Servicing

More than 200 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 $9 billion. Among the mortgage pass-through certificates affected by the latest downgrades were: 70 classes from nine Structured Asset Securities Corp. issues; 27 classes from two SACO issues; 23 classes from three Terwin issues; 21 classes from four Credit Suisse First Boston Home Equity Asset Trust issues; 19 classes from two Countrywide issues; 17 classes from one Fremont Home Loan Trust issue; and 15 classes from two GS Mortgage Securities Corp. issues. 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.

Anworth Mortgage Asset Corp., Santa Monica, Calif., has announced the recent sale of approximately $692 million (in face value) of mortgage-backed security holdings, resulting in a loss of about $21 million.The sales consisted of approximately $637 million of agency MBS and approximately $55 million of triple-A rated nonagency MBS, Anworth reported. "Given the higher rates [relative to agency MBS financings], limited liquidity, and increase uncertainty surrounding the company's borrowings relative to its agency MBS and nonagency MBS holdings, the proceeds from the company's MBS sales have [been] and will be used to reduce its outstanding repurchase agreement borrowings and reduce the company's financial leverage in the near term," the company said. Anworth, a mortgage real estate investment trust, can be found online at http://www.anworth.com.

Onshore/offshore business process outsourcer Zenta has launched a set of default management services to support residential mortgage servicers and attorneys.The services include early- and late-stage collections, assistance and recommendations for loss mitigation options, assurance of proper investor delinquency reporting, management of the foreclosure file from referral to sale of property, bankruptcy processing and management, claim filing, loss analysis, and default mortgage servicing consulting and training. Zenta can be found on the Web at http://www.zenta.com.

Like banks and thrifts, Fannie Mae and Freddie Mac are now bound by federal underwriting guidelines when they purchase subprime mortgages and private-label securitizations backed by subprime loans, according to the Office of Federal Housing Enterprise Oversight.OFHEO Director James Lockhart said the two government-sponsored enterprises have completed their implementation of the subprime guidance that federal banking regulators issued on June 29. The guidance requires lenders to qualify borrowers at the fully indexed rate and restricts stated-income loans and risk-layering features. Meanwhile, Treasury Under Secretary Robert Steel told a congressional panel last week that he is urging the two GSEs to develop loan products that can help refinance troubled subprime borrowers. He cited studies indicating that a large number of borrowers ended up in subprime loans when they could have qualified for a prime mortgage. "In those cases, the GSEs could help," Mr. Steel told the House Financial Services Committee. A Fannie Mae spokesman said, "Conversations are occurring. So we will see where they go."

IndyMac Bancorp, the nation's eighth-largest funder of residential loans, said Sept. 7 that it will cut 10% of its staff in coming months -- roughly 1,000 workers -- as it prepares to lose money in the current quarter.In a statement, IndyMac chief executive Mike Perry predicted that the company's loan production will fall by one-half in the fourth quarter, "although we are experiencing some pricing power on new loans such that our margins are improving." The Pasadena, Calif.-based IndyMac recently transformed its production from mostly alternative-A loans to mostly loans eligible for securitizing by the government-sponsored enterprises. Mr. Perry blamed "illiquidity in the secondary markets" for IndyMac's woes. He said the company will report third-quarter earnings of break-even to a loss of 50 cents a share. IndyMac Bancorp is a holding company of a federally insured depository.

Countrywide Financial Corp., addressing what it calls "changing market conditions," said late Friday that it will lay off 10,000 to 12,000 workers over the next three months, or 20% of its work force.The story was broken by MortgageWire on Sept. 4. Countrywide also repeated that it will only originate loans that can be sold to Fannie Mae, Freddie Mac, or insured by Ginnie Mae. It also said that it hopes to migrate "almost all" of its residential production into its thrift affiliate by the end of September. In a recent interview with National Mortgage News, Countrywide founder, chairman, and chief executive Angelo Mozilo said the current liquidity crisis is one of the worst he has seen during his five decades in the business. The Calabasas, Calif.-based company can be found on the Web at http://www.countrywide.com.

Class M2 of Delta Funding Corp. 2000-2 has been downgraded from BBB-minus to B by Fitch Ratings.Fitch also affirmed the rating on one other class in the transaction. The downgrade was attributed to a deterioration in the relationship between credit enhancement and loss expectations. The underlying collateral for the transaction consists of fixed- and adjustable-rate subprime mortgage loans secured by first and second liens on residential properties.

Two classes of Salomon Brothers Mortgage Securities VII Inc. mortgage pass-through certificates, series 2002-WMC2, have been downgraded by Fitch Ratings.Class M-2 was downgraded from BBB-minus to B, and class M-3 was downgraded from BB to B. Fitch also affirmed the rating on one class in the deal. The downgrades reflect deterioration in the relationship between credit enhancement and expected losses, Fitch said. The collateral of the transaction consists of fixed- and adjustable-rate first- and second-lien mortgage loans extended to subprime borrowers.

Two classes of People's Choice Home Loan Securities Trust series 2004-1 have been downgraded by Fitch Ratings, and two others have been removed from Rating Watch Negative.Class M-7 was downgraded from BB to B, and class M-8 was downgraded from BB-minus to C/DR5. Classes M-3 and M-4 were removed from Rating Watch Negative. Fitch also affirmed the ratings on six classes in the deal. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations. The mortgage pool consists of 30-year subprime residential loans.

Three classes of notes and shares from Trainer Wortham First Republic CBO III Ltd., a collateralized bond obligation that consists mainly of residential mortgage-backed securities, have been downgraded by Fitch Ratings.The downgrades were as follows: class C notes, from A to A-minus; class D notes, from BBB to BB (and removed from Rating Watch Negative); and preference shares, from BB to B (and removed from Rating Watch Negative). Fitch also affirmed the ratings on three other classes of notes in the deal. The downgrades were attributed to credit deterioration and exposure to subprime RMBS.