Servicing

The First American Corp. has announced that it will host the Mortgage Bankers Association's school of mortgage servicing Dec. 11-13 at First American's Westlake, Texas campus.Participants in the MBA's servicing school earn credits toward a Certified Mortgage Servicer designation. Dennis Jankowski, senior vice president of First American's default information services group, will coordinate First American's role in the event. Topics will include portfolio valuations, servicing sales and acquisitions, customer service, escrow, default, loss mitigation, and real-estate-owned transactions. Additional information can be found online at http://www.campusmba.org.

The class A-2 notes issued by Orchard Park CDO Ltd., a collateralized debt obligation partly composed of residential mortgage-backed securities, has been placed on Rating Watch Negative by Fitch Ratings.Fitch said the action "reflects significant credit migration, whereby approximately 12.58% of the portfolio is currently rated below investment grade." In addition to RMBS, the transaction consists of asset-backed securities and other CDOs, the rating agency said.

Class B-1 of Birch Real Estate CDO I Ltd., a collateralized debt obligation consisting mainly of residential mortgage-backed securities, has been downgraded from BB to B by Fitch Ratings.The ratings on five other classes of notes in the transaction were affirmed. Fitch attributed the downgrade to par coverage that has "continued to erode" due to defaulted and distressed assets. Approximately 81% of the transaction is composed of residential MBS, while commercial MBS and asset-backed securities account for approximately 12% and 7%, respectively.

Four certificates from three transactions issued by CHL's Alternative Loan Trust in 2004 have been downgraded by Moody's Investors Service, and one certificate has been placed under review for possible downgrade.The downgrades were as follows: series 2004-6CB, class M-2, from A2 to Baa3; series 2004-6CB, class M-3, from Baa2 to B3; series 2004-8CB, class M-3, from Baa2 to Baa3; and series 2004-J5, class B, from Baa2 to Ba1. Class B of series 2004-J13 was placed under review for possible downgrade. The four classes were downgraded "because the current credit enhancement provided by subordination, overcollateralization, and excess spread is low compared to the projected pipeline losses of the underlying pool," Moody's said, while the watchlist placement was attributed to "the growing pipeline and higher-than-expected losses." All the deals are backed by first-lien alternative-A mortgage loans originated or acquired by Countrywide Home Loans Inc.

Four certificates from two subprime deals originated in 2003 by Ameriquest Mortgage Co. have been downgraded by Moody's Investors Service.In addition, 26 certificates from 13 subprime deals originated in 2002 and 2003 by Ameriquest and Argent Mortgage Co. (the retail and wholesale mortgage loan originators, respectively, of ACC Capital Holdings) have been placed on review for possible downgrade. The downgrades were as follows: Ameriquest Mortgage Securities Inc., series 2003-7, class M-4, from Baa2 to Ba2; series 2003-7, class M-5, from Ba1 to Caa1; series 2003-AR2, class M-3, from Ba1 to Caa1; and series 2003-AR2, class M-4, from Ba3 to Ca. The negative rating actions were based on an analysis of the credit enhancement levels provided by excess spread, overcollateralization, and subordinate classes relative to the expected loss, Moody's said. Moody's can be found online at http://www.moodys.com.

The RPS1-minus residential servicer ratings of PHH Mortgage Corp., Mt. Laurel, N.J., have been placed on Rating Watch Negative by Fitch Ratings.Affected are the company's primary servicer ratings for prime, alternative-A, and home equity/home equity line of credit products. The rating actions reflect the uncertainty of market conditions and the sales of PHH Mortgage and its parent company, PHH Corp., Fitch said. The rating agency can be found on the Web at http://www.fitchratings.com.

Banks and thrifts borrowed $53 billion in advances from their Federal Home Loan Banks in September, down from $110 billion in August at the height of the credit crunch.Members of the Boston FHLBank borrowed $13.3 billion in advances last month. The New York FHLBank reported that its advances were up $8 billion, and the Cincinnati FHLBank experienced a $1.8 billion increase in advances. The heaviest borrowing activity is expected to be at the San Francisco FHLBank, which made $53 billion in advances during July and August. However, a spokeswoman for the bank said it does not plan to disclose the September advances until it reports third-quarter results. As of Sept. 30, the 12 FHLBanks held $822 billion in advances, up 28.4% from the level recorded as of June 30. Demand for advances was relatively flat during the first six months of the year.

Dalton Investments LLC, a Los Angeles-based investment management firm, has announced that it is offering a new distressed-mortgage strategy under which defaulted loans are bought at significant discounts from mortgage servicing companies and restructured.The strategy will provide affordable monthly payments for homeowners and a residential mortgage- and real estate-backed investment vehicle for Dalton's investors, the firm said. The new strategy, a joint venture with Beach Front Property Management Inc., Long Beach, Calif., will be managed by Steven D. Persky, Dalton's co-founder and chief executive officer, and Kyle Kazan, president of Beach Front Property. "This new strategy will combine Dalton's expertise in distressed debt and Beach Front Property Management's experience in buying and restructuring troubled real estate assets," Mr. Persky said. "The subprime market is just beginning to unwind, and we expect defaults and foreclosures to skyrocket over the next six to 12 months." Dalton can be found online at http://www.daltoninvestments.com.

Federally chartered mortgage giant Fannie Mae said it is not pursuing an acquisition of C-BASS LLC and its "scratch-and-dent" servicing affiliate, Litton Loan Servicing.When asked by MortgageWire whether Fannie Mae, in the past, had been pursuing the companies, the spokesman declined to comment. A source told MW that Fannie, during the summer, was exploring the possibility of buying C-BASS and Litton. It was well known in the marketplace that their owners, MGIC Investment Corp. and Radian Corp. -- two publicly traded mortgage insurers -- were exploring a sale. Goldman Sachs has been mentioned as a bidder for the pair. (Goldman declined to comment.) C-BASS, which is based in New York, was hit by margin calls in July, forcing its two mortgage insurance company owners to write down its value by more than $1 billion. According to the Quarterly Data Report, Litton ranks 12th among subprime servicers, with $46 billion in receivables. Fannie Mae can be found online at http://www.fanniemae.com.

Countrywide Financial Corp. could take a $4 billion hit on its loan inventory in the third quarter, according to a new research report issued by Morgan Stanley & Co.Morgan analyst Ken Posner is predicting that the Calabasas, Calif.-based mortgage banker could post a net loss as large as $2.4 billion in the third quarter. Countrywide's capital markets group held $56 billion in assets at the end of the second quarter. Morgan says up to 60% of those assets might be considered "risky" and that mark-to-market writedowns could range from just under $1 billion to $4 billion. Mr. Posner has an "equal-weight" rating on the stock and says he believes it has "enough cash and cash flow to operate and repay financial obligations through 2008." Countrywide can be found online at http://www.countrywide.com.