Servicing

The ratings on 18 subordinate classes from 11 residential mortgage-backed securities transactions issued in 2006 have been placed on CreditWatch with negative implications by Standard & Poor's Ratings Services.The actions reflect "early signs of poor performance" of the collateral backing the transactions, which consists of subprime, alternative-A, and closed-end second-lien loans, S&P said. The percentage of loans in the pools that are severely delinquent (delinquent more than 90 days, in foreclosure, or real estate owned) ranges from 2.77% to 13.46%, S&P reported. Placing ratings on negative CreditWatch when a transaction has not incurred a loss represents something new, according to S&P. "The combination of early high delinquencies and minimal or no loss experience had not been seen in the performance exhibited by prior vintages," the rating agency said. "Many of the 2006 transactions may be showing weakness because of origination issues, such as aggressive residential mortgage loan underwriting, first-time homebuyer programs, piggyback second-lien mortgages, speculative borrowing for investor properties, and the concentration of affordability loans." S&P can be found online at http://www.standardandpoors.com.

Class M-7 of Bear Stearns Asset-Backed Securities series 2005-2 has been removed from Rating Watch Negative by Fitch Ratings.In addition, Fitch affirmed the ratings on seven other classes in the deal. The Rating Watch removal reflects a decline in monthly losses, Fitch said. "The average monthly excess spread over the past six months has been greater than monthly losses and has allowed overcollateralization to grow," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Class M-3 of RFSC Series 2003-RP1 Trust has been downgraded from B3 to Caa3 by Moody's Investors Service, and classes M-3 and M-4 of RFSC Series 2004-RP1 Trust have been placed on review for possible downgrade.The downgrade was attributed to continued losses that have led to "significant deterioration" in overcollateralization. The other two tranches were placed on review based on the weaker-than-expected performance of the underlying pool of subprime and re-performing residential mortgage loans, the rating agency reported.

Community banks cut back on their sales of newly originated single-family loans to wholesalers and secondary-market agencies last year, and sales to Fannie Mae dropped the most, according to a survey by America's Community Bankers.The 215 institutions responding to ACB's annual Real Estate Survey sold only 24% of their loan production in 2006, down from 34% in 2005. Conduits and wholesalers purchased 40% of the $1.95 billion loans sold in the secondary market and Fannie and Freddie Mac purchased 41%. Freddie's share increased by five percentage points to 26%, and Fannie's share fell five percentage points to 15%. The survey respondents originated $20.5 billion in residential mortgages in the first nine months of 2006, and 39% expect to see an increase in loan production in 2007, while 27% expect to see a decline. The respondents are "not as optimistic as they were last year," said ACB senior vice president Debra Cope. ".... The only business where a majority saw a prospect for an increase was home equity lending." A large majority said they expect to see a decline in construction and multifamily lending.

Class B-1 of Centex Home Equity Loan Trust series 2002-C has been downgraded from Baa2 to Baa3 by Moody's Investors Service.The downgrade was based on low credit enhancement levels compared with current loss projections, Moody's said. "The credit support has declined because the deal stepped down, allowing a large portion of the credit support to leak out," Moody's reported, adding that the realized losses have caused overcollateralization to fall below the required level. The underlying collateral consists of fixed- and adjustable-rate, first- and second-lien residential mortgage loans.

Class M5 of Asset Backed Securities Corp. mortgage pass-through certificates, series 2003-HE3, has been downgraded from BBB-minus to BB by Fitch Ratings.In addition, Fitch placed the following four ABSC classes on Rating Watch Negative: series 2003-HE2, class M-5; series 2004-HE6, classes M6 and M7; and series 2004-HE8, class M7. Fitch also affirmed the ratings on 184 other classes in 24 ABSC deals. The rating agency attributed the downgrade to a deterioration in the relationship between loss expectations and credit support levels. The watchlist placements were due to "signs of increasing credit risk, posing a potential threat to subordinate bonds," Fitch said.

Three classes of notes issued by Northlake CDO I, a collateralized debt obligation that includes mortgage-backed securities, have been downgraded by Fitch Ratings.The downgrades were as follows: class II floating-rate notes, from AA to A; class III floating-rate notes, from BBB to BB; and preference shares, from BB to C. The preference shares were also assigned a Distressed Recovery rating of DR6, and the ratings on two other classes in the deal were affirmed. Fitch attributed the downgrades to "an increase in the par value of the assets for which Fitch does not expect a full par recovery." The transaction, a CDO managed by Deerfield Capital Management, is composed of residential and commercial MBS, asset-backed securities, and CDOs. The rating agency can be found online at http://www.fitchratings.com.

The Independent Community Bankers of America has teamed up with wholesaler Taylor, Bean & Whitaker Mortgage Corp. to give its member banks an option to sell their loans servicing-released and achieve better pricing and service for their mortgage customers."It is the philosophy of Taylor, Bean, Whitaker that attracts us to them because they have a community bank focus," said ICBA Mortgage senior vice president Elizabeth Deal. TB&W offers clients a Web-based origination system called CommunityBankOnline that allows the bank's officers to maintain control of customer relationships throughout the origination and servicing of the loan. The Ocala, Fla.-based wholesaler will not cross-sell to the banks' customers and the customers will still make their mortgage payments to the bank, Ms. Deal explained. ICBA's mortgage subsidiary already has alliances and partnerships with Fannie Mae, Freddie Mac, and IndyMac Bank for member banks that want to sell their loans and retain the servicing. The ICBA can be found online at http://www.icba.org, and TB&W can be found online at http://www.taylorbean.com.

Countrywide Financial Corp., Calabasas, Calif., has announced an agreement by one of its subsidiaries to acquire the assets and assume certain liabilities of Chicago-based CCM Futures LLC, a futures trading broker.The terms of the deal were not disclosed. CCMF trades on the Chicago Board of Trade and the Chicago Mercantile Exchange. "The acquisition of CCMF will strengthen our existing futures Introducing Broker business by expanding our product line and customer base, while diversifying our revenue streams," said Ron Kripalani, president and chief executive officer of Countrywide Capital Markets and executive managing director of Countrywide Financial. Countrywide can be found on the Web at http://www.countrywide.com.

Subprime wholesaler ResMae Mortgage, Brea, Calif., has filed for bankruptcy protection, but has agreed to sell certain assets to Credit Suisse for an undisclosed sum.Industry sources said ResMae -- like many subprime funders -- has been hurt by buyback requests from Wall Street. According to the firm's bankruptcy filing, its unsecured creditors include warehouse providers Barclays Bank, Merrill Lynch, and others. As of MortgageWire's deadline, ResMae officials could not be reached for comment. Credit Suisse, which is not listed in the filing as a large unsecured creditor, declined to comment. On Feb. 12 ResMae filed a voluntary petition for reorganization. The asset sale to Credit Suisse will require court approval. The Wall Street firm, which also operates a subprime wholesale platform, has agreed to provide warehouse financing to ResMae allowing the nondepository "to operate in a normal manner during the reorganization," according to a statement released by the lender. According to the Quarterly Data Report, ResMae ranks 23rd among all subprime funders and 30th among servicers. ResMae is one of a dozen or so nondepository subprime lenders that have failed in the past 60 days. The company can be found on the Web at https://www.resmae.com.