Servicing

The Federal Home Loan Bank of Chicago purchased $303 million in loan participations from other FHLBanks in honoring outstanding commitments over the first nine months of this year. (MortgageWire reported Nov. 14 that the bank had stopped buying mortgage loans from other FHLBanks.)Earlier this year, the FHLBank said it would stop making new commitments under its Mortgage Partnership Finance program. A bank spokeswoman also pointed out that the Chicago bank purchased nearly $1 billion in mortgage loans from its members during the same period.

Three certificates from two deals issued by Ameriquest Mortgage Securities Inc. have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2002-3, class M-4, from B3 to Caa2; Quest Trust 2004-X3, class M-6, from Ba1 to Ba2; and Quest Trust 2004-X3, class M-7, from Ba2 to B1. The downgrades were prompted by declines in overcollateralization to below-target levels, the rating agency said.

Two tranches from GSAMP Trust 2004-SEA2 have been downgraded by Moody's Investors Service and two others have been placed on review for possible downgrade.The rating actions were as follows: class M-5, downgraded from B1 to Caa2; class B-1, downgraded from B3 to C; and classes M-3 and M-4, placed on review for possible downgrade. The actions were based on "rapid deterioration of overcollateralization and subordination caused by accelerating losses," the rating agency said. The losses were attributed to the number of defaulted loans and "substantial severity of loss" on liquidated collateral. The transaction consists of seasoned subprime mortgage loans, some of which had been delinquent before securitization. Moody's can be found online at http://www.moodys.com.

Fitch Ratings has lowered the residential primary servicer rating of Nationstar Mortgage LLC (formerly Centex Home Equity Corp.) from RPS2-plus to RPS2 for subprime loans.The rating agency said the downgrade was based on Nationstar's change in ownership from Centex Corp., which is rated BBB-plus, to a nonrated company, Fortress Investment Group. Nationstar is part of Fortress' private equity group. Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating.

The residential primary servicer ratings of PHH Mortgage Corp. for prime, alternative-A, and home equity products have been lowered from RPS1 to RPS1-minus by Fitch Ratings.Fitch said the actions were based on the downgrade of the underlying corporate rating of the parent company, PHH Corp., whose senior debt was recently downgraded from A-minus to BBB-plus. (PHH announced in July that its financial statements for 2005 would need to be restated.) Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating. The rating agency can be found online at http://www.fitchratings.com.

Subprime lender ECC Capital Corp., Irvine, Calif., posted a stunning $54 million loss in the third quarter, citing loan buybacks and early payment defaults.Through the first nine months of the year, the publicly traded nondepository lost almost $80 million. In October, investment banker Bear Stearns & Co. agreed to purchase the money-losing subprime production arm of ECC Capital. In an interview with MortgageWire, a Bear Stearns spokeswoman denied that there were any buyback issues between the Wall Street firm and Encore Credit Corp., the mortgage unit of ECC. (Bear had been warehousing and purchasing loans from Encore.) In its earnings statement, ECC said it is continuing to "experience higher levels of repurchase claims generally relating to early payment defaults." Almost 6% of Encore's loans are in foreclosure. The company also has a 30-plus day delinquency rate of 3.3%. (For more details, see the Nov. 20 issue of National Mortgage News.

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.