Servicing

Two classes of mortgage pass-through certificates in Mortgage Asset Securitization Transactions Asset Back Securities Trust deals have been downgraded by Fitch Ratings.Class M-6 of series 2002-OPT1 was downgraded from BBB-minus to BB-minus, and class M-6 of series 2003-WMC2 was downgraded from BBB-minus to BB-plus. Fitch also placed classes M-10 and M-11 of series 2005-NC2 on Rating Watch Negative and affirmed the ratings on 22 classes in three MASTR ABS securitizations. The rating agency attributed the downgrades to deterioration in the relationship between credit enhancement and loss expectations. Fitch said the collateral backing the transactions consists primarily of first- and second-lien fixed- and adjustable-rate subprime mortgage loans.

Four classes of mortgage pass-through certificates in Mortgage Asset Securitization Transactions Second Lien Trust 2005-1 have been downgraded by Fitch Ratings.The downgrades were as follows: class M-6, from BBB-minus to BB-plus; class M-7, from BB-plus to CC; class M-8, from B-minus/DR2 to C/DR6; and class M-9, from CC/DR3 to C/DR6. Class M-7 was also assigned a Distressed Recovery rating of DR4. In addition, the ratings on six other classes in the MASTR transaction were affirmed. The downgrades were attributed to the failure of overcollateralization to reach the target level and to writedowns stemming from rising interest rates and prepayments that have been much faster than expected.

Seventeen classes from six Structured Asset Securities Corp. residential mortgage-backed securitizations have been downgraded by Fitch Ratings.In addition, the Distressed Recovery ratings on two SASCO classes were lowered. Fitch also affirmed the ratings on 59 classes from six SASCO deals. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations. The pools consist of conventional, fixed-rate, fully amortizing and balloon, second-lien residential mortgage loans, Fitch said.

Twenty-nine classes from 10 Credit Suisse First Boston Home Equity Asset Trust transactions have been downgraded by Fitch Ratings.In addition, the ratings on 97 classes from 18 CSFB HEAT transactions have been affirmed. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations. The rating agency said the collateral backing the transactions consists of first- and second-lien fixed- and adjustable-rate subprime mortgage loans. The rating agency can be found online at http://www.fitchratings.com.

Foreclosures are continuing to "escalate at a record-setting pace" in Massachusetts, according to ForeclosuresMass, a provider of foreclosure data based in Framingham, Mass.The company said 6,624 foreclosures were recorded in the first quarter, up 76% from the level of a year earlier. "It is clear that tens of thousands of Massachusetts residents are trapped in properties they can no longer afford," said Jeremy Shapiro, president and co-founder of ForeclosuresMass. "They can't keep up with mortgage payments that are too high, and the downward pressure on statewide housing prices means that they can't sell the home to pay off their debts. With no substantial market turnaround in sight, we expect Massachusetts foreclosure rates to continue at record or near-record levels for months to come." The company can be found online at http://www.foreclosuresmass.com.

More than 430,000 foreclosure filings were reported nationwide in the first quarter, up 27% from those of the previous quarter and 35% from a year earlier, according to RealtyTrac, an online foreclosure marketplace based in Irvine, Calif.The nation's quarterly foreclosure rate of one foreclosure filing for every 264 households was the highest since RealtyTrac began issuing its report 27 months ago, the company said in its 2007 U.S. Foreclosure Market Report. (Foreclosure filings include default notices, auction sale notices, and bank repossessions.) "The rise in foreclosure activity was quite dramatic and widespread in the first quarter, with 37 out of the 50 states reporting year-over-year increases," said James J. Saccacio, chief executive officer of RealtyTrac. "Certainly the surge in subprime defaults has contributed to the overall rise in foreclosures -- we estimate that more than 50% of the foreclosure activity we charted in the first quarter was from subprime loans. However, it's not just low-end homes that are going into foreclosure. We're seeing a rising percentage of foreclosures with an estimated market value of more than $750,000." The company can be found online at http://www.realtytrac.com.

A study by Freddie Mac has found that illness and excessive debt are gaining ground on job or income loss as the leading cause of mortgage delinquencies.Freddie Mac said unemployment and income losses caused 36% of delinquencies among Freddie Mac loans in 2006, down from 43% between 2001 and 2005. But delinquencies caused by excessive financial obligations rose to 13.6% last year, up from 11.1% in prior years. Late payments linked to a borrower or family illness rose from 19.2% to 21.1%. Noting that only 0.53% of Freddie Mac loans were 90 or more days overdue at the end of 2006, chief economist Frank Nothaft said the drop in job- or income-based severe delinquencies reflects increases in payroll jobs outside the manufacturing sector. "But the increase in late payments due to excessive debt is potentially troubling because it is independent of economic trends and suggests some borrowers are having a harder time handling their financial obligations than in past years." Freddie Mac can be found online at http://www.freddiemac.com.

While rejecting the idea of a government bailout for delinquent subprime borrowers, a top government housing official said Wednesday that the Federal Housing Administration can come to the aid of "tens of thousands" of consumers through the refinancing process.Roy Bernardi, deputy secretary for the Department of Housing and Urban Development, said, "If a refi is doable, FHA would look at it and work with servicers." Mr. Bernardi noted that the agency could do more to help subprime borrowers if FHA reforms are passed by Congress, including a proposal that would allow the agency to charge risk-based premiums. "We must reach out to help the borrower," he said, speaking before a policy meeting sponsored by the Mortgage Bankers Association. "But we can't simply throw money at the problem."

Banks and thrifts can earn Community Reinvestment Act credit by placing their troubled subprime borrowers into newly refinanced loans, but not for ordinary workouts and loan modifications, according to regulators.When it comes to their own loans, "I don't think there is any question whether banks will do workouts and accommodate those individuals appropriately," said Robert Mooney, acting deputy director of the Federal Deposit Insurance Corp., at a CRA conference sponsored by the Consumer Bankers Association. The main thrust of the April 17 interagency statement is to encourage banks to work with nonprofit groups in helping subprime borrowers with adjustable-rate 2/28 and 3/27 mortgages that have been securitized. Mr. Mooney noted that a lot of the borrowers are trapped and facing foreclosure. And it isn't easy to "shake" those loans out of the securitizations so responsible banks can do the workouts, he said. Meanwhile, the regulators want to ensure that "you get the credit you deserve" in the CRA lending or service tests "for taking that extra step and going the extra mile," Mr. Mooney said. The CBA can be found on the Web at http://www.cbanet.org.

Fifteen classes from six deals issued by SACO I Trust have been placed on review for possible downgrade by Moody's Investors Service.The affected classes are as follows: series 2006-2, classes I-B-4 and II-B-4; series 2006-3, class B-4; series 2006-4, class B-4; series 2006-5, classes I-B-4, II-B-1, II-B-2, II-B-3, and II-B-4; series 2006-6, classes B-2, B-3, and B-4; and series 2006-7, classes B-2, B-3, and B-4. These actions are 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 closed-end second-lien loans.