Servicing

Four classes of Long Beach residential mortgage-backed securities, series 2002-5, have been downgraded by Fitch Ratings.The downgrades were as follows: class M-2, from A to A-minus; class M-3, from BB-plus to B-plus; and classes M-4A and M-4B, from BB-minus to C. The last two classes were also assigned a Distressed Recovery rating of DR5. In addition, Fitch affirmed the rating on one other class in the deal. The downgrades were attributed to "continued deterioration" in the relationship between credit enhancement and loss expectations. The rating agency said it expects the overcollateralization to be depleted within 12 months. Fitch can be found on the Web at http://www.fitchratings.com.

W Holding Co., Mayaguez, Puerto Rico, has reported that its bank subsidiary, Westernbank Puerto Rico, recently bought additional rights from San Juan, Puerto Rico-based Doral Financial Corp. and its affiliates to perfect the acquisition of mortgage loan pools purchased since 1995.The pools have an aggregate unpaid principal balance of $937.3 billion, the holding company said. The purchases of the loan pools were originally accounted for as sales of the loans by both parties, but Westernbank later determined that it had to recharacterize the transactions on its balance sheet as commercial loans secured by mortgages. Westernbank and Doral then agreed to restructure the transactions. "As a result of this transaction, the bank will record the loan acquisitions as 'true sales'," said Freddy Maldonado, W Holding Co.'s president and chief investment officer. "Thus, the bank will record the mortgage loans as its own, rather than a financing transaction with Doral." Under the terms of the restructuring, the bank received a net compensation of $42.8 million, he said. Westernbank can be found online at http://www.wbpr.com.

Freddie Mac in August plans to begin providing monthly updates of the loan-level disclosures it has been providing for single-family mortgage participation certificates issued after Dec. 1, 2005.Freddie Mac began disclosing loan-level information at issuance for all of its newly issued single-family PC securities in December of last year. "With loan-level monthly updates, additional data will be available to assist investors in assessing the factors that may affect Freddie Mac mortgage security performance, which may enable investors to value the securities more precisely," the government-sponsored enterprise said. "The company is working with mortgage-securities data providers to accommodate the monthly loan-level updates and expects that the data providers will incorporate loan-level information into their securities analysis tools."

Teji Singh has been named chief servicing officer for Option One Mortgage Corp., an Irvine, Calif.-based national residential lender and subsidiary of H&R Block Inc.Since joining the company in 1998, Ms. Singh has played various roles in the Servicing Division, including strategic and business planning, call center management, customer advocacy, quality assurance, and default, the company said. She is also a member of Option One's enterprisewide customer advocacy team and oversaw the introduction of a servicing customer engagement survey with Gallup. Before joining Option One, she worked for seven years at KPMG Peat Marwick. The company can be found on the Web at http://www.optiononemortgage.com.

Fannie Mae purchased $47.9 billion in mortgages during May, an 8% decline from April's total but a slight improvement over that of a year earlier.Through the first five months of 2006, Fannie purchased $243.4 billion in loans from its seller/servicers. Fannie's chief competitor, Freddie Mac, acquired $35 billion in loans during May, an 11% decline from April's level and a 30% drop from that of May 2005. Fannie's retained portfolio continues to shrink, and at month's end it had $733.8 billion in mortgages on its books, an 11% decline from the level recorded a year earlier. At the end of May Freddie Mac had $723 billion in mortgages on its books, up 8% from the level of a year earlier. The figures are based on monthly reports issued by the two government-sponsored enterprises.

The boards of the Securities Industry Association and The Bond Market Association have voted to merge the two organizations, pending a vote by their member firms scheduled to be completed by the end of July.If the merger is approved, the combined organization is slated to be known as the Securities Industry and Financial Markets Association. "The merger is a tangible recognition of rapid market convergence, which has blurred traditional distinctions separating investors, asset classes, and different regions of the world," the associations said. The new organization will be structured to reflect this, with three business groups (capital markets, private client, and asset management) and three regional boards (U.S., European, and Asian), the associations reported.

Classes IB-4 and IB-5 from Goldman Sachs Mortgage Securities Corp. series 2002-3F have been removed from Rating Watch Negative by Fitch Ratings.Fitch affirmed the ratings on the two classes and on four other classes from the transaction. The Rating Watch removal followed a review of certain nonperforming loans. "Fitch no longer expects that the liquidation of these loans will have any significant impact on the level of credit enhancement for the class IB-5 and class IB-4 bonds," the rating agency said.

Hanover Capital Mortgage Holdings, Edison, N.J., has announced that the company and certain subsidiaries have entered into a master repurchase agreement with the New York branch of a German bank to finance the purchase of up to $200 million of prime residential mortgage loans.The bank is Deutsche Zentral-Genossenschaftbank, Frankfurt AM Main. Hanover said the five-year agreement provides financing of whole loans at a spread to the London interbank offered rate. The company said it expects to use the facility to expand its investments in residential mortgages and its subordinate mortgage-backed securities. Hanover, a mortgage real estate investment trust, can be found online at http://www.hanovercapitalholdings.com.

The performance of home equity loans at banks improved in the first quarter, while the overdue rate on home equity lines of credit increased slightly, according to the American Bankers Association.As of March 31, the home equity delinquency rate fell to 1.94% from 2.07% at the end of 2005. The past-due rate on HELOCs increased to 0.55%, up from 0.51% three months earlier. It marked the fifth consecutive increase in the overdue rate for HELOCs, though the products remained the consumer credit category with the lowest delinquency rate in the ABA's survey. Credit card delinquencies also rose in the first quarter, and ABA chief economist James Chessen said rising interest rates and weak consumer savings are taking a toll. "Not since the Great Depression has the national savings rate remained below zero for so long," he said. "Absent savings to cushion financial stress, some consumers end up missing a payment on their credit card loan." The ABA can be found online at http://www.aba.com.

Fannie Mae has announced that many changes to its MyCommunityMortgage product line -- including 40-year mortgages, new adjustable-rate and interest-only options, streamlined pricing, and expanded eligibility -- will go into effect in August and September.The changes, some of which were outlined in May at the Mortgage Bankers Association's National Secondary Market Conference in Chicago, are aimed at expanding the MCM line of affordable housing products. The government-sponsored enterprise said, for example, that standard whole-loan commitments and mortgage-backed security pool purchase contracts for delivery of MCM first-lien fixed-rate mortgages (and certain ARMs) will be offered beginning Aug. 1. Streamlined pricing that reduces the number of options requiring different guaranty fees or whole-loan pricing will also become available on Aug. 1, along with commitment and delivery options for 40-year loans. Several MCM IO options will be added as of Sept. 1. Numerous other MCM changes are presented in Fannie Mae announcement 06-07, "Community Lending Enhancements -- MyCommunityMortgage." Fannie Mae can be found online at http://www.fanniemae.com.