Servicing

Fitch Ratings has affirmed the long-term issuer default and short-term issuer ratings (BBB-plus and F2, respectively) for Astoria Financial Corp. and Astoria Savings and Loan, but the rating outlook has been revised from stable to negative.Fitch said the negative outlook reflects the "profitability pressure" on the Lake Success, N.Y.-based mortgage lender stemming from an adverse interest rate environment that has caused "significant net interest margin compression" over the past three years. "Capital levels have declined as a result of fairly aggressive stock repurchases, while equity generation remains modest," Fitch said. "Although capital measures are sound from a regulatory perspective, Fitch views negatively the decline in capitalization, particularly in light of [Astoria Financial's] increased mix of reduced- and no-documentation loans." Astoria can be found on the Web at http://www.astoriafederal.com.

First National Bank of Arizona has turned to Phoenix-based Accenture for post-closing business process outsourcing.The Accenture service combines personnel, process, and technology to fully automate this part of mortgage fulfillment. Financial terms of the two-year contract were not disclosed. Accenture said it will provide the bank with file-room services, including imaging to convert paper documents into electronic form, indexing to capture relevant information in digital form, workflow services to speed processing, and performance metrics spanning the process. It will also offer data and document review to confirm that loans have met underwriting, servicing, and secondary-market salability requirements. Accenture will deliver the service both onsite and through its Global Delivery Network, which includes more than 40 centers in 30 cities around the world. The company can be found on the Web at http://www.accenture.com.

An analysis by Fitch Ratings concludes that the flattening of home price appreciation last year contributed to the rising number of defaults on subprime home loans.Using local metropolitan area data, Fitch found that subprime loans originated in the first quarter of 2006 experienced home price appreciation of just 0.5% last year, but that the default rate jumped to 8.3% of outstanding mortgage balances. By contrast, for the full year of 2005, subprime originations experienced average home price appreciation of 17% after 12 months and the default rate was only 1.7%. Fitch says the data show that home price deflation "is driving higher defaults of recently originated subprime mortgages." Fitch can be found on the Web at http://www.fitchratings.com.

Sixteen classes of Residential Accredit Loan Inc. mortgage pass-through certificates have been downgraded by Fitch Ratings, and 15 classes have been placed on Rating Watch Negative.In addition, Fitch upgraded two classes and affirmed the ratings on 76 classes from 16 RALI securitizations. The negative rating actions on 2005 and 2006 vintage deals were due to current trends in the relationship between serious delinquencies and credit enhancement, Fitch said. Downgrades in 2001 and 2003 vintage deals were attributed to high delinquencies and losses. The collateral for the deals consists primarily of 15- and 30-year fixed-rate mortgage loans extended to alternative-A borrowers, the rating agency said.

Analysts included in Zacks.com's All Star Analyst Survey have once again recommended the stock of Starwood Hotels & Resorts Worldwide Inc.The All Star Analyst portfolio represents all stocks with a Strong Buy rating from at least four analysts with a 5-Star All Star ranking, Zacks said. Starwood "has long been one of the All Stars' favorite names in the hotel industry," Zacks reported. The company said Starwood's earnings topped the analysts' consensus by about 26% in the first quarter and that its revenue per available room for same-store hotels rose 10.2% worldwide. Zacks can be found online at http://www.zacks.com.

Foreclosure filings in Massachusetts totaled 2,002 in April, the seventh consecutive month in which they have exceeded 2,000, according to ForeclosuresMass.com, a provider of foreclosure data based in Framingham, Mass.The company said lenders initiated foreclosure proceedings against 23,116 homeowners over the past 12 months, an 81% increase from the 12-month level recorded a year earlier. "Virtually every community in Massachusetts is being impacted by the foreclosure crisis," said Jeremy Shapiro, president and co-founder of ForeclosuresMass.com. "Wealthy and poor, urban and rural, and all communities in between are being ravaged. Our forecasts indicate that foreclosures will continue to have a negative impact on the Massachusetts real estate market throughout 2007." The company can be found online at http://www.foreclosuresmass.com.

Senior Republicans on the House Financial Services Committee are supporting efforts by Comptroller of the Currency John Dugan to curb "stated-income" loans, for which subprime lenders don't verify the borrower's income."We were interested to see Comptroller Dugan's recent remarks on stated-income loans, or 'liar loans,' and are deeply concerned about the explosion in originations of these mortgages in the subprime market," Reps. Spencer Bachus (Ala.), Paul Gillmor (Ohio), and Judy Biggert (Ill.) say in a letter to federal banking regulators. As previously reported, Comptroller Dugan wants to place curbs on stated-income loans in the subprime guidance that regulators are finalizing. The representatives acknowledge there should be a "small niche" for stated-income loans. But they also contend that "these low-doc or no-doc loans with a high LTV and [prepayment] penalties" increase the risks of default. "Current circumstances in the housing market have exposed these poorly underwritten loans, and we would ask the regulators to closely examine the role the use of liar loans may have played in the subprime market defaults we are experiencing," the committee members said.

Classes G and H of Merrill Lynch Mortgage Investors Inc. mortgage pass-through certificates, series 1999-C1, have been downgraded by Fitch Ratings, and class F has been placed on Rating Watch Negative.Class G was downgraded from B to B-minus/DR1, and class H was downgraded from CC/DR3 to C/DR5. The rating agency also affirmed its ratings on six other classes in the deal. The negative rating actions "are due to expected losses on the assets in special servicing (11.4%), in addition to the uncertainty surrounding the timing of the disposition of assets that have been in special servicing for over 24 months," Fitch said.

Thirty-one classes of Structured Asset Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings, and 12 classes have been placed on Rating Watch Negative.The affected classes are part of seven SASCO transactions issued in 2003 and 2006. In addition, Fitch upgraded three classes and affirmed the ratings on 73 classes from 17 SASCO deals. The negative rating actions were attributed to a deterioration in the relationship between credit enhancement and expected losses. The transactions consist of fixed- and adjustable-rate, conventional mortgage loans, virtually all of which have original terms to stated maturity of 30 years. Fitch can be found online at http://www.fitchratings.com.

IndyMac Bancorp Inc., Pasadena, Calif., has announced the pricing of $500 million of noncumulative perpetual preferred stock by its wholly owned subsidiary, IndyMac Bank FSB.The preferred stock pays a dividend of 8.5%. Scott Keys, IndyMac's chief financial officer, said the offering would increase IndyMac Bank's Tier I capital from $2.1 billion to $2.6 billion, based on the company's balance sheet as of March 31. Morgan Stanley & Co. and Goldman Sachs & Co. were the joint book-running managers of the offering. The company can be found online at http://www.indymacbank.com.