Servicing

Forty-six tranches from eight mortgage-backed securitizations issued by Bear Stearns in 2007 have been downgraded by Moody's Investors Service, and 11 tranches have been placed under review for possible downgrade. The negative rating actions were 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, fixed- and adjustable-rate alternative-A mortgage loans. Moody's can be found on the Web at http://www.moodys.com.

Continuing market concerns related to subprime mortgage woes are expected to reduce the overall annual issuance of fixed-income securities by 15% to $3.4 trillion in 2008, according to the Securities Industry and Financial Markets Association. "Issuance is expected to decline significantly in the sectors most affected by subprime mortgage deterioration, while both corporate and municipal issuance are projected to remain high relative to historic levels," said SIFMA, in a forecast based on a survey of its member firms. The association can be found online at http://www.sifma.org.

The Community Reinvestment Act may have deterred banks from engaging in the kind of risky mortgage lending that has led to the foreclosure crisis, according to a Traiger & Hinckley LLP study of 2006 loan data. The company said the study indicates that banks making loans in their CRA assessment areas were less likely to make high-cost loans, charged less for the ones they did make, and were "substantially more likely" to avoid the secondary market and retain high-cost loans and other loans in their portfolios. "Without the CRA, the foreclosure crisis might have negatively impacted even more borrowers and neighborhoods," said Warren Traiger, a partner in the law firm. The study is available at http://www.traigerlaw.com.

Since August, financial institutions across the globe have written down the value of their nonprime mortgage assets by about $94 billion, according to a new tally done by Friedman, Billings, Ramsey & Co. FBR noted that in addition to the writedowns, financial institutions -- including depositories -- have taken $14.7 billion in what it calls "elevated loss provisions." FBR estimated that banks could suffer $59 billion to $148 billion of losses on their portfolios over the next few years. It says banks that had high concentrations of subprime and alternative-A loans, payment-option adjustable-rate mortgages, home equity lines of credit, and other nontraditional loans will suffer the most. The company can be found online at http://www.fbr.com.

Fannie Mae says it will reimburse its servicers for referring homeowners who are behind on their mortgage payments to the HOPE Hotline for foreclosure prevention counseling. "We believe in these difficult times, independent counseling agencies can play a unique role by helping servicers to help borrowers find more opportunities to avoid foreclosure and keep their homes," said Fannie vice president Jason Allnutt. Servicers should contact their Fannie account representative for more details, the giant secondary-market agency said. The toll-free HOPE Hotline, at 1-888-995-HOPE, is open 24 hours a day and allows troubled borrowers to talk with an independent housing counselor. Fannie Mae can be found on the Web at http://www.fanniemae.com.

Servicers participating in the Hope Now alliance are working at an "intense pace" to implement streamlined processes for loan modifications and refinancings, according to Treasury Secretary Henry Paulson, who said he wants to see tangible results in a few weeks. "We expect most servicers to begin fast-tracking borrowers in the next few weeks," Mr. Paulson told the New York Society of Securities Analysts. Fast-tracking is supported to move troubled borrowers into refinances and interest rate freezes quickly. The secretary said he wants servicers to "fully implement connections" to the Federal Housing Administration and other lenders to facilitate refinancings. The Treasury secretary also stressed that the alliance members need to develop a standard reporting process to monitor their progress. "We need to see all the servicers reporting results to Hope Now to measure effectiveness and then to make adjustments as needed," Mr. Paulson said. Outreach efforts by Hope Now have prompted 45,000 borrowers who are facing possible foreclosure to contact their servicers for assistance.

Class B-5 of Wells Fargo Alternative Loan Trust series 2005-1 has been placed on Rating Watch Negative by Fitch Ratings. Fitch also affirmed the ratings on 16 other classes in three Wells Fargo transactions. The negative rating action was attributed to deterioration in the relationship between credit enhancement and expected losses. The underlying collateral consists of conventional first mortgage loans. Fitch can be found online at http://www.fitchratings.com.

Two classes of Wells Fargo mortgage pass-through certificates have been downgraded by Fitch Ratings, and five classes have been placed on Rating Watch Negative. Class B-5 of Wells Fargo 2006-15 has been downgraded from B to CCC/DR2, and class II-B-5 of Wells Fargo 2006-AR18 group 2 has been downgraded from B to CCC/DR2. The securities placed on Rating Watch were class B-4 of Wells Fargo 2006-15; class B-5 of Wells Fargo 2006-18; class I-B-5 of Wells Fargo 2006-AR18 group 1; class II-B-4 of Wells Fargo 2006-AR18 group 2; and class B-5 of Wells Fargo 2006-AR19. The rating agency also affirmed the ratings on 49 other classes from 10 Wells Fargo transactions. The negative rating actions reflect deterioration in the relationship between credit enhancement and loss expectations, Fitch said. The collateral consists of prime adjustable-rate mortgage loans secured primarily by one- to four-family residential properties.

Moody's Investors Service has downgraded 21 classes of mortgage-backed securities from five transactions issued by RAMP in 2004. The downgrades were spurred by credit enhancement levels that may be low given the projected losses on the underlying pools, the rating agency said.

Astoria Financial Corp. "may actually benefit from the mortgage turmoil" and is a good buy for value investors, according to Zacks.com. In its Jan. 4 list of Zacks Rank Buy Stocks, the research firm said Astoria may benefit from the turmoil because it doesn't have to sell loans. "Rather, it keeps them in a portfolio while many other banks are going out of business," Zacks said. "The stock is attractively priced at 13.7 times 2008 [earnings] estimates." Every day, Zacks.com highlights four stocks based on how well they match the criteria for four kinds of investing: aggressive growth, growth and income, momentum, and value. The research company can be found online at http://www.zacks.com.