Servicing

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., has pledged to act on a GSE reform bill this year in an effort to get the White House to accept a temporary increase in the Fannie Mae and Freddie Mac loan limit that is going to be inserted in the economic stimulus package. Sen. Dodd met with Treasury Secretary Henry Paulson Friday morning to discuss strengthening the regulation of the two government-sponsored enterprises. "I wanted the secretary to know I am going to get a GSE bill done," Sen. Dodd told reporters. The Treasury secretary has let it be known that he is unhappy with the one-year increase in the loan limit that House Democratic and Republican leaders insisted on. He has always insisted that an increase should be tied to passage of a comprehensive GSE reform bill. Meanwhile, Republicans claim they agreed to increase the GSE loan limit from $417,000 to $625,000. But in marking up the stimulus bill, Democrats plan to raise the GSE loan limit to 125% of median area home prices in 12 high-cost metropolitan statistical areas, with a $729,750 cap.

House leaders have struck a deal with the White House to increase Fannie Mae and Freddie Mac loan limits from $417,000 to a maximum of $730,000 during negotiations on a $150 billion economic stimulus package. The stimulus package, which Congress is expected to pass in a few weeks, also increases the Federal Housing Administration loan limit permanently. This increase reflects an agreement between the House and Senate banking committee chairmen to increase the FHA and GSE loan limits to 125% of median area home prices, with a $730,000 cap. The increase in the loan limit for the two government-sponsored enterprises would expire after 12 months. House Speaker Nancy Pelosi, D-Calif., negotiated the deal with Treasury Secretary Henry Paulson. But the GSE regulator said raising the loan limit is a "mistake" without passage of a comprehensive bill to strengthen regulation and oversight of Fannie and Freddie. "To restore confidence in the markets, we must ensure the GSEs' regulator has all the necessary safety-and-soundness tools," said James Lockhart, director of the Office of Federal Housing Enterprise Oversight.

Four classes from two issues of American Home Mortgage Assets Trust residential mortgage-backed certificates have been downgraded by Fitch Ratings. The downgrades were as follows: series 2005-1 group 3, class 3-M-4, from BBB-minus to BB (and remains on Rating Watch Negative); and series 2005-2 group 1, class 1-B-3, from BBB-plus to BB (and placed on Rating Watch Negative), class 1-B-4, from BB to CC/DR3, and class 1-B-5, from B to C/DR6. Fitch also placed class 3-M-3 of series 2005-1 group 3 on Rating Watch Negative and affirmed the ratings on 21 classes in four American Home deals. The downgrades were attributed to deterioration in the relationship between credit enhancement and expected losses.

Five classes of mortgage pass-through certificates from J.P. Morgan Alternative Loan Trust series 2007-A1 have been downgraded by Fitch Ratings. The downgrades were as follows: class C-B-1, from AA to A-plus; class C-B-2, from A to BBB; class C-B-3, from BBB to B; class C-B-4, from BB to C/DR4; and class C-B-5, from B to C/DR5. Fitch also affirmed the rating on one class in the deal. The downgrades were attributed to deterioration in the relationship between credit enhancement and expected losses.

Arguing that Congress needs to do something about the "foreclosure crisis," Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., says he wants to attach a Federal Housing Administration reform bill and an increase in the GSE loan limit to the economic stimulus package Congress and the White House are working on. Sen. Dodd said he will be meeting with House Financial Services Committee Chairman Barney Frank, D-Mass., to discuss how the House and Senate FHA bills can be reconciled quickly and attached to the stimulus package. "I want to send a bill to the president as soon as possible," Sen. Dodd told reporters. The Connecticut senator also said he supports a temporary increase in the loan limits for Fannie Mae and Freddie Mac so the two government-sponsored enterprises can bring liquidity to the jumbo market. But he did not sound optimistic that that would be possible. The chairman also served notice that he has "concerns" about the House-passed GSE regulatory reform bill and that some changes are needed to get the bill through his committee. "I want a strong regulator," he said. "But I am not going to gut the GSEs. It is not going to happen on my watch."

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., is working on legislation that would create a new federal program to purchase "distressed" mortgages from lenders at a discount and provide a new 30-year fixed-rate mortgage to homeowners. Those mortgages could be insured by the Federal Housing Administration or purchased by Fannie Mae or Freddie Mac. The proposed Federal Homeownership Preservation Corp. is modeled after a Depression-era program that rescued 1 million homeowners from foreclosure. "It would allow us to deal with this foreclosure matter in a creative way -- one that has been tried before and, I think, worked well," Sen. Dodd told reporters. The chairman said he plans to hold extensive hearings soon on how to reduce foreclosures and stimulate the economy.

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., is working on legislation that would create a new federal program to purchase "distressed" mortgages from lenders at a discount and provide a new 30-year fixed-rate mortgage to homeowners. Those mortgages could be insured by the Federal Housing Administration or purchased by Fannie Mae or Freddie Mac. The proposed Federal Homeownership Preservation Corp. is modeled after a Depression-era program that rescued 1 million homeowners from foreclosure. "It would allow us to deal with this foreclosure matter in a creative way -- one that has been tried before and, I think, worked well," Sen. Dodd told reporters. The chairman said he plans to hold extensive hearings soon on how to reduce foreclosures and stimulate the economy.

Class B-5 of SASCO 2002-4H pass-through certificates has been placed on Rating Watch Negative by Fitch Ratings. Fitch also affirmed the ratings on five other classes in the deal. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations. The collateral consists of conventional 30-year fixed-rate mortgage loans.

Twelve classes from three issues of SARM mortgage pass-through certificates have been downgraded by Fitch Ratings. Fitch also placed two classes on Rating Watch Negative and affirmed the ratings on five classes from the securitizations. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations.

Twenty-six classes of pass-through certificates from six First Horizon mortgage transactions have been downgraded by Fitch Ratings. Fitch also placed four classes on Rating Watch Negative, removed two classes from Rating Watch Negative, and affirmed the ratings on 23 classes from eight First Horizon deals. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and loss expectations. The collateral generally consists of fixed-rate, first-lien prime mortgage loans, with some interest-only loans to alternative-A borrowers.