Servicing

Moody's Investors Service has downgraded the rating of one class of Credit Suisse First Boston Mortgage Securities Corp., Commercial Pass-Through Certificates, Series 1999-C1 and upgraded or affirmed other ratings in the transaction.Due to the rating actions, class L's rating slipped to C from Ca and the ratings of classes C, D, E and F rose, respectively, to Aaa from Aa2, to Aa3 from A2, to A1 from A3, and to Baa1 from Baa2. In addition, Moody's affirmed the ratings of classes A-2, A-X, and F. Moody's can be found on the Web at http://www.moodys.com.

Prepayment rates on 30-year fixed-rate mortgages in Fannie Mae and Freddie Mac mortgage-backed securities declined by 16% and 15%, respectively, in April, according to the Bear Stearns Prepayment Commentary.Overall speeds on 30-year Fannie Mae collateral came in at a constant prepayment rate of 11.4 for the month, down 2.2 CPR from March, Bear Stearns senior managing directors V.S. Srinivasan and Dale Westhoff said in the report. Speeds for comparable Freddie Mac mortgages averaged 10.0 CPR, down 1.8 CPR. "Improving seasonal factors affecting turnover gave way to the drag imposed by a three day decline in the business calendar and a 9 [basis point] back up in rates," they said. The two analysts added, "the decline in speeds was 0.5 to 1.0 CPR more than expected." Overall prepayment speeds for 15-year Fannie and Freddie MBS collateral declined 10%, less than 30-year collateral. Prepayment speed declines on agency hybrids ranged from less than 8% for 3/1 hybrids and 10% for 5/1 hybrids to almost 13% for 7/1 and 10/1 hybrids. Bear Stearns can be found online at http://www.bearstearns.com.

The Senate Banking Committee has approved a regulatory relief bill by a voice vote that removes a "haircut" that banks and thrifts have to take on the value of purchased mortgage servicing rights for capital purposes.Currently, depository institutions carry purchased MSRs at 90% of fair value, and the bill would allow the banking agencies to jointly raise the limit up to 100% of fair market value. The regulatory relief bill, sponsored by Sen. Mike Crapo, R-Idaho, also eliminates a restriction on loans-to-one-borrower involving development loans for residential housing. Thrifts currently cannot make such loans if the purchase price of the units exceeds $500,000. The House passed a regulatory relief bill by a 415-2 vote in March.

Merit Financial, Kirkland, Wash., has reportedly laid off 300 workers and is considering filing for bankruptcy protection, according to a report in the Seattle Times. On Friday a receptionist at the company told MortgageWire that no one was available to talk about the situation and she herself declined to answer questions. She said company CEO and founder Scott Greenlaw a former college football star was not in. A voice mail message left for Mr. Greenlaw had not been returned at press time. Founded just five years ago, the company was funding about $2 billion a year in mortgages. This past fall it published a press release, saying it had been honored by the Puget Sound Business Journal as one of the fastest growing companies in the area. Over the past six months several mortgage firms have announced sizeable layoffs while others have either gone out of business or are for sale.

Employment in the mortgage industry edged down in March after lenders added 6,500 full-time employees to their payrolls in February.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector slipped by 400 jobs to 504,400 in March. During March, the 30-year mortgage rate inched up to 6.4%, but mortgage applications held fairly steady compared to the previous month. Friday's jobs report also shows that hiring in the construction trades has come to a halt after large gains in January and February. As previously reported, single-family housing starts fell 11.2% in March. Meanwhile, the U.S. economy created 138,000 new jobs in April compared to 200,000 in March. The unemployment rate remained unchanged at 4.7%.

The rating on class B-1 of the Terwin Mortgage Trust series 2004-EQR1 securitization has been placed on review for possible downgrade by Moody's Investors Service.Moody's said the rating is being reviewed "in light of rising loss severities upon liquidation and an accelerated deterioration of overcollateralization." The collateral for the transaction consists of nonperforming mortgage loans, which are typically defined as loans that are delinquent 90 days or more, subject to bankruptcy or foreclosure proceedings, or held as real estate owned.

Two classes of notes issued by Varick Structured Asset Fund Ltd., a collateralized debt obligation supported partly by residential and commercial mortgage-backed securities, have been downgraded by Fitch Ratings.Classes A-1 and A-2 were downgraded from B/DR2 to B-minus/DR2. The transaction, a CDO managed by Clinton Group Inc., is supported by a diversified portfolio of asset-backed securities, RMBS, and CMBS. Fitch attributed the downgrades to continued deterioration of the credit quality of the collateral and the adverse effects of its interest rate hedge. "Since the last rating action on Aug. 29, 2005, the portfolio has experienced significant writedown activity, totaling over $8 million, as well as several downgrades, resulting in a steadily worsening weighted average rating factor," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Two classes of notes issued by Bleecker Structured Asset Fund Ltd., and supported in part by residential and commercial mortgage-backed securities, have been downgraded by Fitch Ratings.Classes A-1 and A-2 were downgraded from B-plus to B-minus. The transaction is a collateralized debt obligation supported by asset-backed securities, RMBS, and CMBS. "The rating actions are a result of continued deterioration in the credit quality of Bleecker's collateral pool and the continued negative impact of its interest rate hedge," Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Two certificates from securitizations issued by IndyMac in 2000 and 2001 have been downgraded by Moody's Investors Service.The downgrades were as follows: IndyMac Home Equity Mortgage Loan Asset Backed Trust, series 2000-C, class MV-1, from Aa2 to A3; and IndyMac ARM Trust, series 2001-H2, class B-3, from Baa2 to Ba1. Moody's also confirmed the rating on one class in another IndyMac deal. The downgrades were attributed to credit enhancement levels that "may be low" in view of projected losses on the underlying pools. The securitizations are backed by alternative-A and subprime mortgage loans that were originated by IndyMac Bank FSB. Moody's can be found online at http://www.moodys.com.

Serious delinquencies on nonagency mortgage loans in key areas of Louisiana and Mississippi hit by hurricanes Katrina and Rita are declining, according to a Friedman Billings Ramsay report.The default rate on prime loans (not securitized by Fannie Mae and Freddie Mac) in the 12 hardest-hit metropolitan statistical areas (including Beaumont, Texas) fell from 10.50% in January to 9.58% in February. Defaults (90 days or more past due) on subprime and alternative-A loans also declined significantly. The FBR research paper attributes the decline in defaults to federal disaster relief and payments on federal flood insurance and private hazard insurance claims. In mid-March, the Federal Emergency Management Agency said it had paid out nearly 90% of all flood insurance claims related to hurricanes Katrina and Rita, totaling $11.3 billion. Separately, Freddie Mac announced an extension through Aug. 31 of mortgage payment relief for homeowners in the Gulf Coast states most affected by the hurricanes.