Orange, Calif., has announced the raising of more than $300 million in committed capital to acquire distressed mortgage assets as a principal investor. Fasthold Capital offers mortgage loan acquisition services that provide capital to companies with distressed assets; advisory services for the liquidation of the assets; and asset servicing systems to help homeowners get through the current real estate crisis. "In a time where some people are using the current real estate crisis to take advantage of customers, we have been successful in building a business based on our commitment to dealing fairly and honestly with our customers and successfully completing transactions," said John Duden, managing partner at Fasthold Capital. The company can be found online at http://www.fastholdcapital.com.

U.S. home prices fell nationally by a record 15% in April from the level recorded a year earlier, according to the S&P/Case-Shiller home price index. All 20 of the metropolitan areas tracked by the Case-Shiller index are now showing home price declines on an annualized basis. In 12 of the 20 metropolitan areas, prices have declined for eight consecutive months. Las Vegas and Miami continued to have the most severe home price deterioration over the previous 12 months. In a report with few bright spots, Case-Shiller found that the rate of annual price declines moderated in markets such as Chicago, Cleveland, and Denver in April. "If there is anywhere to look for possible improvement, it would be that the pace of monthly declines has slowed down for most of the markets," said David Blitzer, chairman of the index committee at Standard & Poor's. Separately, the Office of Federal Housing Enterprise Oversight reported that home values fell 0.8% from March to April, based on OFHEO's repeat home sales price index. OFHEO estimates a smaller 12-month decline than the Case-Shiller index, calculating that home values declined by 4.6% from April 2007 to April 2008. S&P can be found on the Web at http://www.standardandpoors.com.

Moody's Investors Services has downgraded some insurance financial strength ratings of U.S. and United Kingdom entities with ties to bond insurers FGIC Corp. and Security Capital Assurance, citing concerns linked to their mortgage-related exposures. The downgraded IFSRs are those of FGIC's main operating subsidiaries, Financial Guaranty Insurance Co. and FGIC UK Ltd. (from Baa3 to B1), and SCA's subsidiaries XL Capital Assurance Inc., XL Capital Assurance (U.K.) Ltd., and XL Financial Assurance Ltd. (from A3 to B2). Moody's also downgraded the senior debt ratings of FGIC Corp. from B3 to Caa2 and the contingent capital securities ratings of Grand Central Capital Trusts I-IV from B2 to B3. In addition, the rating agency downgraded SCA Ltd.'s debt ratings for its preference shares from B3 to Ca. Moody's can be found online at http://www.moodys.com.

Freddie Mac has announced that it will continue to treat Mortgage Guaranty Insurance Corp., PMI Mortgage Insurance Co., and Radian Guaranty Inc. as Type I insurers under its eligibility requirements for private mortgage insurers. The announcement followed Freddie Mac's review of the companies' business and financial remediation plans. The companies have said they are implementing the plans in an effort to regain double-A ratings from one or more rating agencies. Triad Guaranty Inc. recently reported that Freddie Mac had denied the appeal of its suspension as an approved mortgage insurer, and reported that its mortgage insurance subsidiary, Triad Guaranty Insurance Co., would cease issuing commitments for mortgage insurance as of July 15 and be transitioned into runoff.

Six classes of notes issued by Bonifacius Ltd. and Bonifacius LLC, which together constitute a collateralized debt obligation consisting partly of subprime mortgage-backed securities, have been downgraded by Fitch Ratings. The downgrades were as follows: classes A-1M and A-1Q, from BBB to CC/DR4; class A-1J, from BB to C/DR6; class A-2, from B-minus to C/DR6; class A-3, from CCC to C/DR6; and class A-4, from CC to C/DR6. Fitch also assigned Distressed Recovery ratings of DR6 to classes B, C, and D. The downgrades were attributed to "significant collateral deterioration" in the portfolio, especially subprime residential MBS, alternative-A RMBS, and structured finance CDOs with exposure to subprime RMBS. Fitch can be found on the Web at http://www.fitchratings.com.

The ratings of 108 tranches from 10 payment-option adjustable-rate mortgage transactions issued by Bear Stearns have been downgraded by Moody's Investors Service. Forty-eight tranches remain on review for possible further downgrade, and 24 others were placed on review for possible downgrade. Moody's said the ratings were downgraded, in general, based on higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels. The collateral consists primarily of first-lien, adjustable-rate, negatively amortizing alternative-A mortgage loans.

Moody's Investors Service has downgraded the ratings of 435 tranches from 67 payment-option adjustable-rate mortgage transactions issued by Countrywide. Of the downgraded tranches, 174 remain on review for possible further downgrade and 179 others were placed on review for possible downgrade. The ratings were downgraded, in general, based on higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels, Moody's said. The collateral consists primarily of first-lien, adjustable-rate, negatively amortizing alternative-A mortgage loans.

Moody's Investors Service has announced that it is reviewing alternative-A payment-option ARM transactions as part of its wider review of residential mortgage-backed securities. Moody's said the main reason for the review is that many option adjustable-rate mortgage pools are experiencing higher-than-expected rates of delinquency, foreclosure, and real estate owned. Moody's can be found on the Web at http://www.moodys.com.

Moody's Investors Service has downgraded key ratings of two mortgage-related bond insurers in the latest of a series of negative rating actions the two companies have protested. Moody's has downgraded MBIA's insurance financial strength rating from Aaa to A2 and Ambac's IFSR from Aaa to Aa3. Several related ratings are also being affected by the move, including some transactions the companies have insured. Regarding both companies, Moody's said that, among other concerns, "uncertainty about the ultimate performance of ... mortgage-related exposures continues to adversely affect market perceptions" of them, "greatly impairing" their "financial flexibility and ability to write new insurance." In protesting recent negative rating actions by Moody's and the other two major rating agencies, MBIA and Ambac have separately assured market participants that they have taken steps to offset their mortgage-related risks and that their capitalization and claims-paying ability are sound.