Servicing

Class M-7 of Bear Stearns Asset-Backed Securities series 2005-2 has been placed on Rating Watch Negative by Fitch Ratings.In addition, Fitch affirmed the ratings on seven other classes in the deal. The Rating Watch placement reflects a deterioration in the relationship between excess spread and monthly losses, Fitch said. "Due to faster-than-expected prepayments, the dollar amount of excess spread has been less than expected and has not been sufficient to build the overcollateralization to its target amount," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Classes M-5 and M-6 of First Franklin Mortgage Loan Trust 2003-FFH1 have been placed under review for possible downgrade by Moody's Investors Service.The actions were attributed to low credit enhancement levels relative to current loss projections for the deal, which consists of first-lien subprime residential mortgage loans. Due to credit defaults, excess spread is being used to cover losses and the overcollateralization is "eroding far below its target," the rating agency said.

Five classes of Asset Backed Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings, and two classes have been removed from Rating Watch Negative.The downgrades were as follows: series 2001-HE1, class M-2, from A to BBB-plus, and class B, from BBB-minus to BB; series 2002-HE2, class B, from BBB-minus to BB-minus; and series 2003-HE1, class M-3, from BBB to BB, and class M-4, from BBB-minus to BB-minus. The two classes from series 2003-HE1 were also removed from Rating Watch Negative. In addition, Fitch affirmed the ratings on four classes in the three ABSC deals. The rating agency attributed the downgrades to a deterioration in the relationship between loss expectations and credit enhancement. The transactions consist of fixed- and adjustable-rate subprime residential mortgage loans. Fitch can be found online at http://www.fitchratings.com.

Seven certificates from two CIT Home Equity Loan Trust subprime mortgage deals have been downgraded by Moody's Investors Service.The downgrades in series 2002-1 were as follows: class MF-1, from Aa2 to Aa3; class MF-2, from A2 to Baa3; class BF, from Baa2 to B2; and class BV, from Baa2 to Ba1. The downgrades in series 2002-2 were: class MF-2, from A2 to A3; class BF, from Baa2 to Ba1; and class BV, from Baa2 to Ba2. Moody's also confirmed the ratings on three classes from CIT transactions. The downgrades were attributed to a weaker-than-expected performance by the mortgage collateral and the resulting erosion of credit support. The overcollateralization in the fixed-rate pools of both deals and the adjustable-rate pool of the 2002-1 deal are below their targets, and pipeline losses for both deals could deplete the overcollateralization and result in losses on the most subordinate tranches, Moody's said.

Class B-1 of Terwin Mortgage Trust 2004-EQR1 has been downgraded from Baa2 to B3 by Moody's Investors Service.The transaction is collateralized by nonperforming mortgage loans, which are typically defined as loans that are delinquent by 90 days or more, are subject to bankruptcy or foreclosure proceedings, or are held as real estate owned. The downgrade was attributed to the rapid deterioration of overcollateralization, which declined from $1.5 million to just under $600,000 from November 2005 to June 2006.

Six classes from transactions originated by New Century Mortgage Corp. have been downgraded by Moody's Investors Service.The downgrades from securitizations issued by Asset Backed Securities Corp. were as follows: series 2002-HE2, class B, from Baa2 to B2; and series 2003-HE1, class M4, from Baa3 to B2. The downgrades from deals issued by Morgan Stanley Dean Witter Capital I Inc. were as follows: series 2001-NC3, class B-1, from Baa3 to Ba1; series 2002-NC1, class B-1, from Baa2 to Ba1; series 2002-NC2, class B-1, from Baa2 to Ba1; and series 2002-HE1, class B-2, from Baa3 to Ba1. In addition, Moody's upgraded 28 certificates from 13 deals originated by New Century and confirmed the ratings on three certificates previously placed under review for possible downgrade. The downgrades were attributed to credit enhancement levels that are low given the projected losses on the underlying pools. Moody's can be found online at http://www.moodys.com.

The Federal Home Loan Bank of New York has announced a commitment to provide up to $250 million in disaster relief funds through its community lending programs.The FHLBank said its member institutions can tap the low-cost loans to meet the short-, medium-, and long-term needs of communities designated disaster areas by the Federal Emergency Management Agency. "Several designated communities in upstate New York and western New Jersey have been hard hit by recent severe flooding," the bank said. "The $250 million CLP commitment can specifically be used for housing, small-business, and economic development lending."

Freddie Mac has announced that it is now in compliance with the Federal Reserve Board's revised Payments System Risk policy, ahead of the July 20 implementation deadline.In September 2004, the Fed revised its daylight credit policies for payments into the Fedwire system, effective July 20, 2006. (Fedwire handles all the interest and redemption payments on securities guaranteed by Freddie and Fannie Mae.) The revised policy requires Freddie Mac to fully fund its accounts in the system to the extent necessary to cover payments on its debt-and mortgage-related securities each day. Freddie said it began testing its new business practices in April 2006, and has implemented a strategy that aims to fully fund the company's daily payment obligations by 11 a.m. ET.

Class M of DLJ Mortgage Acceptance Corp. series 1996-QA has been placed on review for possible downgrade by Moody's Investors Service.Moody's said the action was based on the weak performance of the underlying loans, whose cumulative losses have exceeded original expectations. The B-1 certificate has already assumed some writedowns. The rating agency can be found on the Web at http://www.moodys.com.

Freddie Mac has announced the pricing of two new classes of perpetual noncumulative preferred stock: $250 million of a fixed-rate dividend class and $750 million of a variable-rate dividend class.The 5 million shares of fixed-rate preferred stock (CUSIP: 313400699) are being offered to investors at $50 per share with a dividend rate of 6.42%, the government-sponsored enterprise said. The 15 million shares of variable-rate preferred stock (CUSIP: 313400715) are priced at $50 per share, with an initial dividend rate of 6.00%. Dividends will reset quarterly beginning on Oct. 1, 2006, at a rate equal to the three-month London interbank offered rate plus 0.50%. Freddie Mac said it will have the option to redeem all or part of both classes of shares on or after June 30, 2011, at $50 per share plus accrued dividends. The preferred stock is being offered via a syndicate of dealers headed by Bear, Stearns & Co. and UBS Securities LLC. Freddie Mac can be found online at http://www.freddiemac.com.