Servicing

Moody's Investors Service has downgraded one class from a transaction issued by Credit Suisse First Boston Mortgage in 2002 and placed one class from another deal under review for possible downgrade.Class B-F of Credit Suisse First Boston Mortgage Acceptance Corp. series 2002-HE4 was downgraded from B1 to Caa3, and class B-1 of Credit Suisse First Boston Mortgage Securities Corp. series 2002-HE11 was placed under review for possible downgrade. The actions were attributed to credit enhancement levels, including excess spread, that were deemed low in view of projected losses. The pools are backed by subprime, first-lien, fixed- and adjustable-rate loans. The rating agency can be found online at http://www.moodys.com.

Analysts included in Zacks.com's All Star Analyst Survey have recommended the stock of Starwood Hotels & Resorts Worldwide Inc.The All Star Analyst portfolio represents all stocks with a Strong Buy rating from at least four analysts with a 5-Star All Star ranking, Zacks said. Starwood "recently posted earnings per share from continuing operations of 74 cents for the second quarter, which marked a more than 25% positive surprise over the consensus," Zacks reported. Zacks can be found online at http://www.zacks.com.

Irwin Financial Corp., Columbus, Ind., has reported net income of $2.9 million ($0.09 per share) for the second quarter, but the results include an after-tax loss of $5.2 million from Irwin Mortgage, which is for sale and now listed under discontinued operations.A year earlier, Irwin reported a net loss of $3.4 million ($0.12 per share). The company said its core mortgage production and servicing operations were profitable in the second quarter, but that the after-tax loss reflected "certain costs related to the planned sale of the segment" and hedge losses related to mortgage servicing rights. "While our origination volumes and overall profitability in our home equity segment are still below our desired levels, we believe we are on the path to improved profitability," said Irwin chairman Will Miller. ".... We are making clear progress on the sale of our conventional first-mortgage segment, and I hope we will be in a position to announce definitive plans shortly." The company can be found online at http://www.irwinfinancial.com.

In the first quarter, 88% of the homeowners who refinanced their homes got a mortgage at least 5% larger than the original loan, the highest percentage since the second quarter of 1990, according to Freddie Mac.The percentage was up from 86% in the previous quarter and 72% a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "The staying power of refinance activity has been much stronger than we initially thought," said Frank Nothaft, Freddie Mac's chief economist. "But borrowers are reacting to both incentives to cash out home equity through refinance and incentives to change their mortgage as they hit an interest rate adjustment." In the second quarter, 42% of all mortgage applications were for refinancings, down from 44% in the first quarter, Freddie Mac reported.

Freddie Mac chairman and chief executive Richard Syron says he is pleased with the mortgage company's first-half business results, including a $1.3 billion profit in the first quarter."We have increased our credit guarantee business by about 10% in the first half," Mr. Syron said during a teleconference late Tuesday. He noted that the portfolio growth was less than 4%, but said "we have not seen consistent opportunities for growth at attractive spreads." Freddie Mac just agreed to limit the growth of its portfolio to 2% a year. Freddie estimates that first-quarter earnings came it at $1.3 billion and says they would have been higher except that the mortgage company took a $300 million adjustment as part of a correction due to its 2005 audited results. "Business results have been pretty good," Mr. Syron said. Freddie Mac executives said the company had a fair value return on equity of 10% in the first quarter and can generate annual returns in the low to mid-teens without portfolio growth. Freddie Mac can be found online at http://www.freddiemac.com.

Jim Judd, president and chief operating officer of World Savings, has been named to lead the combined mortgage operations of Wachovia Corp. and Golden West Financial Corp., which will be based in Charlotte, N.C., following the completion of Wachovia's acquisition of Golden West.Wachovia said the combined operations will be called the Retail Mortgage and Credit Group, and that all current mortgage and credit operations sites of both companies will remain in place. Wachovia said the pending merger with Golden West, the Oakland, Calif.-based parent company of World Savings, is expected to be completed in the fourth quarter. Wachovia can be found online at http://www.wachovia.com.

Origination services and default management services are the fastest-growing segment of mortgage processing services, according to NelsonHall, a Boston-based firm specializing in the analysis of business process outsourcing.In a research report titled "Mortgage BPO Industry Assessment and Forecast," the firm said customers want mortgage BPO vendors to help them convert fixed costs to variable costs in order to deal with fluctuating volumes. The research also found that mortgage BPO contracts are typically limited to one of four service areas (origination, servicing, default management, and securitization) in the United States, while such contracts usually cover multiple service areas outside the United States. "Vendors need to be able to manage rapid scaling of work force size and still maintain and increase worker knowledge of increasingly complex mortgage products," said NelsonHall research director Andy Efstathiou, citing another finding. The study also found that risk control and reduction are growing in importance, and mortgage BPO involves little offshoring of services, but offshoring is growing faster than the market as a whole. The company can be found online at http://www.nelson-hall.com.

Class A of SARM Net Interest Margin Notes, series 2005-5, has been placed under review for possible downgrade by Moody's Investors Service.Moody's said the rating action was based on the performance of the Structured Adjustable Rate Mortgage Loan Trust 2005-5. "The transaction has experienced high prepayments, which has adversely affected the NIM by reducing the dollar amount of payments made to the A-IO2 class, which serves as collateral in this NIM transaction," the rating agency said. Moody's noted that NIM deals typically represent the securitization of excess spread, prepayment penalties, and cap payments generated by the underlying residential mortgage-backed securities.

Class B-1 of GE Capital 1998-HE1 has been placed under review for possible downgrade by Moody's Investors Service.Moody's said the rating action was based on credit enhancement levels that are low in view of projected losses. The collateral underlying the transaction consists of closed-end, fixed-rate, first-lien residential mortgage loans. The rating agency can be found online at http://www.moodys.com.

Four classes from three subprime Renaissance Home Equity Loan Trust residential mortgage-backed securities have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-1, class B, from BBB to BBB-minus (and removed from Rating Watch Negative); series 2002-2, class B, from BBB to BBB-minus; and series 2002-3, class M2, from A to BBB-plus, and class B, from BBB to C (and removed from Rating Watch Negative). In addition, class B of series 2002-3 was assigned a Distressed Recovery rating of DR4, and the ratings on nine other classes from the three transactions were affirmed. Fitch attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses. Fitch can be found online at http://www.fitchratings.com.