Servicing

Twenty-seven classes from seven transactions issued by Structured Asset Investment Loan Trust have been downgraded by Moody's Investors Service.In addition, Moody's placed eight classes from two SAIL transactions on review for possible downgrade and confirmed the ratings on three classes. The rating agency attributed the negative rating actions to credit enhancement levels that are seen as too low based on higher-than-expected rates of delinquency. "Moreover, recent losses have begun to erode overcollateralization on a number of the downgraded deals, leaving the rated bonds less protected against future losses," Moody's said. The collateral in the deals consists of fixed- and adjustable-rate, first- and second-lien subprime residential mortgage loans. Moody's can be found on the Web at http://www.moodys.com.

Rating agencies issued a blizzard of news releases during the week of April 23 announcing downgrades and other rating actions on mortgage-backed and mortgage-related securities, many of them linked to subprime mortgage loans.The releases resulted in more than 30 news items on well over 300 downgrades of MBS, asset-backed securities supported by home equity loans, and collateralized debt obligations containing residential and commercial MBS. This was a record number of downgrade-related news items for this publication in a single week.

Economist David Lereah is leaving the National Association of Realtors in mid-May to take a top position at Move Inc., a provider of real estate information that operates the NAR's website and owns Realtor.com.After seven years at the NAR, Mr. Lereah will become an executive vice president at Move, which is based in Westlake Village, Calif. The NAR is a longtime stockholder in the company, which was formed in the mid 1990s and was formerly known as Homestore. The NAR has directors on Move's board. Mr. Lereah will also serve as chairman and partner of a new business entity that former Realtor.com president and chief executive Allan Dalton is planning to launch in the third quarter. "Having David partner with me on this new venture will ensure that consumers and the industry will benefit from his unparalleled knowledge of financial issues and the real estate marketplace," Mr. Dalton said. The NAR can be found online at http://www.realtor.com, and Move can be found at http://www.move.com.

The Federal Housing Administration may not be able to revive its single-family program unless the agency adopts private-sector policies and procedures in originating, insuring, and servicing mortgages, according to the Consumer Mortgage Coalition.So the trade group is working to add language to an FHA reform bill (H.R. 1852) that requires the FHA to swiftly align its processes and procedures with those of the conventional market. The CMC contends that the FHA's outdated underwriting processes and severe penalties for noncompliance force lenders to conduct their FHA business as separate operations. This is expensive and discourages lenders from participating in the FHA program, according to CMA executive director Anne Canfield. "It is really important for FHA to align their processes and procedures with the way the world works," she said. The House Financial Services Committee is scheduled to mark up H.R. 1852 on May 1.

Minority real estate groups are calling on House Financial Services Committee leaders to earmark a portion of a GSE affordable housing fund to support foreclosure prevention funds.Subprime loans are prevalent in minority and low-income neighborhoods, according to the Asian Real Estate Association of America, the National Association of Real Estate Brokers, and the National Association of Hispanic Real Estate Professionals. "The reality is that without real resources it will be extremely difficult to help many of these borrowers facing spikes in interest rates and increases in their monthly mortgage obligations," the three real estate groups say in a letter to the committee chairman, Rep. Barney Frank, D-Mass., and the ranking minority member, Rep. Spencer Bachus, R-Ala. The government-sponsored enterprise bill approved by the House committee on March 28 requires Fannie Mae and Freddie Mac to contribute annually an estimated $520 million to an affordable housing fund. During the first year, those AH funds are directed to the repair and rebuilding of affordable housing in Louisiana and Mississippi. The three groups want a portion of those contributions earmarked for loss mitigation, homeowner counseling, and foreclosure prevention.

Two classes of notes issued by MKP CBO I Ltd., a collateralized debt obligation partly composed of residential and commercial mortgage-backed securities, have been downgraded by Fitch Ratings.Class A-1L was downgraded from B/DR2 to CCC/DR2, and class A-2L was downgraded from CC/DR4 to C/DR5. Fitch attributed the downgrades to "further deterioration of the credit quality of the collateral pool and severe undercollateralization of the subordinate notes." The CDO consists of RMBS, CMBS, and commercial and consumer asset-backed securities, the rating agency said.

Two classes of GSMPS Mortgage Loan Trust series 2003-1 have been downgraded by Moody's Investors Service.Class B4 was downgraded from Ba2 to Ba3, and class B5 was downgraded from B2 to Ca. The rating on one other class in the transaction was confirmed. The downgrades stem from the fact that credit enhancement levels are too low in view of projected losses on the underlying pools, Moody's said. The transaction consists of a securitization of re-performing loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs, virtually all of which were repurchased from Ginnie Mae pools, the rating agency said.

Four classes from three issues of CDC Mortgage Capital Trust mortgage pass-through certificates have been downgraded by Fitch Ratings, and three classes have been placed on Rating Watch Negative.The downgrades were as follows: series 2003-HE1, class B1, from B-plus to CCC; series 2003-HE3, class B-3, from BBB-minus to BB-minus (and removed from Rating Watch Negative); and series 2003-HE4, class B-2, from BBB to BB, and class B-3, from BBB-minus to BB-minus (and removed from Rating Watch Negative). The securities placed on Rating Watch Negative were as follows: class B3 of series 2004-HE1 and classes B3 and B4 of series 2004-HE2. In addition, Fitch upgraded two classes and affirmed the ratings on 32 classes from seven CDC deals. The rating agency attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses.

Seven classes from two Meritage Mortgage Loan Trust securitizations have been downgraded by Fitch Ratings, and two other classes have been placed on Rating Watch Negative.The downgrades were as follows: series 2004-1, class M-6, from BBB-plus to BBB, class M-7, from BBB to BB-plus, class M-8, from BB-minus to B, and class B-1, from B-plus to C (and assigned a Distressed Recovery rating of DR4); and series 2004-2, class M-8, from BBB-plus to BB-plus, class M-9, from BBB to BB, and class M-10, from BB-plus to B-plus. The securities placed on Rating Watch Negative were classes M-6 and M-7 of series 2004-2. Fitch said the negative rating actions were due to a deterioration in the relationship between credit enhancement to expected losses.

Seven certificates from four transactions issued in 2004 by First Franklin Mortgage Loan Trust have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2004-FFH1, class M-7, from Baa1 to Ba1, class M-8, from Baa2 to B2, and class M-9, from Baa3 to Caa1; series 2004-FFH2, class B-1, from Ba1 to B2, and class B-2, from Ba2 to Caa1; series 2004-FFH3, class B-2, from Ba1 to B3; and series 2004-FFH4, class B-2, from Ba3 to B1. The downgrades were based on an "analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to expected losses," Moody's said. The transactions are backed by first-lien, adjustable- and fixed-rate subprime mortgage loans. Moody's can be found online at http://www.moodys.com.