Servicing

Class B-4 of CSFB Home Equity Asset Trust series 2006-4 has been placed on Rating Watch Negative by Fitch Ratings.In addition, Fitch upgraded one class and affirmed the ratings on 22 classes in four Credit Suisse First Boston mortgage-backed securitizations. The negative rating action was attributed to "early negative trends in the relationship between serious delinquency and credit enhancement." The rating agency can be found online at http://www.fitchratings.com.

Four classes of Securitized Asset Backed Receivables mortgage pass-through certificates have been placed on Rating Watch Negative by Fitch Ratings.The affected classes were as follows: class B5 of series 2006-HE1; class B-5 of series 2006-FR2; class B-5 of series 2006-FR3; and class B-4 of series 2006-WM1. In addition, Fitch affirmed the ratings on 69 classes in eight SABR securitizations. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and expected losses. The collateral in the transactions consists primarily of closed-end subprime residential loans secured by first- and second-lien mortgages, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Two classes of Asset Backed Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings.Class 1-M4 of series 2002-HE3 group 1 was downgraded from B to B-minus/DR1, and class 2-M4 of series 2002-HE3 group 2 was downgraded from B to B-minus/DR1. In addition, Fitch upgraded two classes in two ABSC deals, affirmed the ratings on six classes, and lowered the Distressed Recovery rating of class B1F of series 1999-LB1 group 1 from DR1 to DR2. The rating agency attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses.

Three classes of notes issued by Mid Ocean CBO 2000-1 Ltd., a collateralized debt obligation that includes mortgage-backed securities, have been downgraded by Fitch Ratings.Class A-1L has been downgraded from BB to B-minus/DR2, and classes A-2 and A-2L have been downgraded from CCC/DR4 to C/DR4. The rating agency attributed the downgrades to "poor collateral performance and substantial interest rate swap costs" that have caused the portfolio to generate insufficient interest proceeds to fully cover the interest obligations on Mid Ocean's liabilities. The transaction, a CDO managed by Deerfield Capital Management, is composed of residential MBS, commercial MBS, asset-backed securities, and other CDOs.

Four classes of Specialty Underwriting & Residential Finance asset-backed certificates have been downgraded by Fitch Ratings, and two have been placed on Rating Watch Negative.The downgrades were as follows: series 2003-BC1, class B-1, from BBB-plus to BB (and placed on Rating Watch Negative), and class B-2, from BB to C/DR6; and series 2003-BC2, class B-1, from BBB-plus to BB (and placed on Rating Watch Negative), and class B-2, from BBB to CC/DR3. In addition, Fitch affirmed the ratings on 11 classes from three SURF transactions. The negative rating actions were attributed to a deteriorating relationship between credit enhancement and loss expectations. SURF acts as program administrator for the seller, Merrill Lynch Mortgage Lending Inc., and its loan acquisition program facilitates the purchase by the Merrill Lynch company of eligible nonconforming loans from various SURF-approved originators, Fitch said.

Ten classes of Residential Asset Securities Corp. subprime transactions have been downgraded by Fitch Ratings, and 10 other classes have been placed on Rating Watch Negative.In addition, Fitch affirmed the ratings on over 175 classes in 47 RASC issues. The negative rating actions were attributed to a deteriorating relationship between expected losses and credit enhancement. The underlying collateral in all the transactions consists of fully amortizing 15- to 30-year fixed- and adjustable-rate mortgages secured by first liens extended to subprime borrowers.

Fitch Ratings has downgraded the residential primary servicer rating for subprime loans of Kansas City, Mo.-based NovaStar Mortgage Inc. from RPS2-minus to RPS3-plus and removed it from Rating Watch Negative.Fitch said the downgrade reflects "the challenging subprime mortgage environment," uncertainties regarding the company's profitability, and concerns that financial challenges may hurt its servicing operation and servicing quality. Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating.

Federal Deposit Insurance Corp. Chairman Sheila Bair says accounting firms and industry groups have concluded that there is latitude in the accounting rules governing securitizations that allow servicers to actively restructure subprime loans facing foreclosure.She noted that the industry groups are committed to working with borrowers to prevent foreclosures and with community activists to reach borrowers that need to restructure their loans. The Mortgage Bankers Association has asked the Financial Accounting Standards Board for guidance on the FAS 140 servicing issues. "MBA believes restructurings of certain securitized residential mortgage loans that are widely anticipated to go into default will not cause qualified special-purpose entities holding restructured loans to be disqualifying, thereby forcing the transferors to record a repurchase of the loans," the association said. The FDIC chairman also reported that the regulators are near agreement on the subprime lending guidance when it comes to curbing stated-income loans and other issues. She said she expects the guidance to be issued no later than July.

The multifamily housing revenue bonds of the St. Cloud (Minn.) Housing & Redevelopment Authority (Parkview Terrace Apartments Project), series 1999A, have been downgraded from B to D by Standard & Poor's."The downgrade reflects a missed debt service payment on June 1, 2006, in the amount of $86,000 and the project's long history of poor financial performance," said Renee Berson, an S&P credit analyst. The rating agency said the trustee, U.S. Bank NA, has indicated that future principal payments are "uncertain."

Two classes from a pair of Finance America Mortgage Loan Trust subprime securitizations have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are class M-8 of series 2004-1 and class M-9 of series 2004-2. Moody's said the negative rating actions were taken because credit enhancement levels on the two classes may be low in view of projected losses. The transactions are backed primarily by first-lien adjustable- and fixed-rate subprime mortgage loans.