Servicing

Classes B-1 and B-2 of CDC Mortgage Capital Trust 2002-HE3 have been placed under review for possible downgrade by Moody's Investors Service.The actions were attributed to the weaker-than-expected performance of the mortgage pool and the resulting erosion of credit support. "The deal lost over $1 million of overcollateralization from July 2006 to August 2006, and future losses could cause further erosion of the overcollateralization and put pressure on the most subordinate tranches," Moody's said. The transaction consists primarily of first-lien subprime mortgage loans. The rating agency can be found on the Web at http://www.moodys.com.

Three classes in two Soundview Home Equity Loan Trust securitizations have been downgraded by Fitch Ratings, and one other class has been placed on Rating Watch Negative.The downgrades were as follows: series 2005-A, class B4, from BB-minus to C; and series 2005-B, class M14, from BB-minus to B-plus, and class M15, from B-plus to C. In addition, class B3 of series 2005-A was placed on Rating Watch Negative, class B4 of series 2005-A was assigned a Distressed Recovery rating of DR5, and class M15 of series 2005-B was assigned a Distressed Recovery rating of DR6. Fitch also affirmed the ratings on 28 other classes in the two transactions. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations.

Three classes from Credit Based Asset Servicing and Securitization LLC mortgage loan asset-backed certificates, series 2002-CB5, have been downgraded by Fitch Ratings, and two have been removed from Rating Watch Negative.The downgrades were as follows: class B-1, from BBB to BB; class B-2, from BBB-minus to BB-minus; and class B-3, from BB to B-plus. Classes B-2 and B-3 were removed from Rating Watch Negative. Fitch also affirmed the ratings on four classes from the deal. The downgrades reflect a deterioration in the relationship between credit enhancement and loss expectations, the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

Freddie Mac will issue its 2006 annual report late in the first quarter of 2007 and then turn its attention to getting out its quarterly financial reports "as quickly as possible," Freddie chairman and chief executive Richard Syron has told the company's annual shareholder meeting.After the annual report is issued, "our intent is to turn all our efforts" to the quarterly reports, Mr. Syron said in clarifying the company's timetable for returning to regular quarterly reporting. At the meeting, the shareholders approved the directors slate, including the addition of Robert Glauber to the board. Mr. Glauber is chairman and chief executive of the National Association of Securities Dealers and a former Treasury under secretary (1989-1992). The shareholders defeated a shareholder proposal that would require Freddie to disclose its corporate contributions to civil rights activist Jesse Jackson's organizations and other charities. Freddie Mac can be found online at http://www.freddiemac.com.

Countrywide Financial Corp. president and chief operating officer Stanford L. Kurland -- once considered a possible heir to chief executive officer Angelo Mozilo -- resigned from the company Thursday evening.Mr. Kurland was immediately replaced by David Sambol, a 21-year veteran of Countrywide who served as executive managing director of business segment operations. A source familiar with the situation told MortgageWire Mr. Sambol "is now in the path of succession" to succeed Mr. Mozilo, whose contract with the company expires at year-end. Who will succeed Mr. Mozilo as CEO, and when, "is now in the hands of the board," said the source. Mr. Mozilo also holds the title of chairman, which he has said he intends to keep after stepping down as CEO. Mr. Kurland worked at Countrywide, the nation's largest lender and servicer, for 28 years. In a statement, Mr. Mozilo said Mr. Kurland "has made significant contributions to Countrywide's success." The company can be found online at http://www.countrywide.com.

Classes M-2 and M-3 of Deutsche Alt-A Securities Inc. Mortgage Loan Trust, series 2003-4XS, have been placed under review for possible downgrade by Moody's Investors Service.The negative rating actions were attributed to credit enhancement levels that were deemed low given the projected losses on the underlying pools, which could cause "a more significant erosion" of overcollateralization. Moody's can be found on the Web at http://www.moodys.com.

Two classes of GS Mortgage Securities Corp. residential mortgage pass-through certificates, series 2003-HE1, have been downgraded by Fitch Ratings.Class B-1 of the transaction was downgraded from BBB to BBB-minus, and class B-2 was downgraded from BBB-minus to BB-plus. Fitch also affirmed the ratings on three other classes in the transaction. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses. The deal consists of subprime mortgage loans separated into two groups, one with conforming loans and one with all other loans. Fitch can be found online at http://www.fitchratings.com.

Merrill Lynch & Co. has agreed to buy subprime mortgage giant First Franklin Financial Corp., San Jose, Calif., and two affiliates for $1.3 billion.Meanwhile, sources have told MortgageWire that First Franklin's owner, Cleveland-based National City Corp., is now considering selling part of its 'A' paper mortgage business as well. When asked about a possible sale of National City Mortgage (see item below), a bank spokesman would only say that the unit "is not part of the strategic review" being conducted on the bank's subprime divisions. The bank announced Tuesday morning that it would sell First Franklin; National City Home Loan Services, Pittsburgh; and NationsPoint, Lake Forest, Calif., to Merrill, which already has a foot in the subprime industry through conduits and a specialty servicer called Wilshire Credit Corp., of Oregon. First Franklin ranks 10th among all subprime funders, according to the Quarterly Data Report, a MW affiliate. Subprime servicer NCHLS ranks 11th, with $44 billion in receivables. NCC said it would book a $1 billion pretax gain on the sale. First Franklin relies mostly on wholesale. NationsPoint is a direct-to-consumer lender. Merrill Lynch can be found online at http://www.merrilllynch.com, and First Franklin can be found at http://www.first-franklin.com.

Class B-5 of Terwin Mortgage Trust series 2004-EQR1 has been placed on Rating Watch Negative by Fitch Ratings.Fitch also affirmed the ratings on nine other classes in the transaction. The negative rating action was based on trends in overcollateralization stemming from "a reduction in the dollar amount of excess spread due to faster-than-expected prepayments and rising interest rates," Fitch said. The collateral for the transaction is fixed-rate subprime loans secured by second-lien mortgages on residential properties.

Class M1 of the DLJ ABS Trust series 2000-5 securitization of subprime mortgage loans has been downgraded from Aa2 to A3 by Moody's Investors Service.Moody's also confirmed the ratings of the A-1 and A-3 classes from the same transaction. The downgrade was based on the high proportion of delinquent loans relative to the available overcollateralization, the rating agency said. "Relatively high loss severities in recent months caused a significant deterioration of overcollateralization, which has since stabilized and begun to build back towards its target amount," the rating agency said. Moody's can be found online at http://www.moodys.com.