Servicing

Fitch has affirmed one class of notes, downgraded five classes, and placed three classes of notes issued by GSC ABS CDO 2006-4u Ltd. (GSC 2006-4u) on Rating Watch Negative.The following rating actions are effective immediately: $0 class A-S1VF notes affirmed at 'AAA'; $85,000,000 class A1 notes downgraded to 'AA' from 'AAA', placed on Rating Watch Negative; $45,000,000 class A2 notes downgraded to 'A' from 'AA', placed on Rating Watch Negative; $45,000,000 class A3 notes downgraded to 'BB' from 'A', placed on Rating Watch Negative; $33,000,000 class B notes downgraded to 'CCC' from 'BBB', remains on Rating Watch Negative; $10,000,000 class C notes downgraded to 'CC' from 'BB+', remains on Rating Watch Negative. GSC 2006-4u is a hybrid cash and synthetic arbitrage collateralized debt obligation (CDO), which closed on Oct. 6, 2006. The portfolio is managed by GSC Group who maintains a CDO asset manager rating of 'CAM2' for structured finance CDOs. GSC 2006-4u is composed of 94.28% residential mortgage-backed securities, 0.84% commercial mortgage-backed securities, and 4.88% CDOs. On July 12, 2007, class B and class C notes were placed on Rating Watch Negative because of negative migration of subprime RMBS assets in the portfolio. In addition, Fitch has also removed three classes of notes from Rating Watch Negative. The following rating actions are effective immediately: $0 class A-1A notes affirmed at 'AAA'; $125,000,000 class A-1B notes affirmed at 'AAA'; $13,500,000 class A-2 notes affirmed at 'AAA'; $56,500,000 class B notes affirmed at 'AA'; $14,500,000 class C notes affirmed at 'AA-'; $22,500,000 class D notes downgraded to 'A-' from 'A'; $21,000,000 class E notes downgraded to 'BB' from 'BBB', removed from RWN; $4,718,616 class F notes downgraded to 'B' from 'BB+', removed from RWN; $4,718,616 class G notes downgraded to 'B-' from 'BB', removed from RWN. GSC 2006-2m is an arbitrage cash flow collateralized debt obligation, with hybrid features, which closed on May 31, 2006. The portfolio is managed by GSC Group who maintains a CDO asset manager rating of 'CAM2' for structured finance CDOs. GSC 2006-2m is composed of 82.97% RMBS, 6.62% CMBS, and 9.47% CDOs. The class A-1A is structured as delayed draw notes. On July 12, 2007, classes E, F and G notes were placed on Rating Watch Negative because of negative migration of subprime RMBS assets in the portfolio.

Given the Bank of America investment, Fitch Ratings has revised the Rating Watch on Countrywide Financial Corp. and related subsidiaries to Evolving from Negative, signifying that Fitch may upgrade, downgrade or affirm CFC's ratings once additional information has been gathered.The Rating Watch Evolving reflects the $2 billion strategic equity investment from Bank of America in non-voting convertible preferred stock of CFC. The preferred securities, which yield 7.25%, can be converted into common stock at $18 per share, subject to restrictions on trading for 18 months. BoA will receive no Board representation as a result of its investment. Fitch's downgrade of CFC and subsidiary ratings on Aug. 16, 2007 was prompted by the company's announcement that it had drawn down its $11.5 billion unsecured bank facility, a clear sign that liquidity pressure was mounting. While the decision in and of itself raises concerns, Fitch believes the added liquidity provides relief in the short term. Fitch also believes that CFC's current liquidity issues were not caused by a fundamental breakdown of the company's financing plan or strategy, but more so with investor's extreme risk aversion that has triggered unprecedented disruption in the capital markets. Even if the environment normalizes in relative short order, Fitch believes that residual effects caused by the company's temporary liquidity stress will have a significant impact on origination volume and operating performance.

Lehman Brothers has made plans to shut down its BNC Mortgage LLC subsidiary in a move that affects about 1,200 employees in 23 U.S. locations.The Wall Street firm cited "market conditions have necessitated a substantial reduction in its resources and capacity in the subprime space" as the reason for the shutdown. Lehman will continue to originate mortgages in the U.S. through its Aurora Loan Services LLC platform. As a result of the BNC closure, the company will record related after-tax charges, including severance, real estate and technology costs, of approximately $25 million, and a 100% after-tax goodwill write-down of approximately $27 million. Lehman can be found on the Web at http://www.lehman.com.

Countrywide Financial Corp. is forcing tens of thousands of homeowners into foreclosure by refusing to restructure subprime adjustable rate mortgages with 10% and 11% interest rates, according to a community activist group that provides low-cost mortgage financing to prevent foreclosures.The Neighborhood Assistance Corporation of America chief executive Bruce Marks called on CWF to start working with its borrowers and restructure their unaffordable loans. NACA assembled a group of Countrywide borrowers to tell their stories at a Washington press conference and they repeatedly complained about being socked with $5,000 and $10,000 fees and receiving no help from servicing employees. NACA receives financial backing from Bank of America and Citigroup and Mr. Marks said maybe BoA's $2 billion investment in Countrywide will force the nation's largest mortgage lender and servicer to change its policies. "Isn't it ironic," he said, that Countrywide forced people into subprime loans with high rates and now Countrywide has to pay subprime rates to fund its operations and "can't survive."

Countrywide Home Loans chief Angelo Mozilo said Thursday morning that the subprime market is "damaged for the foreseeable future."In an interview with National Mortgage News Mr. Mozilo said consumers that will be hurt the most from the subprime fallout are low-income minorities, and even middle-class home buyers, especially in California where Countrywide is the largest residential lender. The CFC chairman and CEO also called on the Office of Federal Housing Enterprise Oversight to increase the loan limit cap for Fannie Mae and Freddie Mac, a move, he said, that would help troubled jumbo borrowers refinance their loans. The current cap is $417,000.

Late Wednesday Bank of America invested $2 billion in Countrywide Financial Corp., the nation's largest home lender, a possible sign that the mortgage liquidity crisis could be ebbing somewhat -- but only for conventional lenders. (See Angelo Mozilo's confidential memo to employees.)The news came just after Lehman Brothers closed its subprime unit, BNC Mortgage, and Quality Home Loans, the nation's largest "hard money" lender filed for bankruptcy protection. In a memo sent to employees CFC chairman, co-founder and CEO Angelo Mozilo said, "Through this important investment from Bank of America, today, Countrywide's future is much brighter." A little over a week ago, CFC's future was in doubt after a Merrill Lynch analyst, Kenneth Bruce, suggested that if the industry's liquidity crisis continued the lender might be forced into bankruptcy. Specifically, BoA invested $2 billion in the form of a non-voting convertible preferred security yielding 7.25% annually. The security can be converted into common stock at $18 per share, with resulting shares subject to restrictions on trading for 18 months after conversion.

Fitch has placed 131 pre-2006 transactions and 104 additional first-lien U.S. subprime transactions originated in 2006 "under analysis."The rating agency said this affects a total of 235 deals representing $92.1 billion of debt outstanding, including $4.2 billion in bonds rated BBB or lower. The bonds rated BBB or below are the ones most likely to face rating actions, Fitch said. Fitch can be found on the Web at http://www.fitchratings.com.

Home equity delinquency rates continued to rise in June while jumbo delinquencies stayed relatively flat, according to Moody's Investors Service reports.The 60-plus day HE delinquency rate based on current balance rose to 13.20% in June from 12.35% in May and jumbo delinquencies in that category were 0.417%, relatively unchanged from the previous month's level of 0.421%, Moody's said. Moody's can be found online at http://www.moodys.com.

With its acquisition by Lone Star Fund V (U.S.) LP in doubt, Accredited Home Lenders Holding Co., San Diego, has announced a restructuring program that shuts down its U.S. mortgage originations operations for the time being.The company said it is closing all of its retail operations as of Sept. 5. This consists of 60 retail branches, five support locations and 480 people. The only retail to continue to operate will be the San Diego-based customer retention unit. Furthermore, five of the 10 wholesale divisions will shut on Sept. 5. Overall, it will reduce its wholesale workforce by 490 people, leaving 340 people employed. In addition, Accredited said it is not accepting any new applications in the U.S. Its headquarters staff will be cut by 180 positions. The company said the moves do not affect its Canadian mortgage originations business or its U.S. loan servicing platform. Accredited said this restructuring, plus the $1 billion loan trade will allow it to survive off of securitization cash flows, servicing income and other income until it can resume loan origination operations.

Fitch Ratings has downgraded two classes of notes issued by Whatley CDO I Ltd., citing "credit deterioration in the subprime residential mortgage-backed securities space." Specifically, Fitch lowered the ratings of classes BF and BV and affirmed the ratings of five other classes of the collateralized debt obligation. Fitch can be found online at http://www.fitchratings.com.