Servicing

Three classes from Wisconsin Avenue Securities Mezzanine REMIC Pass-Through Certificates Fannie Mae REMIC Trust 1998-W3 have been downgraded by Fitch Ratings. The downgrades were as follows: class B1, from AA-minus to A-minus; class B2, from A-minus to B; and class B3, from BB to C/DR4. Fitch also affirmed the ratings on nine classes from three other Wisconsin Avenue securities transactions. The downgrades were attributed to the relationship between credit enhancement and loss expectations. The rating agency said Fannie Mae has "no exposure" to any of the affected tranches, adding that it believes the asset quality of Fannie's portfolio "remains unaffected" by the rating actions. Fitch can be found on the Web at http://www.fitchratings.com.

Mack-Cali Realty, a real estate investment trust based in Edison, N.J., has been designated the "Bear of the Day" for June 3 by Zacks Equity Research, Chicago. The Bear of the Day is a stock expected to underperform the markets over the next three to six months. Zacks said the office REIT "will have a difficult time holding steady occupancy and increasing rents" and that suburban office landlords are expected to "have a tough time in 2008." Zacks can be found online at http://www.zacks.com, and Mack-Cali can be found at http://www.mack-cali.com.

Fremont General Corp., Brea, Calif., has completed the sale of the remaining mortgage servicing rights on its $12.2 billion portfolio to Litton Loan Servicing. Fremont received support for the sale agreement from the California Department of Financial Institutions and the Federal Deposit Insurance Corp. The troubled California thrift's stock was suspended from the New York Stock Exchange earlier this year and now trades via the "pink sheets" service. Litton Loan Servicing is an affiliate of Goldman Sachs & Co.

Thornburg Mortgage Inc., a troubled real estate investment trust based in Santa Fe, N.M., has announced that it needs more time to file its first-quarter earnings report with the Securities and Exchange Commission and estimated that it will do so by June 12. The company previously estimated that it would file the report by June 2. To finalize its Form 10-Q, the company said it must, among other things, complete its valuation analysis and the accounting for a March 31 senior subordinated secured note transaction. (Thornburg completed a $1.35 billion private placement at that time after announcing that it had to raise nearly $1 billion in capital to keep in place a key 364-day agreement with certain counterparties involved in potentially "material" margin calls it had been facing.) The company has also announced receipt of a letter from the New York Stock Exchange stating that the company is not in compliance with the NYSE's continued-listing criteria because the average closing price of its common stock has been less than $1 for 30 consecutive trading days. Thornburg said it intends to cure the deficiency by implementing a reverse stock split. It can be found online at http://www.thornburgmortgage.com.

Residential Capital Corp., which is trying to restructure its bank lines, says in a new public filing that it may need $1.4 billion in additional liquidity. The Minneapolis-based ResCap, which controls the nation's eighth-largest residential mortgage banker, said it needs additional funds because of "the inability to consummate certain asset sales, due to adverse conditions" by June 30. (It was hoping to raise $1.3 billion by selling assets.) In a filing with the Securities and Exchange Commission dated June 3, ResCap said it is negotiating with its parent company and affiliates to sell certain assets to them, including RFC Resort Funding. ResCap, the mortgage arm of GMAC Financial Services, can be found on the Web at http://www.rescapholdings.com.

Early delinquencies on securitized subprime loans declined slightly in March for the first time in years, but the percentage of B&C loans 90 days or more past due rose nearly 30 basis points to 9.67%, according to a Friedman Billings Ramsey Investment Management report. In addition, loans in foreclosure jumped nearly 50 bps to 11.47%, the report says. FBRIM managing director Michael Youngblood says loss mitigation efforts and economic stimulus checks, along with seasonal factors, will provide a "temporary respite" from sharply rising 30-day and 60-day delinquencies this summer. However, the research director says he expects defaults to accelerate in September and the fourth quarter due to deteriorating labor market conditions and weak housing markets. The 30-day delinquency rate on securitized alternative-A mortgages fell back 13 bps to 3.97% in March, according to FBRIM. But the 60-day delinquency rate rose 13 bps to 2.2% and loans 90 days or more past due rose 35 bps to 3.36%. Alt-A mortgages in foreclosure rose 42 bps to 4.77%. FBRIM is a subsidiary of Friedman Billings Ramsey, which can be found online at http://www.fbr.com.

Over 160 classes from 43 alternative-A mortgage-backed securities deals were downgraded by Fitch Ratings on May 30. The affected securities were: 118 classes from 31 Banc of America Alternative Loan Trust deals and 45 classes from 12 J.P. Morgan Alternative Loan Trust deals. Fitch also affirmed 56 classes in the alt-A transactions. The rating agency attributed the downgrades to expected defaults and losses from delinquent loans and projected losses from the currently performing pools. Fitch can be found on the Web at http://www.fitchratings.com.

The number of defaults reported for April by the Mortgage Insurance Companies of America totaled 73,880, compared with 58,131 in March, causing the cure/default ratio to drop from 87.0% to 53.6%. Cures totaled 39,584 in April. MICA officials said the increase in defaults results from an unnamed major lender's change in how it records delinquencies and is a one-time event. The April default statistic includes both newly reported defaults as well as previously unreported defaults for the lender. "Overall, the market is returning to fundamentals," said MICA executive vice president Suzanne C. Hutchinson. "The year-over-year increase of 11.7% in [traditional] new insurance written reflects that return to quality in the marketplace." The dollar volume of primary new insurance written fell from $20.5 billion in March to $19.8 billion in April. The traditional category accounted for $19.4 billion of the total, compared with $20.3 billion in March and $17.4 billion in April 2007. Application volume totaled just 128,243, the lowest since February 2007, when it stood at 123,059.

A house price index that purports to give the industry's "first clear representation" of U.S. housing market trends at a county level has been introduced by Integrated Asset Services LLC, Denver. The IAS360 House Price Index tracks monthly changes in the median sales price of detached single-family residences in more than 15,000 "neighborhoods" across the United States, the company said. The April data indicate "measurable improvements in some of the nation's hardest-hit areas" despite the fact that many areas are still in the throes of the credit crunch, IAS reported. For example, the Midwest "rebounded nicely" with a 5.90% gain in median sales prices, according to IAS. "Given the granularity, the methodology, and the timely monthly reporting of the IAS360, we are able to provide the market with early warning signs on housing price trends," said David McCarthy, president and chief executive officer of IAS. "When the housing markets are rosy, a 50,000-foot view may be acceptable. But when we are facing tumultuous markets, we need to go deeper to understand what is truly going on to make smart decisions." The company, a provider of default management and residential collateral valuation services, can be found online at http://www.iasreo.com.

Meanwhile, the latest LoanPerformance Home Price Index reports that home prices in 42 states showed a three-month decrease in March and that 90% of the statistical areas studied had inflation-adjusted price declines. Los Angeles-Long Beach-Glendale topped the index's list of statistical areas experiencing three-month home price declines, recording a 7.41% decrease. Cleveland-Elyria-Mentor ranked second with a 7.38% decline, and Oakland-Fremont-Hayward (Calif.) finished third at 7.33%. "Two-thirds of all states now show year-over-year real estate declines, according to this latest LoanPerformance HPI release," said Mark Fleming, chief economist of First American CoreLogic, the Santa Ana, Calif.-based company that compiles the index. "Although only one-third of [Core-Based Statistical Areas] are depreciating on a nominal basis, on an inflation-adjusted basis 90% of CBSAs are experiencing real price declines." The LoanPerformance HPI provides monthly home price indices and median sales prices covering 7,523 ZIP codes and 670 counties in all 50 states and the District of Columbia, the company said. First American CoreLogic can be found online at http://www.facorelogic.com.