Servicing

Stockton, Calif., Detroit, and Las Vegas posted the three highest U.S. metropolitan foreclosure rates in the first half of 2007, according to RealtyTrac, an online foreclosure marketplace based in Irvine, Calif.The company's 2007 Midyear Metropolitan Foreclosure Market Report ranks the foreclosure rates of the nation's 100 largest metro areas. The foreclosure rates for the three cities were one filing for every 27 households in Stockton, one for every 29 households in Detroit, and one for every 31 households in Las Vegas, the company reported. "While foreclosure activity has skyrocketed over the past year in many cities, particularly in California, Ohio, and the Northeast, foreclosure activity seems to be subsiding in parts of Texas, South Carolina, and other states," said James J. Saccacio, RealtyTrac's chief executive officer. "Still, the overall trend is toward escalating foreclosure rates, with 82 of the top 100 metro areas reporting year-over-year increases in the number of homes affected by foreclosure." The rest of the top 10 cities were as follows: Riverside-San Bernardino, Calif.; Sacramento, Calif.; Denver; Miami; Bakersfield, Calif.; Memphis; and Cleveland. RealtyTrac can be found online at http://www.realtytrac.com.

Countrywide Home Loans, Calabasas, Calif., funded $39 billion in mortgages during July, a 6% gain from the level recorded a year earlier, but a 14% drop from that of the previous month.Figures released by the company also show that purchases by its capital markets group plummeted by 86% to just $508 million during the month. So far this year, Countrywide's capital markets group has bought $14.8 billion, compared with $44 billion for the same period last year, a 66% decline. Company president David Sambol said the lower volume "reflects our tighter lending guidelines that have significantly curtailed total production." Countrywide can be found on the Web at http://www.countrywide.com.

A number of investors, including builder KB Home's founder Eli Broad, have put a total $3 billion cash infusion into a closely watched Goldman Sachs "quantitative strategy fund" that has been pressured by the credit crunch sparked by subprime mortgage woes."Many funds employing quantitative strategies are currently under pressure," Goldman said, noting that -- in addition to the Global Equity Opportunities Fund that received the multibillion-dollar investment -- it has a couple of other funds in this category that have suffered. In addition to Mr. Broad, others who have invested in GEO include C.V. Starr & Co. Inc., a global investment firm with ties to AIG, and Perry Capital LLC, a private investment management firm founded by former Goldman equity trading executive Richard C. Perry.

The current mortgage market crisis is likely to far exceed that of the early 1990s because of surging defaults and foreclosures related to interest rate resets on adjustable-rate mortgages, according to Robert Dunn, president of Oxford Funding Corp., a Houston-based asset resolution company."During the mortgage crisis of the early 1990s, I personally managed the acquisition, restructure, and resale of over $750 million in secondary mortgage assets," Mr. Dunn said in a statement. "I expect that our current mortgage market crisis will dwarf what we saw back then for a number of reasons. We see defaults and foreclosures rising dramatically in the near future, as over $650 billion of loans to subprime borrowers are scheduled to reset at higher interest rates by 2009." Mr. Dunn also said the Federal Reserve "seems intent on raising interest rates to fight inflation, and we've seen before what a rising interest rate environment does to all debt markets, especially mortgages. As underwriting standards have also been tossed to the wind over the past few years, we feel a significant spillover of defaults to the alt-A market and even into the prime credit market is highly likely." Oxford Funding can be found online at http://www.oxfordfunding.com.

Freddie Mac said Tuesday that it will add liquidity to the alternative-A market by providing 90-day forward commitments on a negotiated basis to what it calls "experienced" lenders.A spokesman for the company said the loans will not be held on its balance sheet. "We'll facilitate their securitization with our guarantee," he said. In a statement, company senior vice president Paul Mullings said, "Freddie Mac continues to be an active force in the alt-A market," adding that it will accept reduced documentation loans "underwritten with appropriate credit risk offsets." Freddie's announcement comes a few days after its regulator denied Fannie Mae's request to increase its balance sheet in an effort to provide some liquidity to the nonprime market. Freddie Mac can be found on the Web at http://www.freddiemac.com.

Standard & Poor's Ratings Services has placed its underlying rating on the Ohio Housing Finance Agency's series 2007A capital fund revenue bonds on CreditWatch with negative implications.The action was attributed to a debt service reserve fund that is invested in a repurchase agreement with Depfa Bank PLC. (S&P lowered its rating on Depfa from AA-/A-1-plus to A+/A-1 on July 23, the rating agency said.) OHFA is examining options under the terms of its repurchase agreement for maintaining the current rating. S&P said the options include assigning the repo agreement to an eligible provider or terminating the repurchase agreement. The rating agency can be found online at http://www.standardandpoors.com.

Class B-2 of GS Mortgage Securities Corp. residential mortgage pass-through certificates, series 2003-NC1, has been placed on Rating Watch Negative by Fitch Ratings.Fitch also affirmed the ratings on four other classes in the GSAMP transaction. The negative ration action was attributed to a deterioration in the relationship between credit enhancement and expected loss. Losses have exceeded excess spread in the past six months and eroded the overcollateralization to a point below its target level, Fitch reported. The collateral backing the deal consists of closed-end subprime mortgage loans secured by first and second liens on residential properties.

Two classes of Securitized Asset Backed Receivables 2004-OP1 mortgage pass-through certificates have been downgraded by Fitch Ratings.Class B-2 was downgraded from BBB to BB-plus, and class B-3 was downgraded from BBB-minus to CCC/DR1. Fitch also affirmed the ratings on four other classes in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses. The collateral consists of closed-end, first- and second-lien subprime mortgage loans.

Three classes of Finance America Mortgage Loan Trust series 2003-1 have been downgraded by Fitch Ratings.The downgrades were as follows: M-4, from BBB-plus to BB; class M-5, from BBB to B; and class M-6, from BBB-minus to B-minus/DR1. Fitch also affirmed the ratings on three classes in the transaction. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses.

Class B-5 of GE-WMC mortgage pass-through certificates, series 2005-2, has been downgraded from BB-plus to BB by Fitch Ratings.Fitch also affirmed the ratings on 23 classes from two GE-WMC transactions. The subprime transactions were among those placed Under Analysis on July 12. Fitch reported that at the end of the day on Aug. 10, it had downgraded 672 classes (with an outstanding balance of $13 billion) from those subprime RMBS deals and affirmed the ratings on 1,219 classes with an outstanding balance of $105 billion. Fitch can be found on the Web at http://www.fitchratings.com.