Servicing

Two classes of Asset Backed Funding Corp. mortgage-backed securities, series 2002-SB1, have been downgraded by Fitch Ratings.Class M-3 was downgraded from BBB to BB, and class B was downgraded from CC/DR3 to C/DR4. Fitch also affirmed the ratings on several classes in the ABFC issue. The rating agency attributed the downgrades to a deterioration of credit enhancement relative to expected monthly losses.

Five classes from three GE Capital home equity loan pass-through certificate deals have been downgraded by Fitch Ratings.The downgrades were as follows: series 1997-HE3, class M, from AA to A, and class B1, from CC/DR4 to C/DR4; series 1999-HE1, class B1, from A to BBB, and class B2, from CC/DR3 to C/DR3; and series 1999-HE3, class B3 from CC/DR4 to C/DR3. In addition, Fitch affirmed 19 classes from seven GE Capital transactions. The downgrades were attributed to a deterioration in the relationship between credit enhancement and monthly losses. The loans consist of 15- to 30-year closed-end home equity mortgage loans secured by residential properties. Fitch can be found online at http://www.fitchratings.com.

ECC Capital Corp., an Irvine, Calif.-based real estate investment trust that originates and invests in residential mortgage loans, has announced that it expects to take a fourth-quarter loss and that the pending sale of its mortgage banking business will likely close in the first quarter of 2007.The company said arrangements with Bear Stearns Residential Mortgage Corp., which is buying ECC's mortgage banking operations for an estimated total consideration of $26 million, are expected to reduce the cash requirements of funding the operating losses of the mortgage banking operations in the fourth quarter. "However, management cautions that, based on preliminary October and November results, operating losses are still expected for the fourth quarter of 2006," the company said.

Issuance of U.S. prime jumbo mortgages rose again in the third quarter after a "roller coaster-like run" over the past year, according to Standard & Poor's.Issuance hit a peak of $79.3 billion in the fourth quarter of 2005, and then declined in the next two quarters. But issuance increased to $57.3 billion in the third quarter, up $8.6 billion (or 18%) from the second-quarter total, S&P says in a report titled "U.S. Prime Jumbo Issuance Is Back On The Rise." However, issuance is still lower than the levels recorded in 2005 as a result of higher interest rates and slower home price appreciation, the rating agency said. Issuance in the third-quarter of 2006 was off $13.5 billion (or 20%) from that of a year earlier. S&P can be found online at http://www.standardandpoors.com.

Servicing has a major effect on the performance of a commercial real estate construction loan, according to Fitch Ratings in a new report outlining its criteria for rating construction loan servicers.Fitch said its analysis of construction loan servicers will focus on five main functions: loan closing; servicing; construction risk management and underwriting; disbursement processing and control; and subperforming loan management. "Companies that have been servicing construction loans for at least five years and have demonstrated expertise in managing a diverse portfolio of construction loans are viewed favorably," said Fitch director Rich Carlson. "By the same token, however, Fitch also expects highly rated servicers to maintain awareness of current servicing trends by participating in industry conferences, forums, and associations that actively shape industry standards." Fitch rates construction loan servicers as Acceptable or Unacceptable, and Mr. Carlson said the rating agency will only consider rating securitizations of such loans if the servicer is rated Acceptable. Fitch can be found online at http://www.fitchratings.com.

Fannie Mae is scheduled to release its 2004 10-K financial annual report after the stock market closes on Dec. 6.Fannie Mae also said it will hold a conference call at 1 p.m. on Dec. 7. Several Fannie executives, including Daniel Mudd, president and chief executive officer of the government-sponsored enterprise, chief financial officer Robert Blakely, and senior vice president David Hisey are scheduled to discuss the filing with analysts and investors during the call. Details for listening to the conference call can be found at www.fanniemae.com.

Class M2 of Ameriquest Mortgage Securities Inc. series 2002-C has been downgraded from B to CC/DR4 by Fitch Ratings, and two classes from another AMSI home equity issue have been placed on Rating Watch Negative.Classes M5 and M6 of series 2003-6 were placed on watch. In addition, Fitch affirmed the ratings on seven classes from the two Ameriquest transactions. The negative rating actions were attributed to monthly losses that have generally exceeded excess spread and caused a deterioration in the amount of overcollateralization.

Two classes of the Long Beach Mortgage Loan Trust series 2003-1 subprime mortgage deal have been downgraded by Fitch Ratings.Class M-3 was downgraded from BBB to BB-plus, and class M-4 was downgraded from BB-minus to B. In addition, the ratings on two other classes were affirmed. The downgrades reflect continued deterioration in the relationship between credit enhancement and loss expectations, the rating agency said. The performance of the deal has also been hurt by a growing concentration of loans secured by manufactured homes, Fitch said.

Two classes of First Franklin Financial Corp. residential mortgage-backed certificates, series 2001-FF2, have been downgraded by Fitch Ratings, and another class has been placed on Rating Watch Negative.Class M-2 was downgraded from A-minus to BBB-minus, and class M-3 was downgraded from BBB-minus to BB-minus. Class M-1 was placed on Rating Watch Negative, and the ratings on two other classes were affirmed. Fitch attributed the negative rating actions to a deteriorating relationship between credit enhancement and expected losses. Fitch can be found online at http://www.fitchratings.com.

Two classes of Ocwen Residential MBS Corp. series 1999-R1 mortgage-backed securities have been downgraded by Moody's Investors Service.Class B4-A was downgraded from Ba2 to B1, and class B5-A was downgraded from Ca to C. The downgrades were attributed to weak collateral performance. Moody's said recent losses on the pool and high expected loss severities on the remaining collateral contributed to the rating actions. The certificates are secured primarily by first-lien, seasoned reperforming collateral, as well as loans with high loan-to-value ratios.