Servicing

Three classes of notes (and two classes of loan interests) issued by Westways Funding X Ltd., a mortgage market value collateralized debt obligation, have been downgraded by Fitch Ratings.The downgraded notes were as follows: class C, from A to CCC; class D, from BB-minus to C/DR5; and income notes, from CCC to C/DR6. In addition, the class LC loan interests have been downgraded from A to CCC, and the class LD loan interests have been downgraded from BB-minus to C/DR5. "Losses incurred during the liquidation process have increased the risk that the class C and LC notes may not be paid in full," Fitch said. "It is likely that class D and LD will incur a significant loss and class income notes will suffer a complete loss." Fitch can be found on the Web at http://www.fitchratings.com.

Forty-eight classes from 10 residential mortgage-backed securities deals have been downgraded by DBRS Ltd.The downgrades involve MBS transactions issued by Structured Asset Securities Corp., Credit Suisse First Boston Mortgage Securities Corp. Home Equity Mortgage Trust, Home Equity Mortgage Trust, Merrill Lynch Mortgage Investors Trust, Fremont Home Loan Trust, and CWABS Asset-Backed Certificates Trust. DBRS attributed the downgrades to an increase in the pipeline of delinquencies of more than 90 days relative to available levels of credit enhancement. The rating agency can be found on the Web at http://www.dbrs.com.

Opteum Inc., a real estate investment trust based in Vero Beach, Fla., has announced that the company will change its name to Bimini Capital Management Inc. on Sept. 28.The REIT, which invest mainly in residential mortgage-backed securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae, said its class A common stock will begin trading that day under the symbol BMN on the New York Stock Exchange. Opteum also said its website will be moved to http://www.biminicapital.com.

Members of the House Financial Services and Judiciary committees have fashioned a narrowly tailored bill to allow bankruptcy judges to modify "predatory" mortgages, but congressional "experts" think it has virtually no chance of passing.Rep. Brad Miller, D-N.C., told a Mortgage Bankers Association conference that the bankruptcy bill (H.R. 3609) is drafted to help troubled subprime borrowers with adjustable-rate 2/28 loans. It would allow bankruptcy judges to waive prepayment penalties and spread the principal payments over 30 years. The interest rate could be set a "couple of points" above that of the prime mortgage to recognize that the borrower is riskier than a prime borrower. The congressman noted that Sen. Arlen Specter, R-Pa., might support a similar bill on the Senate side, as opposed to a broader bill that Sen. Richard Durbin, D-Ill., is drafting to repeal other parts of the 2005 bankruptcy bill, which took 10 years to pass. MBA senior vice president Steve O'Connor told the mortgage bankers that bankruptcy experts think the chances of congressional passage of H.R. 3609 are "close to zero."

The average subprime loan servicer has only recently begun to make material loan modifications related to interest rate resets, and the modification activity remains low, according to a recent survey of mortgage servicers by Moody's Investors Service.The survey reviewed 16 subprime servicers with total servicing volume of approximately $950 billion, roughly 80% of the subprime servicing market. Moody's said the survey showed that most servicers had only modified about 1% of loans that underwent a reset in January, April, and July of 2007. It also found that the majority of large servicers surveyed continue to rely on passive letter-based contact with borrowers instead of more active methods such as telephone calls. "These trends can be a cause for some concern," said Nicolas Weill, chief credit officer in the Moody's Structured Finance Group. "Based on these survey results, the number of future loan modifications by subprime servicers on loans facing reset may be lower than needed to mitigate losses meaningfully." The rating agency can be found online at http://www.moodys.com.

The class A-3 notes from Enhanced Mortgage-Backed Securities Fund V Ltd., a collateralized debt obligation, have been downgraded from CC/DR3 to C/DR4 by Fitch Ratings.In addition, Fitch withdrew its ratings on classes A-4 and B. The rating agency said the CDO had violated overcollateralization tests, and its portfolio of mortgage- and asset-backed securities was liquidated.

The class A notes from Brit Alliance ABSpoke 2005-X and 2005-XI, collateralized debt obligations tied to mortgage-backed securities, have been downgraded from AA to A-minus by Fitch Ratings.The transactions are unfunded managed synthetic CDOs that reference portfolios of various asset-backed securities, Fitch said. They are "designed to provide credit protection for realized losses on the reference portfolio[s] through a credit default swap between the issuer and the swap counterparty, Morgan Stanley Capital Services Inc.," the rating agency said. The downgrades were attributed to deterioration in the credit quality of the reference portfolios, which total $462 million of ABS assets for series 2005-X and $673 million of ABS assets for series 2005-XI. The swaps reference prime and subprime residential MBS in the case of series 2005-X, and RMBS, ABS, and commercial MBS in the case of series 2005-XI, Fitch reported.

Four classes of notes issued by Duke Funding High Grade II-S/EGAM I Ltd., a collateralized debt obligation used to acquire mortgage-backed securities, have been downgraded by Fitch Ratings and placed on Rating Watch Negative.The downgraded notes were as follows: class C and series 2 class C, from A to BB; and class D and series 2 class D, from BBB to B. Also placed on Rating Watch Negative were classes B1, series 2 class B1, class B2, and series 2 class B2. The downgrades were attributed to a reduction in credit enhancement from realized losses and a drop in the market value of the underlying assets. The watchlist placements were based on concerns about the continued availability of repo funding at current terms, the rating agency said. Fitch said the proceeds of the notes are used to buy a diversified portfolio of triple-A rated, primarily private-label residential MBS.

Forty-eight classes from 14 structured finance collateralized debt obligations have been placed on Rating Watch Negative by Fitch Ratings.The actions, which affect approximately $1.2 billion of notes in CDOs issued in 2006 and 2007, were attributed to Fitch's ongoing review of structured finance CDOs in which "significant portions" of the portfolio have been downgraded or watchlisted by Fitch or other major rating agencies. "In addition to public rating actions, this collateral portfolio review identified concentrations of subprime [residential mortgage-backed securities] bonds issued in 2006 where expected losses may be significantly higher than the ratings suggest," Fitch said. The rating agency said CDO tranches watchlisted as a result of recent subprime RMBS credit deterioration now represent approximately 20.2% of Fitch-rated U.S. structured finance CDOs. Fitch can be found on the Web at http://www.fitchratings.com.

Citing rising six-month default rates, Moody's Investors Service says the fallout from aggressive mortgage underwriting and a prolonged housing downturn will produce downward ratings pressure on subprime and alternative-A tranches of recent-vintage U.S. residential mortgage-backed securities.Moody's said six-month default rates have continued to rise significantly for loans backing RMBS issued in the third and fourth quarters of 2006. In addition, Moody's said new data show that deteriorating performance is also evident in 12-month default rates. For example, 12-month collateral defaults for subprime RMBS issued in the second quarter of 2006 rose to 7.39%, more than three times the average of 2.00% for subprime RMBS issued between the first quarter of 2002 and the second quarter of 2005, Moody's reported. The rating agency can be found on the Web at http://www.moodys.com.