Servicing

Five classes of Structured Asset Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: SASCO 2001-8A pools 1-3, class B4-I, from BB-minus to B; SASCO 2002-22H group 1, class B4-I, from BB to B, and class B5-I, from CCC/DR2 to C/DR6; and SASCO 2002-22H group 2, class B4-II, from BB to B, and class B5-II, from CCC/DR2 to C/DR6. In addition, the ratings on 15 other classes in the transactions were affirmed. Fitch attributed the downgrades to cumulative pool losses and high delinquency levels.

Fannie Mae has announced that its recent tender offers for up to $21.04 billion of callable debt securities resulted in a repurchase of $4.16 billion of the securities.The securities were originally issued with European-style one-time call options that have since expired. The government-sponsored enterprise said the offers were part of its effort to maintain a liquid and transparent market for its debt products. Fannie Mae can be found online at http://www.fanniemae.com.

Metropolitan Life Insurance Co., New York, has been approved for membership in the Federal Home Loan Bank of New York, the first life insurance company to become a member, according to the FHLBank.Tony Williamson, senior vice president and treasurer of MetLife, said the membership "is an important element in our strategic plan to secure multiple sources of reliable funding." The FHLBank-NY declared a 6.25% dividend for the third quarter. MetLife can be found on the Web at http://www.metlife.com, and the FHLBank can be found at http://www.fhlbny.com.

NexCen Brands Inc., New York, has announced that it plans to sell its mortgage-backed securities portfolio and exit the MBS business.One security was sold and settled on Oct. 31, and the remainder will be sold pursuant to forward-sale arrangements that are slated to settle on Nov. 21, according to the company. "Total proceeds from these MBS sales, exclusive of accrued interest and prepayments already received in October, and including any prepayments to be received in November 2006, will be approximately $78 million," NexCen said.

Class M-3 of Ace Securities Corp. mortgage-backed securities, series 2003-HE3, has been downgraded from BBB to BB by Fitch Ratings, and three classes from two Ace subprime transactions have been placed on Rating Watch Negative.The securities placed on rating watch were class M-2 of series 2003-HE3 and classes M-5 and M-6 of series 2003-FM1. In addition, the rating agency affirmed the ratings on six other classes from the two transactions. Fitch said the negative rating actions were taken because monthly losses exceeded the available excess spread in recent months, causing a deterioration in the amount of overcollateralization. The rating agency can be found on the Web at http://www.fitchratings.com.

The long-term issuer rating of Doral Financial Corp., a mortgage lender based in San Juan, Puerto Rico, has been lowered from BB-minus to B-plus by Fitch Ratings.Among other rating changes, Fitch also downgraded Doral's senior debt from BB-minus to B and its preferred stock from B to CCC-plus, and lowered the long-term issuer rating of Doral Bank, a subsidiary, from BB to BB-minus. The ratings remain on Rating Watch Negative. Fitch said the actions stemmed from "a combination of near-term and long-term challenges." The former include the refinancing of $625 million of unsecured debt coming due July 20, 2007, and low capital levels, although Fitch added that Doral is still well capitalized by regulatory standards. The long-term challenges include regulatory restrictions on Doral Bank, capitalization levels, poor operational performance in 2006, the potential financial impact of lawsuits, and the change of Doral's business model from that of a mortgage company to that of a full-service bank.

In the third quarter, 89% of the homeowners who refinanced their homes got a mortgage at least 5% larger than the original loan, according to Freddie Mac.The percentage was up from 88% in the previous quarter and 73% a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "Mortgage borrowers continue to refinance their mortgages at a higher frequency than historically would have occurred given the rise in mortgage rates over this year," said Frank Nothaft, Freddie Mac's chief economist. "But the wide proliferation of adjustable-rate mortgages originated in the past few years that are nearing their first interest-rate adjustment provides borrowers an incentive to refinance into a lower-cost ARM or fixed-rate mortgage." In the third quarter, 41% of all mortgage applications were for refinancings, down from 42% in the second quarter, Freddie Mac reported.

The long-term issuer default ratings of R&G Financial Corp., San Juan, Puerto Rico, and R-G Mortgage Corp. have been lowered from BBB-minus to BB by Fitch Ratings.Fitch also downgraded R&G Financial's preferred stock from BB to B, lowered various ratings of other R&G subsidiaries such as R-G Premier Bank and R-G Crown Bank, and assigned a rating outlook of negative. The rating agency said the actions stemmed from various concerns, including a longer-than-expected delay in releasing audited financial statements for fiscal year-end 2005 and quarterly financials for 2006, regulatory restrictions on subsidiaries, the company's operational performance in 2006, and the mix and level of its capitalization. In January, R&G Financial announced the resignation of Ramon Prats as vice chairman and president, and as president of R-G Mortgage and R-G Premier Bank, in connection with an investigation by the company's audit committee. The probe related to the company's need to restate its earnings for 2002, 2003, and 2004. Fitch can be found online at http://www.fitchratings.com, and R&G Financial can be found at http://www.rgonline.com.

Fannie Mae acquired $66.59 billion in mortgages during September, its best purchase month of the year.Loan acquisitions rose 36% from their August level, but compared with September 2005, purchases fell 6%. September tends to be a good month for secondary-market activity, reflecting loan applications filed in the summer that result in fall closings. Fannie's chief competitor, Freddie Mac, purchased $41.4 billion in mortgages in September, a 34% decline from the level of a year earlier. In August Freddie purchased $43.2 billion. At the end of September, Fannie had a retained portfolio of $726 billion and Freddie's totaled $702 billion. The government-sponsored enterprises can be found online at http://www.fanniemae.com and http://www.freddiemac.com.

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that 318,355 properties nationwide entered some stage of foreclosure in the third quarter, a 43% year-over-year increase.The number represented a 17% increase from the level recorded in the second quarter. The company's Q3 2006 U.S. Foreclosure Market Report is based on the company's database of pre-foreclosure and foreclosure properties, which it says includes nearly 650,000 properties in more than 2,500 counties across the country. "Higher interest rates and a general softening of the real estate market are the two key factors contributing to the 43% increase in foreclosure filings from the third quarter of 2005," said James J. Saccacio, RealtyTrac's chief executive officer. "What our third-quarter research appears to be showing is that the first wave of adjustable-rate mortgages is having a negative impact on the number of homes going into foreclosure." The company said Colorado, Nevada, and Florida had the nation's highest foreclosure rates in the second quarter. RealtyTrac can be found online at http://www.realtytrac.com.