Servicing

Class B-4 of Salomon Brothers Mortgage Securities VII Inc. mortgage pass-through certificates, series 1997-HUD1, has been downgraded from CC to C by Fitch.In addition, the ratings on four other classes in the deal and four classes from Salomon 1997-HUD2 were affirmed. The rating agency attributed the downgrade to depleted credit support and high delinquencies. Fitch can be found online at http://www.fitchratings.com.

Fannie Mae's mortgage portfolio may be stabilizing after declining by over $200 billion, or 22.6%, over the 12 months ended in November.The government-sponsored enterprise reported that its giant portfolio had declined to $715.5 billion in November, down from $912.6 billion in November 2004. Freddie Mac, which used to be Fannie's smaller brother, now has a $692.7 billion portfolio. Freddie reported on Dec. 22 that its mortgage portfolio has grown at a 6.7% annual rate so far this year. However, Fannie is beginning to shift gears, and its portfolio shrank by only a 2.6% annual rate in November, compared with 16.1% in October. In September, Fannie sold $32.1 billion in assets as it struggled to achieve a 30% capital surplus mandated by its regulator. In November, Fannie sold only $2.5 billion in assets, and purchases totaled $16.0 billion. Freddie reported $32.6 billion in purchases during November. The GSEs can be found online at http://www.fanniemae.com and http://www.freddiemac.com.

Standard & Poor's Rating Services has clarified its criteria for high-cost home loans in Massachusetts in view of recent amendments to the state's anti-predatory-lending regulations.S&P said it will continue to exclude Massachusetts "high cost home mortgage loans" (under the Massachusetts Predatory Home Loan Practices Act) from its rated structured finance deals. The rating agency said last year that such loans might be subject to indeterminate liability, preventing it from estimating their potential liability. S&P also noted that the definition of such loans was different from that of "high cost home loans" in the state's anti-predatory-lending regulations, which were not subject to indeterminate liability. Such "regulation loans" were permitted into S&P rated structured finance deals if its credit enhancement criteria were satisfied, as long as they were not also high cost home mortgage loans under the act. However, the Massachusetts Division of Banks recently amended the regulations to conform them to the act, and thus all regulation loans are now also high cost home mortgage loans under the act, the rating agency reported. S&P can be found online at http://www.standardandpoors.com.

New York Mortgage Trust Inc., a New York-based real estate investment trust, has announced the completion of an approximately $228.7 million securitization of adjustable-rate mortgage loans.The notes in the transaction, New York Mortgage Trust 2005-3, are backed by first-lien ARMs and hybrid ARMs, all of which were originated through the company's mortgage banking subsidiary, The New York Mortgage Co. LLC. The weighted average loan-to-value ratio of the loans is about 69.5%, and the weighted average FICO score is about 732, the company said. Credit Suisse First Boston LLC served as underwriter for the transaction.

Three classes of Structured Asset Securities Corp. residential mortgage-backed securities have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-10H, class B4, from BB to B, and class B5, from B to C; and series 2003-7H, class B5, from B to CCC. Fitch also affirmed the ratings on 47 classes from six SASCO securitizations. The downgrades were attributed to cumulative pool losses and high delinquency levels. The rating agency can be found on the Web at http://www.fitchratings.com.

Standard & Poor's Ratings Services has placed its ratings on 35 classes from 18 U.S. synthetic collateralized debt obligation deals on CreditWatch with negative implications.When pari passu tranches are combined, the 35 ratings represent 25 credit classes, S&P said. "The CreditWatch placements are due to an update of S&P's credit opinion regarding the risks associated with the credit behavior of non-investment-grade entities," the rating agency said. "In addition, our assessment of how that behavior is correlated also has been updated." The updated assumptions have been incorporated into S&P's CDO Evaluator model, the latest version of which (version 3.0) was released Dec. 19 for global synthetic CDOs. The 35 classes represent approximately 4% of S&P's total publicly rated U.S. synthetic CDO tranches, the rating agency reported. S&P can be found online at http://www.standardandpoors.com.

Meanwhile, ForeclosureS.com also reported that new filings of foreclosure cases began to rise in New Jersey at the end of the third quarter.New filings rose from 3,228 in the second quarter to 3,668 in the third quarter, company president Alexis McGee said. Prices supported by severe supply constraints in New Jersey were making it easier for distressed homeowners to sell their way out of foreclosure, Ms. McGee said. She added that median home prices had risen 13% to $352,420 in the state so far in the second half of 2005, but that cutbacks by homebuilders and slowing sales volume suggested that the market would cool in 2006.

Foreclosure activity began to rise in California at the end of the third quarter, according to ForeclosureS.com, Fair Oaks, Calif.Alexis McGee, president of ForeclosureS.com, said many factors are conspiring to put homeowners at risk of possible foreclosure, such as rising interest rates, a flattening price appreciation curve, and growing use of high-risk loans to qualify for more expensive homes. "We saw increases in defaults month to month at the end of the third quarter in eight of the 13 Northern California counties that we cover, and in four of five Southern California counties," she said. ForeclosureS.com expanded its foreclosure list to nationwide coverage in November, and now has over 700,000 listings of distressed property in more than 900 counties across the country, Ms. McGee said. The company can be found online at http://www.foreclosures.com.

Option One Mortgage Corp., Irvine, Calif., has announced that it will extend for an additional 90 days the payment deferral period for borrowers affected by hurricanes Katrina and Rita.The deferral period now extends to 180 days from the date of the disaster declaration for Hurricane Katrina by the Federal Emergency Management Agency, or until the end of February, Option One said. In addition to payment deferral during that period, the company said it will not file negative credit reports, assess late fees, or pursue legal actions in progress, such as foreclosure. "[W]e encourage any borrower who has not been in touch to please contact us so we can help them work out the best solution for their particular circumstances," said Teji Singh, Option One's senior vice president of servicing operations. Option One said it may extend the relief measures past 180 days on a case-by-case basis. The company can be found online at http://www.optiononemortgage.com.

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that the number of new properties in some stage of foreclosure decreased 12% nationwide in November.The company's Monthly U.S. Foreclosure Market Report indicates that 71,606 new foreclosure properties were added to the rolls in November. "After reaching their highest level of the year in October, foreclosures in November retreated to closer to the levels we saw earlier this fall and in the summer," said James J. Saccacio, RealtyTrac's chief executive officer. "While fewer foreclosures in most of the Gulf Coast states contributed to this, it also continues the trend of seeing the national foreclosure rate drop the month after a significant spike." The company said Florida was the only Gulf Coast state with increasing foreclosures in November, with 8,872, an increase of 16% and the most foreclosures reported by any state. RealtyTrac can be found online at http://www.realtytrac.com.