Servicing

Four classes of Salomon Brothers Mortgage Securities VII Inc. asset-backed pass-through certificates, series 2002-CIT1, have been downgraded by Fitch Ratings.The downgrades were as follows: class M-2, from A to BBB-plus; class M-3, from A-minus to BBB; class M-4, from BBB to BB; and class M-5, from BBB-minus to BB-minus. Fitch also affirmed the ratings on two other classes in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations.

Six classes from three Ameriquest Mortgage Securities Inc. and Argent Securities Inc. home equity issues have been downgraded by Fitch Ratings.The downgrades were as follows: AMSI series 2003-8, class M-5, from BBB to BB, and class M6, from BBB-minus to BB-minus; AMSI series 2004-R3, class M-6, from BBB-minus to BB-plus, and class M7, from BB-plus to BB; and ARSI series 2004-PW1, class M-10, from B-plus to B, and class M-11, from B to CC/DR2. The rating agency also placed classes M2, M3, and M4 of AMSI series 2003-8 on Rating Watch Negative. In addition, Fitch affirmed the ratings on 18 classes from the three deals. The downgrades were attributed to monthly losses that have generally exceeded excess spread and caused a deterioration in the amount of overcollateralization. Fitch can be found online at http://www.fitchratings.com.

Foreclosures are occurring at a record-breaking pace in Massachusetts, according to ForeclosuresMass, a provider of foreclosure data based in Framingham, Mass.The company said 4,891 foreclosures were recorded in the third quarter, up 66% from the level of a year earlier and 140% from that of 2004. Foreclosures this year in Massachusetts "have already surpassed the number of foreclosures in all of 2005," said Jeremy Shapiro, president and co-founder of ForeclosuresMass. "Every corner of the state is being impacted by this incredible surge." The company can be found online at http://www.foreclosuresmass.com.

Foreclosures in several Southwestern states have already far exceeded those for all of 2005, according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm.Alexis McGee, president of the firm, said California, Texas, and Colorado have among the highest foreclosure numbers in the nation. In California, foreclosures have reached 117,560, a level that surpasses by 45% the 80,989 filings recorded last year. Texas has recorded 90,620 foreclosures, up 14.7% from 79,012 for all of 2005, and Colorado's foreclosure total has reached 54,959, a 25% increase from 43,951 last year, ForeclosureS.com reported. The company can be found online at http://www.foreclosures.com.

The Federal Home Loan Bank of Chicago is still working on a plan to move its Mortgage Partnership Finance program off its balance sheet, but the restructuring is not expected to make the mortgage purchase program more profitable."Income from the off-balance-sheet MPF business is expected to be less than the income generated under the current business model," according to the Chicago FHLBank's third-quarter financial report. The $88.9 billion-asset FHLBank reported third-quarter earnings of $42 million in the third quarter, down 6.7% from those of the same period last year. The MPF program generated $31 million of the earnings in the third quarter. Meanwhile, the bank is buying back excess stock as required by a supervisory agreement. It is also purchasing mortgage-backed securities to generate interest income. The bank can be found online at http://www.fhlbc.com.

The Federal Home Loan Bank of Boston has disclosed that its largest source of mortgage loans, Balboa Reinsurance Co. (a Countrywide subsidiary), stopped selling loans to the FHLBank in April."Management cannot predict the extent to which Balboa Reinsurance Co. may sell loans to the bank in the future," the Boston FHLBank says in its third-quarter financial report. Nearly 70% of the Boston FHLBank's $4.6 billion mortgage portfolio came from Balboa, a subsidiary of Countrywide Financial Corp., Calabasas, Calif. The Boston bank's loan purchases totaled $39.2 million in the third quarter, compared with $1.2 billion in the same period last year. With the loss of its major customer, the Boston bank's mortgage portfolio is shrinking as principal repayments outpace loan purchases. But the FHLBank still reported strong earnings. Net income totaled $50.3 million in the third quarter, a 62.6% increase from that of a year earlier. The FHLBank can be found online at http://www.fhlbboston.com.

Classes B3, B4, and B5 of GSMPS Mortgage Loan Trust, series 2003-1, have been placed under review for possible downgrade by Moody's Investors Service.The rating actions were taken because credit enhancement levels are low given the projected losses on the underlying pools of re-performing loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs, the rating agency said. Virtually all the loans were repurchased from Ginnie Mae pools, according to Moody's.

Classes B-2, B-3, and B-4 of Reperforming Loan REMIC Trust Certificates, series 2003-R4, have been placed under review for possible downgrade by Moody's Investors Service.The rating actions were attributed to credit enhancement levels that are deemed low in view of projected losses on the underlying pools, Moody's said. Loss severities "appear to be very high" for collateral insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs, the rating agency said.

Class M-3 of Residential Accredit Loans Inc., series 2004-QA2, has been downgraded from Baa2 to Ba1 by Moody's Investors Service.The downgrade was attributed to "relatively low" credit enhancement levels in light of expected losses. "The excess spread has significantly declined due to the high percentage of hybrid collateral. .... As a result, the deteriorating overcollateralization amount is causing the subordinate tranches to be more vulnerable to defaults. The underlying collateral consists of alternative-A, first-lien, adjustable-rate residential mortgage loans. The rating agency can be found online at http://www.moodys.com.

Detroit, Ft. Lauderdale, Fla., and Denver posted the three highest U.S. metropolitan foreclosure rates in the third quarter, according to RealtyTrac, an online foreclosure marketplace based in Irvine, Calif.The company's Q3 2006 U.S. Metropolitan Foreclosure Market Report ranks the foreclosure rates of the nation's 100 largest metro areas. The foreclosure rates for the three cities were 1.249%, 1.138%, and 1.113%, respectively, the company reported. "The third quarter saw a marked increase in the number of properties entering some stage of foreclosure," said James J. Saccacio, RealtyTrac's chief executive officer. "It appears that a combination of factors, including a slowdown in home sales and lower home appreciation rates are contributing to higher numbers of delinquencies." The rest of the top 10 cities were as follows: Miami; Dallas; Indianapolis; Fort Worth, Texas; Atlanta; Las Vegas; and Memphis. RealtyTrac can be found online at http://www.realtytrac.com.