Servicing

Fannie Mae has cut ties with ailing subprime lender New Century Financial Corp., informing the company that it can no longer sell loans to the government-sponsored enterprise or service its mortgages.New Century, which is expected to file for bankruptcy protection, disclosed the news March 20 in a filing with the Securities and Exchange Commission. The Irvine, Calif.-based wholesaler also said it has been hit with cease-and-desist orders from several states, including California, Florida, and New York. The C&Ds accuse the company of not funding loans after closing. (New Century has not funded a mortgage in at least two weeks.) All of its warehouse providers cut off credit to the company. It services about $40 billion in loans, according to the Quarterly Data Report. One investment adviser told MortgageWire that New Century has enough cash to last 60 days. Its stock was delisted by the New York Stock Exchange and now trades on the "pink sheets." The companies can be found online at http://www.fanniemae.com and http://www.ncen.com.

Origen Financial Inc., a real estate investment trust based in Southfield, Mich., has announced the renewal of a financing facility with Citigroup Global Markets Realty Corp. for an additional year, with an increase in its capacity from $235 million to $250 million.The company said the other terms of the facility have also improved, offering lower borrowing costs and a higher advance rate. Origen, which originates and services manufactured home loans, can be found on the Web at http://www.origenfinancial.com.

Two subordinated certificates from Merrill Lynch Mortgage Investors Trust series 2004-SL1 and 2004-SL2 have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are class B-3 of series 2004-SL1 and class B-4 of series 2004-SL2. In addition, Moody's placed four classes on review for possible upgrade. The rating agency said the transactions are backed by subprime second-lien mortgages whose recent losses have exceeded the available excess spread, thereby depleting the overcollateralization.

Classes M-7, B-1, and B-2 from Long Beach Mortgage Loan Trust series 2006-A have been placed on review for possible downgrade by Moody's Investors Service.The negative rating actions were attributed to credit enhancement levels that may be too low to sustain the current ratings when compared with rising projected losses. The transaction is backed by second-lien loans.

Four certificates from Ace Securities Corp. Home Equity Loan Trust have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are classes M8, M9A, M9B, and B1. Moody's attributed the negative rating actions to the fact that the bonds' credit enhancement levels, including excess spread, may be too low in view of projected losses. The primary originators on the transaction, which is backed by second-lien loans, are Long Beach Mortgage Co. (60%) and Fremont Investment & Loans (30%).

Four certificates from Fremont Home Loan Trust series 2006-B have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are classes SL-M7, SL-M8, SL-M9, and SL-B1. The negative rating actions were attributed to the fact that the bonds' credit enhancement levels, including excess spread, may be too low in view of projected losses. The transaction is backed by second-lien loans.

The ratings of five classes from three Terwin Mortgage Trust securitizations have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are as follows: series 2005-7SL, classes B-6 and B-7; series 2005-11, class I-B-7; series 2005-11, class II-B-5; and series 2006-4SL, class B-6. The watchlisting actions were attributed to recent losses that have eroded overcollateralization, possibly lowering credit enhancement levels too much to support the existing ratings. The underlying collateral backing the transactions consists mainly of second-lien residential mortgage loans.

Five certificates from New Century Home Equity Loan Trust series 2006-S1 have been placed on review for possible downgrade by Moody's Investors Service.The affected certificates are classes M4, M5, M6, M7, and M8. The negative rating actions were based on credit enhancement levels (including excess spread) that may be too low to sustain the current ratings when compared with rising projected losses. The transaction is backed by second-lien loans.

Class B-3 of SACO I Trust 2004-3 has been downgraded from B3 to Caa2 by Moody's Investors Service, and nine other certificates from various SACO I deals have been placed on review for possible downgrade.The nine certificates are as follows: series 2004-2, class B-2; series 2005-1, class B-3; series 2005-2, classes B-3 and B-4; series 2005-4, classes B-2, B-3, and B-4; and series 2005-WM1, classes B-4 and B-5. In addition, four certificates issued by SACO I Trust 2004-1 and 2004-2 were placed on review for possible upgrade. The negative rating actions were attributed to losses that have exceeded the excess spread available, thereby depleting the overcollateralization. The transactions are backed by closed-end second loans.

Three tranches from two deals issued by MASTR Second Lien Trust have been downgraded by Moody's Investors Service, and one tranche has been placed under review for possible downgrade.The downgrades were as follows: series 2005-1, class M-8, from Ba2 to B1; and series 2006-1, class M-7, from Ba1 to B3, and class M-8, from Ba2 to Caa2. Class M-6 of the latter series was placed under review for possible downgrade. The rating actions were attributed to weaker-than-expected performance by the mortgage collateral and a resulting erosion of credit support. The underlying collateral for the deals consists of second-lien, fixed-rate residential mortgage loans. The collateral in the 2005-1 was primarily originated by Accredited Home Lender (42%) and the collateral in the 2006-1 was primarily originated by Fremont Investment & Loans (47%) and American Home (31%).