Servicing

H&R Block Inc., Kansas City, Mo., has announced that it expects to record a $102.1 million provision for losses in the current quarter related to its subsidiary Option One Mortgage Corp.Block said the expected loss provision would reflect an increase in the estimated recourse liability recorded by Option One for loan repurchases and premium-recapture reserves. "The increased level of loan repurchases, which have been noted industrywide, are primarily due to a higher level of repurchase requests from loan buyers and an increase in early payment delinquencies," the company said. The provision would represent an after-tax amount of $61.3 million, or $0.19 per share, Block reported. The company can be found online at http://www.hrblock.com.

Five classes of the Long Beach Mortgage Loan Trust series 2002-1 subprime mortgage deal have been downgraded by Fitch Ratings.The downgrades were as follows: group 1, class I-M2, from BBB to BB, and class I-M3, from CCC/DR2 to C/DR4; and group 2, class II-M1, from A-plus to BBB-plus, class II-M2, from BBB to BB, and class II-M3, from CCC/DR2 to C/DR4. In addition, the rating on one class in group 1 was affirmed. The downgrades stem from the fact that the transaction is experiencing monthly losses that exceed the available excess spread, causing "substantial deterioration" of the overcollateralization, 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. Fitch can be found online at http://www.fitchratings.com.

Eight classes from five Ameriquest Mortgage Securities Inc. securitizations have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2003-1, class M-4, from Baa3 to B1; series 2003-2, class M-3, from Baa2 to Baa3, and class M-4, from Baa3 to Ba3; series 2003-7, class M-5, from Baa3 to Ba1; series 2003-8, class M-5, from Baa2 to Baa3, class MV-6, from Baa3 to Ba3, and class MF-6, from Baa3 to Ba3; and Quest Trust 2003-X4, class M-3, from Baa3 to Ba3. In addition, class M-4 of series 2003-AR2 was placed under review for possible downgrade, and nine classes from four Ameriquest deals were upgraded. The negative rating actions were based on projected losses versus available support from excess spread and overcollateralization, Moody's said. The rating agency can be found online at http://www.moodys.com.

Accredited Home Lenders Holding Co., San Diego, has reported an increase in the size of its asset-backed commercial paper conduit from $1.0 billion to $2.5 billion.The company said the conduit is issued through its subsidiary Carmel Mounting Funding Trust, a special-purpose, bankruptcy-remote entity formed by Accredited Home Lenders Inc., a wholly owned subsidiary of the parent company. The conduit finances subprime mortgage loans originated by Accredited Home Lenders Inc. through the issuance of extendible asset-backed commercial paper and subordinated debt. "Increasing the size of this facility provides us with additional origination funding capacity at more favorable rates than traditional warehouse lines," said James Konrath, Accredited's chairman and chief executive officer. The company can be found online at http://www.accredhome.com.

Class A-6 of Access Financial's series 1996-1 securitization of manufactured housing contracts has been downgraded from AA-minus to A-minus by Fitch Ratings.In addition, the ratings on six classes from two Access manufactured housing transactions were affirmed. Fitch attributed the downgrade to a deterioration in the relationship between credit enhancement and expected losses. Cumulative losses now represent 27.6% of the original balance, and the certificates are undercollateralized by $11.2 million, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Radius Mortgage Capital LLC, San Diego, has selected GMAC Mortgage Corp., Horsham, Pa., to handle the special servicing of mortgage loans.Radius is a whole-loan mortgage investor that focuses on credit-sensitive and liquidity-impaired residential loans. GMAC Mortgage said it will provide interim and retained subservicing for Radius' complete portfolio of first and closed-end second mortgages. The companies can be found online at http://www.radiusmc.com and http://www.gmacsolutions.com.

Rising foreclosure activity in the Southeast indicates that speculators who bought houses when prices had peaked are "simply walking away" from houses they can't sell at a profit, according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm."Over 8,500 properties in Florida went into foreclosure in the month of June alone," said Alexis McGee, president of ForeclosureS.com. ".... Now, price appreciation has gone flat and even reversed slightly, and this trend is colliding with rising interest rates. People who bought at or near the market peak are being squeezed out of their homes, and speculators find themselves trapped by rising costs and negative cash flows." The company can be found online at http://www.foreclosures.com.

Ginnie Mae has announced that Section 538 guaranteed loans under the U.S. Department of Agriculture's Rural Development Multifamily Housing Program are now eligible as collateral for Ginnie's multifamily securities.Section 538 loans are used to "revitalize" Section 515 multifamily loans, which are aimed at providing housing for persons in designated rural areas who have low or moderate incomes, Ginnie Mae said. "This product will complement Ginnie Mae's existing multifamily securitization products and will enhance the availability of multifamily housing for low- and moderate-income families in rural areas," the agency said. Ginnie Mae can be found online at http://www.ginniemae.gov.

Meanwhile, ForeclosureS.com has reported that foreclosure activity in several Western markets rose sharply in the second quarter after a first-quarter dip."Year over year, at the end of the second quarter of 2006, foreclosure activity in California has increased more than 67%," said Alexis McGee, president of the Fair Oaks, Calif.-based investment advisory firm. She added that defaults were also rising in formerly hot housing markets such as Las Vegas and Phoenix, where she said more than 25% of new-home sales were going to out-of-state investors who had no intention of occupying the homes. "Now those who came late to the party find themselves squeezed by rising interest rates and resulting negative cash flows," she said.

Mortgage defaults in the Chicago metropolitan area surged in the second quarter, rising 60% from the level recorded in the first quarter, according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm."As of mid-August, 17,467 homes were in some stage of foreclosure in the Midwestern region that includes Chicago, Gary, Ind., and Kenosha in southern Wisconsin," said Alexis McGee, president of ForeclosureS.com. Ms. McGee said job losses in the manufacturing sector, growing consumer debt, and rising energy costs are "putting the squeeze" on the middle class in the Midwest. The company can be found online at http://www.foreclosures.com.