Servicing

Four classes of IndyMac MBS RAST 2006-A10 mortgage-backed securities have been downgraded by Fitch Ratings.The downgrades were as follows: class B-1, from AA to AA-minus; class B-2, from A to BBB; class B-3, from BBB to B; and class B-4, from BB to C/DR5. Fitch also affirmed the rating on one other class in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations. The collateral for the deal consists of fixed-rate, first-lien residential mortgages.

Seven classes of notes issued by Lexington Capital Funding III Ltd., a hybrid collateralized debt obligation composed primarily of residential mortgage-backed securities, have been downgraded by Fitch Ratings.The downgrades were as follows: class A-3, from AAA to AA; class B, from AA to A; class C, from AA-minus to A-minus; class D, from A to BBB; class E, from A-minus to BBB-minus; class F, from BBB to BB; and class G, from BBB-minus to B-plus. Fitch also affirmed the ratings on two other classes in the CDO. The downgrades resulted from collateral deterioration, as 26.9% of the portfolio has been downgraded by at least one rating agency since the closing of the transaction, Fitch reported.

Twenty-two additional classes of subprime mortgage- and asset-backed securities have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also affirmed the ratings on classes with outstanding balances of nearly $2 billion. Among the securities affected by the latest downgrades were: 12 classes from two Structured Asset Investment Loan Trust issues; four classes from one issue of Wells Fargo Home Equity asset-backed certificates; 14 classes from one SACO issue; and two classes from one CSFB HEMT issue. 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." Fitch can be found online at http://www.fitchratings.com.

New York Mortgage Trust Inc., a New York-based real estate investment trust, has reported that its shares are being delisted from the New York Stock Exchange.The REIT said it will now be traded on the OTC Bulletin Board under the symbol NMTG. The company said it has applied to list its common stock on another national securities exchange.

The Federal Home Loan Bank of Des Moines has received regulatory approval to accept one- to four-family construction loans as collateral for advances at a time when many members have stepped up their borrowings from the bank.For many community banks, "construction loans are an important part of their lending portfolio," said Richard Swanson, president and chief executive of the Iowa-based FHLBank. Expanding the list of eligible collateral will help to "maximize their borrowing capabilities," he said. In August, members of the Des Moines bank borrowed $2 billion in advances. During the first six months of 2007, the Des Moines bank's advance business grew by only $700 million. Mr. Swanson noted that several other FHLBanks take construction loans as collateral, and his members expressed an interest. So an application was filed with the Federal Housing Finance Board six months ago. "We have determined that the proposed activity has sufficient controls that minimize the risk to the Bank," the approval letter says.

Fannie Mae is "not actively" seeking to buy a servicing platform, according to its chief executive officer, Daniel Mudd, but he says he is concerned about a shortage of servicing capacity due to a growing number of troubled loans and servicers that are going out of business.There have been reports that the mortgage giant has its eye on Litton Loan Servicing, but Fannie's president and CEO declined to comment specifically on the Houston servicer in taking questions from reporters. "Keeping that capability out there is much more important to us than that being a line of business per se," Mr. Mudd said after speaking to the National Association of Federal Credit Unions. Mr. Mudd stressed that Fannie's mission is to provide stability in the secondary mortgage market, and servicing capacity is important to the stability of the secondary market. Since April, Fannie's Home Stay program has helped 33,000 subprime borrowers refinance into safer loans totaling $6 billion, Mr. Mudd told the credit union executives. Fannie can be found online at http://www.fanniemae.com.

Bear Stearns & Co. has hit Impac Mortgage Holdings with new margin call requests, according to a source familiar with the situation.Under a margin call, a lender is asked to post additional capital because of concerns about loan buybacks. In Bear's case, the margin calls are not huge, the source said, but will put additional pressure on the nondepository lender/servicer. Officials at the Irvine-based Impac did not return telephone calls about the matter by deadline time. A Bear spokeswoman declined to comment.

Countrywide Financial Corp. declined to comment late Tuesday on published reports that said it is working on a "strategic investment" with a possible suitor.The company said, "Regarding media reports today about Countrywide Financial Corp., it is the company's policy not to comment on market rumors." A few weeks ago, Bank of America invested $2 billion in CFC, bolstering its liquidity. Countrywide said it has already taken "decisive steps to address the challenges arising in this environment and thereby enable Countrywide to meet its funding needs and position the company for continued growth and success." Meanwhile, according to new filings with the Securities and Exchange Commission, three different financial institutions recently slashed their ownership stakes in Countrywide. The three include: AXA Financial, Barclays Global Investors NA, and Legg Mason Capital Management. Until recently, the three were the largest institutional investors in CFC. Countrywide can be found online at http://www.countrywide.com.

Class B-4 of NovaStar 2004-3 mortgage pass-through certificates has been downgraded from BBB-minus to BB by Fitch Ratings.Fitch also affirmed the ratings on 10 other classes in the transaction. The rating agency attributed the downgrade to a deterioration in the relationship between credit enhancement and loss expectations. The collateral consists of fixed- and adjustable-rate residential mortgage loans secured by first and second liens.

Two classes of Finance America Mortgage Loan Trust 2004-2 mortgage pass-through certificates have been downgraded by Fitch Ratings.Class M-8 has been downgraded from BBB-minus to BB, and class M-9 has been downgraded from BB-minus to B. Fitch also affirmed the ratings on seven other classes in the transaction. The rating agency attributed the downgrade to a deterioration in the relationship between credit enhancement and loss expectations. The collateral consists of fixed- and adjustable-rate residential mortgage loans secured by first and second liens.