Servicing

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.

A nationwide surge of foreclosures has become "a driving force" in the otherwise sluggish real estate market, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.The company said its 2006 Mid-Year Market Analysis indicates that foreclosure properties are changing hands nearly twice as fast as existing homes. New U.S. foreclosures totaled 23,982 in January and 26,802 in June, but the active foreclosure inventory fell from 95,073 in January to 89,352 in June, Foreclosure.com reported. Thus, despite higher new-foreclosure rates, inventory has been kept in check by high demand for foreclosed homes, the company said. "Everything we are seeing in the current climate in the real estate industry is driven by rising interest rates and a sluggish housing market," said Brad Geisen, president and chief executive officer of Foreclosure.com. "This has fueled interest in the foreclosure market, creating a golden opportunity for investors and people looking for good deals on homes." The company can be found online at http://www.foreclosure.com.

Deutsche Bank has agreed to purchase MortgageIT Holdings Inc., New York, the nation's 21st-largest lender, for $429 million, or $14.75 a share.The purchase is Deutsche Bank's second mortgage-related acquisition in eight weeks. A real estate investment trust, MortgageIT Holdings owns MortgageIT Inc., a residential mortgage lender that employs 2,100 full-timers in 50 branches and is licensed to originate mortgages in all 50 states. The operating company will become a part of Deutsche Bank's residential mortgage-backed securities business in New York. Phil Weingord, Deutsche Bank's head of global markets for the Americas, said the company continues to expand its RMBS business and believes "the vertical integration of a leading mortgage originator like MortgageIT will provide significant competitive advantages, such as access to a steady source of product for distribution into the mortgage capital markets." Doug Naidus, chairman and chief executive officer of MortgageIT, said the transaction "will enable us to accomplish our mutual goal of becoming a top player in the U.S. residential lending and securitization markets in short order." The companies can be found online at http://www.db.com and http://www.mortgageitholdings.com.

The Federal Agricultural Mortgage Corp., a government-sponsored enterprise commonly known as Farmer Mac, has announced an offering of guaranteed notes by Farmer Mac Guaranteed Notes Trust 2006-2.Farmer Mac said the five-year notes will be collateralized by an obligation of Metropolitan Life Insurance Co. that, in turn, will be collateralized by Farmer Mac-eligible agricultural real estate mortgage loans. The GSE, which was chartered to provide a secondary market for agricultural real estate and rural housing mortgage loans, can be found on the Web at http://www.farmermac.com.

Foreclosures have been soaring throughout California and parts of Arizona, according to Default Research Inc., a foreclosure research company based in Mt. Pleasant, Pa."Many people are focused on Southern California as the 'hot spot' of foreclosure activity due to the sheer numbers of foreclosures, but Northern California has seen increases percentagewise nearly as high as Southern California," said Serdar Bankaci, president and chief executive officer of Default Research. "In fact, there has been an average increase in foreclosure of 50% since the beginning of the year." Meanwhile, Pima and Maricopa counties in Arizona have experienced foreclosure increases since January of 40% and 30%, respectively, the company reported. Default Research can be found online at http://www.defaultresearch.com.

National City Corp., Cleveland, is throwing in the towel on its subprime division, placing First Franklin Financial Corp. on the auction block.The bank said it is weighing "strategic alternatives" for the San Jose, Calif.-based unit, including a sale. It also may unload its subprime servicing division, National City Home Loan Services, Pittsburgh, and NationsPoint, Lake Forest, Calif., a direct-to-consumer lender. A bank spokesman told MortgageWire that National City is not committed to a sale and ultimately could wind up keeping the units if it doesn't like the bids. He added that National City has no plans, at this time, to sell its prime mortgage division, National City Mortgage, which is based in Miamisburg, Ohio. Nat City Mortgage is the nation's 18th-largest funder, but its production declined dramatically in the first quarter, according to the Quarterly Data Report, an MW affiliate. First Franklin is the nation's 12th-largest subprime funder, according to QDR. NCHLS is the nation's 12th-largest subprime servicer. Nat City and First Franklin can be found on the Web at http://www.nationalcity.com and http://www.first-franklin.com.