Servicing

Six classes of notes issued by Pyxis ABS CDO 2006-1 Ltd., a collateralized debt obligation backed partly by subprime mortgage-backed securities, have been downgraded by Fitch Ratings. The downgrades were as follows: class A-1, from BBB-minus to CC; class A-2, from BB to CC; class B, from BB-minus to CC; class C, from B to CC; class D, from CCC-plus to CC; and class X, from CCC to CC. The downgrades reflect "significant collateral deterioration" in the portfolio of the hybrid cash and synthetic CDO, specifically subprime residential MBS and structured finance CDOs with underlying exposure to subprime RMBS, Fitch said.

Eight classes from Silver Martin CDO I Ltd., a collateralized debt obligation backed partly by subprime mortgage-backed securities, have been downgraded by Fitch Ratings, and seven of the classes have been removed from Rating Watch Negative. Fitch attributed the downgrades to "significant collateral deterioration" in the portfolio, especially subprime residential MBS, alternative-A RMBS, and structured finance CDOs with underlying exposure to subprime RMBS. Since the last rating action on the transaction in November, nearly 66% of the portfolio has been downgraded, the rating agency said.

Ten classes from Ridgeway Court Funding II Ltd., a collateralized debt obligation backed partly by subprime mortgage-backed securities, have been downgraded by Fitch Ratings, and nine of the classes have been removed from Rating Watch Negative. Fitch attributed the downgrades to "significant collateral deterioration" in the portfolio, especially subprime residential MBS, alternative-A RMBS, and structured finance CDOs with underlying exposure to subprime RMBS. Since the last rating action on the transaction in November, nearly 77% of the portfolio has been downgraded, the rating agency said.

Thirty certificates from seven transactions issued by Merrill Lynch Mortgage Investors Trust and backed by second-lien loans have been downgraded by Moody's Investors Service. Moody's also placed three classes of certificates on review for possible downgrade. The downgrades were attributed to credit enhancement levels, including excess spread and subordination, that were deemed to be too low in view of projected losses. "The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral," the rating agency said, adding that "substantial pool losses" in recent months have eroded credit enhancement available to the mezzanine and senior certificates.

Sixty-three certificates from 19 First Franklin Mortgage Loan Trust transactions backed by first-lien subprime mortgage loans have been downgraded by Moody's Investors Service. Moody's also placed 11 certificates under review for possible downgrade. The downgrades were attributed to the fact that credit enhancement provided by subordination, overcollateralization, and excess spread for each deal is low compared to projected pipeline losses. "Stepdown and continuous losses have left the deals with thin credit enhancement levels and made them more vulnerable to pool deterioration in the tail end of the deals' lives," the rating agency said. Moody's can be found online at http://www.moodys.com.

More than 100 additional classes of subprime mortgage-backed securities were downgraded by Fitch Ratings on April 30. Fitch also affirmed the ratings on classes with outstanding balances of more than $5 billion. The securities affected by the latest downgrades were: 54 classes from 23 issues by Structured Asset Investment Loan; 31 classes from eight issues by CDC Mortgage Capital Trust; 20 classes from 19 issues by Chase Funding Loan Acquisition Trust; 17 classes from four issues by Structured Asset Securities Corp.; and nine classes from two issues by People's Choice Home Loan. Fitch can be found online at http://www.fitchratings.com.

The number of severely delinquent mortgage accounts rose 15% from February 2007 to February 2008, according to a National Score Index study conducted by Experian Consumer Direct. The national average credit score for those with a severely delinquent mortgage account stood at 599 in February 2008, compared with 605 a year earlier, Experian reported. "Conversely, the average credit score in February 2008 for those with a mortgage account with no delinquencies was 750," the credit report provider said. (The company said its definition of severely delinquent mortgage accounts includes chargeoffs, short sales, foreclosures, repossessions, collections, voluntary surrenders, and bankruptcies.) The study also found that the average mortgage balance for those with a severely delinquent account was $131,699 in February 2008, compared with $124,465 a year earlier, and that the states with the highest number of such accounts were California (where 12.4% of mortgage accounts are severely delinquent), Florida (8.0%), and Texas (6.3%). The company can be found on the Web at http://www.experian.com.

Hammered by accelerating delinquencies in its home equity portfolio, Cal State 9 Credit Union, Concord, Calif., lost $53.1 million in the first quarter. Cal State, which lost $61.6 million last year, is being managed by its regulator, the National Credit Union Administration. The agency is trying to sell the California lender. Delinquencies in the credit union's home equity loan portfolio rose 38% in the quarter from year's end. Meanwhile, depositors continued to withdraw their funds from the ailing CU, with $29 million in accounts walking out the door in the first quarter. Cal State 9 at one time had $465 million in assets.

Deutsche Bank has reported taking a 141 million euro ($220 million) loss in the first quarter, a period in which it also took 885 million euros ($1.38 billion) in writedowns on commercial real estate and residential mortgage-backed securities. The RMBS involved in the writedowns were predominantly backed by alternative-A credit mortgages, the company said. "In the month of March, pressure on the banking sector was more intense than at any time since the current credit downturn began," said DB chairman Josef Ackermann.

Origen Financial, a manufactured housing lender based in Southfield, Mich., has agreed to sell its servicing platform and related assets to Green Tree Servicing, St. Paul, Minn. The deal includes the transfer of approximately $1.6 billion of manufactured housing loans. Origen said it will use proceeds from the sale to retire a $15 million loan secured by the servicing assets, partially repay a $46 secured loan facility, and as working capital. As part of the sale, Green Tree will assume the lease for Origen's Fort Worth, Texas, servicing facility. Origen, battered by difficult market conditions, previously announced that it had suspended the origination of new loans for its own portfolio and sold recently originated but unsecuritized loans at a loss. "With the agreement to sell our servicing platform, we are now focused on trying to sell our origination platform assets and right-size our employee and cost structure to accommodate the continued management of our $1 billion securitized loan portfolio," said Ronald Klein, Origen's chief executive. Upon completion of the transaction, Green Tree will see its servicing portfolio grow to over $22 billion. Origen can be found online at http://www.origenfinancial.com.