Servicing

Five classes from two Credit Suisse First Boston Home Equity Asset Trust transactions have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-5, class M-2, from A to BBB, and class B-1, from B-plus to CCC/DR1; and series 2003-2, class M-2, from A-minus to BBB, class M-3, from BBB-minus to B, and class B-1, from B to CCC/DR1. Fitch also affirmed the ratings on three other classes in the two transactions. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations. The collateral consists of first- and second-lien subprime mortgage loans.

Eight tranches from two deals issued by Wachovia Mortgage Loan Trust in 2006 have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2006-ALT1, class M-3, from A1 to A2, class M-4, from A2 to Baa1, class B-1, from Baa1 to Ba1, and class B-2, from Baa3 to Ba3; and series 2006-AMN1, class M-6, from A3 to Baa1, class B-1, from Baa1 to Baa2, class B-2, from Baa2 to Baa3, and class B-3, from Baa3 to Ba1. The downgrades were attributed to 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, fixed- and adjustable-rate, alternative-A mortgage loans.

Thirteen tranches from five deals issued by Residential Asset Securitization Trust in 2006 and late 2005 have been downgraded by Moody's Investors Service, and five tranches have been placed under review for possible downgrade.One downgraded tranche remains on review for possible downgrade. Moody's said 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. The collateral consists primarily of first-lien, fixed-rate, alternative-A mortgage loans.

Twenty-three tranches from 10 mortgage-backed securities deals collateralized primarily by first-lien, fixed- and adjustable-rate scratch-and-dent mortgage loans have been downgraded by Moody's Investors Service.The affected transactions were issued by Morgan Stanley ABS Capital I Inc. Trust, Truman Capital Mortgage Loan Trust, Countrywide Home Loan Trust, RFSC Series 2004-RP1 Trust, Structured Asset Securities Corp. Trust, and CSFB. Most of the deals have experienced a growing proportion of severely delinquent loans, and in all of them the amount of available credit enhancement has been reduced from losses or both losses and stepdown, according to Moody's. For most, the timing of the losses, coupled with the passing of performance triggers, has caused the protection available to the subordinate bonds to be diminished. Moody's can be found online at http://www.moodys.com.

Eighteen classes of mortgage-backed securities from several issuers have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also removed five classes from Rating Watch Negative and affirmed the ratings on classes with outstanding balances of over $1.7 billion. Among the securities affected by the latest downgrades were: 21 classes from four issues of Credit Suisse First Boston Home Equity Asset Trust transactions; 13 classes from three issues of Park Place Securities Inc. mortgage pass-through certificates; six classes from two issues of SACO mortgage pass-throughs; three classes from two issues of Ameriquest mortgage pass-throughs; and two classes from one issue of GS Mortgage Securities Corp mortgage pass-throughs. The rating actions were attributed to changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness." The rating agency can be found online at http://www.fitchratings.com.

The residential master servicer rating of Universal Master Servicing LLC, Charlotte, N.C., has been raised from RMS3-plus to RMS2-minus by Fitch Ratings.Fitch attributed the upgrade to "the company's ability to effectively oversee and monitor the loan accounting, investor reporting, and default management of its primary servicers and subservicers, continued investment in technology, and increasing use of automation." The rating also reflects the financial strength of UMS's majority owner, Wachovia Bank NA, Fitch said. The rating agency rates residential servicers on a scale of 1 to 5, with 1 being the highest rating.

Freddie Mac will sell $6 billion in noncumulative, perpetual preferred stock and cut its dividend by 50% as part of a plan to meet capital requirements imposed by the Office of Federal Housing Enterprise Oversight.Freddie had hinted at the moves in releasing its third-quarter financial results, which included higher-than-expected credit provisions. The loss put Freddie Mac perilously close to falling short of OFHEO's 30% surplus capital requirement. Freddie Mac chairman and chief executive Richard Syron said issuing preferred stock and cutting the fourth-quarter dividend to $0.25 per share "will help us meet the 30% surplus and address regulatory concerns and GAAP accounting requirements, provide sufficient capital to continue fulfilling our important housing mission through the current market environment, and better position us to effectively manage the company going forward." The preferred stock is being offered through a syndicate of dealers headed by Lehman Brothers and Goldman Sachs. The government-sponsored enterprise can be found online at http://www.freddiemac.com.

Mortgage-related securities issuance to fell to $476.6 billion in the third quarter, down from $495.8 billion in the third quarter of 2006 and from $617.1 billion in the previous quarter, according to the Securities Industry and Financial Markets Association's Research Quarterly."The lower volumes are attributable to continuing housing market weakness and depressed non-agency market conditions, especially in the subprime sector," SIFMA said in the report. The nonconforming market did show some improvement during the quarter relative to August, but "continues to be beset by reduced liquidity and historically wide spreads to the agency market," according to the association. SIFMA can be found online at http://www.sifma.org.

A coalition of housing and community activists is calling on five Wall Street investment banks that "reaped" huge profits from funding and securitizing subprime loans to contribute their 2007 bonuses to a foreclosure prevention fund.The National Training and Information Center, the National Association for the Advancement of Colored People, and other groups contend that the investment banks pushed subprime lending to unsustainable levels and reaped tremendous profits and bonuses. The groups also are releasing a report that details Wall Street's involvement in the subprime debacle. "Wall Street must do the right thing and forgo their lavish bonus to help families stay in their homes," said NTIC board member Inez Killingsworth. "It's time they clean up their mess." As part of a "Save the American Dream" campaign, the groups are inviting Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers, and Bears Stearns to a summit to set up a foreclosure prevention fund.

Wells Fargo & Co., San Francisco, has announced that it will take a $1.4 billion special provision in the fourth quarter for higher losses it now expects in certain indirect channels and that it will "further tighten" its home equity lending standards by no longer accepting business through those channels.The company said it will stop originating home equity loans through wholesalers in which the combined loan-to-value ratio of the first and second mortgages is 90% or higher, or where the second mortgage is not behind a Wells Fargo first mortgage. Wells Fargo also reiterated that it will no longer acquire home equity loans through correspondent relationships, and that $11.9 billion in loan portfolios already acquired through such channels will be placed in liquidating status. The company said the $1.4 billion special provision for the liquidating portfolio reflects higher expected losses stemming from further deterioration in the housing market outlook. "Given today's uniquely challenging environment, we believe that sharpening our focus on our better-performing and relationship-based home equity loans is in the best long-term interest of our company," said John Stumpf, Wells Fargo's president and chief executive. Wells Fargo can be found online at http://www.wellsfargo.com.