Servicing

CIT Group Inc., a global commercial and consumer finance company, has announced the launch of the CIT Payment Protection Plan, an optional debt protection program for its first-mortgage and consumer loan customers.Under the plan, customers faced with involuntary unemployment, family leave of absence, disability, or death of a co-borrower, would not have to pay the principal and interest portion of their monthly loan payment, up to a specific dollar amount, for up to six months. "The CIT Payment Protection Plan allows borrowers the ability to protect their credit during uncertain periods of their lives," said Paul Petrylak, president of CIT Insurance Services. "As one of a few financial institutions to offer debt protection to first-mortgage customers, the plan will offer temporary relief to our customers as they work to get back on their feet after a significant life event." The company can be found online at http://www.cit.com.

Tighter underwriting standards on subprime loans could have a greater impact on reducing foreclosures than banning prepayment penalties and balloon loans and other so-called predatory lending practices, according to a study by the Office of the Comptroller of the Currency.OCC researchers discovered a strong correlation between high foreclosures and refinanced loans with no- and low-document features, which they equated with "loose" lending practices. The study of foreclosures in Chicago did not find the same correlation on subprime loans with balloons or prepayment penalties (36 months or longer) or on no- or low-doc purchase loans. The OCC researchers maintain that underwriting practices that ensure borrowers can repay their loan represent a more effective approach to preventing foreclosures than "blanket" prohibitions on certain lending practices. This approach is also consistent with the proposed guidance on interest-only and payment-option mortgages, according to the study. Federal banking regulators are expected to finalize the guidance this fall.

The class B certificates from three Renaissance Home Equity Loan Trust subprime deals issued in 2002 have been placed under review for possible downgrade by Moody's Investors Service.The affected transactions are: series 2002-1, series 2002-2, and series 2002-3. The deals were originated by Delta Funding Corp. The rating actions were taken because credit enhancement levels are low given the projected losses on the underlying pools, Moody's said. Overcollateralization in all the underlying pools is below its target or 50-basis-point floor as of the Aug. 25 reporting date, the rating agency reported. Moody's can be found online at http://www.moodys.com.

Affordability products dominated the alternative-A mortgage sector in the second quarter, pushing the issuance of alt-A securities to a record high after a brief downturn early in the year, according to Standard & Poor's Ratings Services.Issuance rose about 33%, from $76 billion in the first quarter to $101 billion in the second quarter, and 50% when compared with the $66 billion volume a year earlier, S&P reported. Affordability products such as payment-option adjustable-rate mortgages and interest-only ARMs represented 77% of the total volume in the second quarter, up from 61% a year earlier, S&P said. "This growth is a result of the dramatic increase in the popularity of affordability products during the first half of 2006," said credit analyst Jeff Watson. "Standard & Poor's expects total volume in second-half 2006 to stabilize, rather than to continue to grow above current levels." The data were published in a report titled "Trends in U.S. Residential Mortgage Products: Alt-A Sector Second-Quarter 2006." S&P can be found online at http://www.standardandpoors.com.

Fitch Ratings has assigned Financial Freedom Senior Funding Corp. an RPS3-plus residential primary servicer rating for reverse-mortgage loans.Fitch said the rating is based on Financial Freedom's expertise in servicing reverse mortgages, integrated payment processing and reverse-mortgage systems, and established quality-monitoring procedures. Fitch said the rating also reflects the financial strength of parent company IndyMac Bank, which has a long-term debt rating of BBB-minus from Fitch. Financial Freedom is based in Irvine, Calif., and has a specialized reverse-mortgage servicing platform in San Francisco. Financial Freedom serviced approximately 93,000 loans totaling more than $9.8 billion as of May 31.

Fannie Mae chief executive Daniel Mudd says he believes the company's retained portfolio could fall dramatically, to just $10 billion, if limits imposed by a Senate GSE bill prevail.In a 39-page letter to members of the Senate Banking Committee, Mr. Mudd writes that "in our analysis a literal reading of the bill would lead to a reduction in the size of our portfolio to a range of $10 billion to $100 billion." At the end of July, Fannie's retained portfolio totaled $731.4 billion. The letter -- penned by Mr. Mudd and company chairman Stephen Ashley -- is dated July 31 and addresses questions raised by senators before and after a June hearing on the company's accounting scandal. Mr. Mudd's estimate on the company's retained portfolio addresses loan limits imposed by S. 190, a government-sponsored enterprise reform bill introduced by Senate Banking Committee Chairman Richard Shelby, R-Ala. Mr. Mudd also said that if S. 190 became law, it would bar Fannie (and Freddie Mac) from investing in mortgage-backed securities "in almost all instances." Fannie Mae can be found online at http://www.fanniemae.com.

Four classes from four net-interest-margin securitizations issued by Lehman Brothers (SASCO) have been downgraded by Moody's Investors Service.The downgrades were as follows: SARM Net Interest Margin Notes, series 2005-5, class A, from A3 to B1; SAIL Net Interest Margin Notes, series 2003-2, class A, from Baa2 to Ba2; SASCO Net Interest Margin Trust 2003-36XS, class A, from A1 to Baa2; and SASCO Net Interest Margin Trust 2003-3XS, class A, from A3 to Baa2. NIM deals typically represent the securitization of excess spread, prepayment penalties, and cap payments generated by the underlying residential mortgage-backed securities. Moody's attributed the downgrades to "low and diminishing levels" of residual cash flows from the underlying transactions. The transaction underlying SARM 2005-5 has experienced high prepayments, reducing the payments to the A-IO2 class that serves as collateral, the rating agency said. "For the other NIM securities, losses incurred by the underlying pools have diverted cash flow away from the residual tranches, which provide collateral to the NIMs," Moody's reported. The rating agency can be found online at http://www.moodys.com.

The PMI Group, San Francisco, has inked a deal to buy back $345 million worth of its common stock through Goldman Sachs & Co.A spokesman for the company said the accelerated buyback commitment will offset a debenture program that will result in the issuance of about $345 million worth of new stock to bondholders. The mortgage insurer said the company is trying to avoid a dilution in its share price. Not only is Goldman serving as broker on the share buybacks, but it has also arranged for $345 million in financing to fund the program. According to the Quarterly Data Report, PMI is the nation's second-largest mortgage insurance company. PMI can be found on the Web at http://www.pmigroup.com.

Three subordinate certificates from three subprime securitizations issued by Saxon Asset Securities Trust in 2001 have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2001-1, class MF-2, from Ba2 to Ba3; series 2001-2, class B-1, from Ba2 to B1; and series 2001-3, class B, from Ba1 to B1. The downgrades were based on weaker-than-expected performance by the mortgage pools and the resulting erosion of credit support, Moody's said. In the 2001-1 deal, the overcollateralization is almost fully depleted and the BF-1 tranche has realized losses, the rating agency reported. In the 2001-2 and 2001-3 deals, pipeline losses could cause further erosion of the overcollateralization and put pressure on the most subordinate tranches, Moody's said. Saxon Mortgage Inc. is the master servicer of the transactions, and Saxon Mortgage Services Inc., a sister company, is the primary servicer.

Interactive Mortgage Advisors, Denver, is offering a $145.7 million portfolio of bulk Fannie Mae servicing rights.The average loan size of the portfolio is $106,967. The average yield is 5.96%. IMA, a servicing brokerage and advisory firm, did not disclose the identity of the seller. The bid deadline is Aug. 31.