Servicing

Moody's Investors Service has downgraded 60 tranches from 11 deals issued by Countrywide in 2006 and placed 39 tranches under review for possible downgrade.Three downgraded tranches from the CWALT Inc. issues of mortgage pass-through certificates remain on review for possible downgrade. The negative rating actions were based on higher-than-expected rates of delinquency, foreclosure, and real estate owned relative to credit enhancement levels, Moody's said. The collateral backing the affected classes consists chiefly of first-lien, fixed- and adjustable-rate, alternative-A mortgage loans.

More than 200 classes of mortgage- and asset-backed securities have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.In addition to the 224 downgrades, Fitch placed 95 classes on Rating Watch Negative and affirmed the ratings on classes with outstanding balances of approximately $14 billion. Among the securities affected by the latest downgrades were: 36 classes from three Structured Asset Securities Corp. mortgage pass-through certificates; 30 classes from three Credit Based Asset Servicing & Securitization transactions; 29 classes from three Securitized Asset Backed Receivables transactions; 26 classes from two issues of Soundview asset-backed certificates; and 20 classes from two issues of HASCO mortgage pass-through certificates. 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."

Citing exposure to mortgage, home equity, and residential construction lending, Fitch Ratings has downgraded National City Corp. and revised downward the rating outlooks of Wells Fargo & Co., Washington Mutual Inc., Countrywide Financial Corp., and three other large banks.The long-term issuer default rating of National City was downgraded from AA-minus to A-plus, and its short-term IDR was downgraded from F1-plus to F1. The rating outlook is negative. Fitch cited NatCity's "weakened core financial performance" and opined that its remaining mortgage banking business "is likely to remain pressured." The rating outlooks of Wells Fargo, KeyCorp, Zions Bancorporation, and Capital One Financial Corp. were revised from positive to stable because of "strong reliance on consumer lending businesses such as mortgages and home equity credit as well as exposure to residential construction," Fitch said. The same factors were cited in the revision of WaMu's outlook from stable to negative. Similar factors were also cited in removing Countrywide from Rating Watch Evolving and assigning it a negative outlook, with the additional concern that the company is repositioning its main business, mortgage banking, amid "extremely difficult conditions." Fitch can be found online at http://www.fitchratings.com.

MountainView Capital Holdings, Denver, a player in the red-hot "scratch-and-dent" market, has raised $65 million in equity capital.Led by president and chief executive officer Mike Morgan, MountainView is an investor and trader of delinquent, performing, and subperforming mortgages. It also functions as a servicing broker and offers analytics. Chris Rooker, a principal in the firm, likened the current mortgage crisis to the savings-and-loan mess of the late 1980s and early 1990s, noting, "We are seeing opportunities in the mortgage space unprecedented since the days of the Resolution Trust Corp." The RTC was a government agency that helped liquidate $500 billion in assets belonging to failed thrifts. MountainView's new investors include Union Square Partners, CLAC Industries, and MountainView management.

New York Attorney General Andrew Cuomo said Wednesday that his office will subpoena Fannie Mae and Freddie Mac as part of a widening probe of the residential mortgage industry.Among other things, the subpoenas seek information on mortgages purchased by the government-sponsored enterprises from their seller/servicers, including Washington Mutual of Seattle. The GSEs also agreed to a demand by the New York AG that they hire an independent examiner to conduct a review of all WaMu appraisals on mortgages they purchased. In 2006, according to the eMortgage Industry Directory, WaMu sold north of $30 billion in loans to the GSEs. "In order to fulfill their duty to consumers and investors, Fannie Mae and Freddie Mac must ensure that Washington Mutual's mortgages have not been corrupted by inflated appraisals," the attorney general said in a statement. At deadline time, only Fannie had commented on the matter, saying it would fully cooperate.

Moody's Investors Service has downgraded 107 tranches from 18 deals issued by Bear Stearns in 2006 and late 2005 and placed 25 tranches under review for possible downgrade.Four downgraded tranches remain on review for possible downgrade. The negative rating actions were based on higher-than-expected rates of delinquency, foreclosure, and real estate owned relative to credit enhancement levels, Moody's said. The collateral backing the classes consists primarily of first lien, fixed- and adjustable-rate, alternative-A mortgage loans. Moody's can be found online at http://www.moodys.com.

In the third quarter, 87% of the homeowners who refinanced their homes got a mortgage at least 5% larger than the original loan, according to Freddie Mac.The percentage was up from 84% in the previous quarter but down slightly from 88% a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "Thirty-year fixed conforming mortgage rates averaged 6.7% in July, the highest level thus far this year, before easing in the latter half of the quarter," said Frank Nothaft, Freddie Mac's chief economist. "At the same time, rates on jumbo mortgages became relatively much more expensive compared to conforming rates, rising to an average of 7.4% for 30-year fixed-rate loans in August. These higher rates during the first part of the third quarter put a damper on mortgage activity and reduced the overall volume of refinancing." Freddie Mac can be found online at http://www.freddiemac.com.

Steel Mountain Capital, a Lakewood, Colo.-based investor in performing, subperforming, and nonperforming assets, has allied with a for-profit subsidiary of America's Community Bankers to assist community banks with valuation and disposition strategies for real estate assets."The specific focus of the partnership will be the purchase of nonperforming residential and commercial real estate mortgages," the Colorado-based investor said. "In addition to member-advantaged pricing, Steel Mountain will provide a quick and efficient response, with a streamlined purchase and sales agreement, a portfolio review and evaluation within 24 hours, and a funding timeline of 30 days or less." ACB and the ABA plan to merge on Dec. 1, and Steel Mountain also plans to offer its services to the ABA at that time.

IndyMac Bancorp Inc., Pasadena, Calif., has reported a net loss of $202.7 million ($2.77 per share) for the third quarter, compared with net earnings of $86.2 million ($1.19 per share) a year earlier.IndyMac said its pretax credit costs totaled $407.7 million in the third quarter, compared with $103.5 million in the second quarter. "We are clearly disappointed with this quarter's results, which were driven by deteriorating mortgage delinquencies and a declining housing market, combined with an unprecedented collapse in the secondary market for non-GSE loans and securities -- IndyMac's primary business," said Michael W. Perry, IndyMac's chairman and chief executive officer. "While this loss is substantially higher than we had been forecasting, it was clearly not unexpected given the magnitude of the losses being reported by others in our industry and the recent decline in our stock price." IndyMac can be found online at http://www.indymacbank.com.

Since July, residential lenders have tightened their underwriting standards on prime jumbo mortgages, as well as alternative-A and subprime loans, according to a Federal Reserve Board survey of senior loan officers.Banks increased their loan fees, spreads, and downpayment and income documentation requirements on prime jumbo mortgages, according to the October survey. Over one-third of respondents said originations of prime jumbos had declined, and 10% reported an increase. Meanwhile, 40% of the loan officers reported tightening credit standards on conforming prime loans, 50% reported tightening on "nontraditional" mortgages (alt-A, interest-only, and payment-option adjustable-rate mortgages), and 55% reported tightening on subprime loans over the past three months. At a fair-lending conference, Fed Governor Randall Kroszner said Fed surveys show significant tightening on subprime loans. He added that delinquencies and foreclosures on subprime loans are "likely to continue to rise for a number of quarters."