Servicing

Two classes of Salomon Brothers Mortgage Securities VII Inc. mortgage pass-through certificates, series 2000-UP1, have been downgraded by Fitch Ratings.Class B-4 was downgraded from BB to B, and class B-5 was downgraded from CC to C. In addition, Fitch affirmed the ratings on 21 classes of Salomon mortgage-backed certificates. The downgrades were attributed to poor collateral performance and the deterioration of asset quality beyond original expectations. The transaction is collateralized by prime 30-year fixed-rate mortgage loans. Fitch can be found online at http://www.fitchratings.com.

Fitch Ratings has placed the ratings of First Bancorp on Rating Watch Negative, citing an announcement by the Securities and Exchange Commission that it is conducting an informal inquiry of First Bancorp in connection with mortgage loan accounting.Fitch said the SEC inquiry is related to First Bancorp's disclosure Aug. 10 that it is reviewing its accounting for mortgage loans purchased from two other financial institutions from 2000 to 2004. First Bancorp is also "evaluating the impact of these issues on the company's internal controls and procedures, including its internal control over financial reporting," the rating agency said. Fitch said the company also announced that it won't be able to file its SEC Form 10-Q for the second quarter on a timely basis. "The untimely filing of financials by [First Bancorp] could trigger a covenant default in a few of the company's funding facilities, causing liquidity to be pressured," the rating agency said.

Taipan Group LLC, a Baltimore-based publisher of financial newsletters, is touting as "revolutionary" a new program that Taipan says enables homeowners to lock in the value of their homes during housing market declines.The House Hedge Program, developed by Taipan analyst Bryan Bottarelli, allows homeowners to own a piece of the top 21 real estate companies trading on major U.S. stock markets, ranging from residential homebuilders and commercial developers to mortgage companies and mortgage insurance companies. As the housing market declines, the companies' stock prices will fall, profiting those invested in the hedge program, Taipan explained. "But there's an additional benefit to the House Hedge Program: homeowners collect payouts," Mr. Bottarelli said. "How much depends on individual circumstances." The company can be found online at http://www.taipanonline.com.

Fannie Mae's retained portfolio dropped below the $800 billion mark in July, after the company shed nearly $20 billion in assets.Last summer the congressionally chartered mortgage giant held nearly $900 billion in mortgage assets on its books. In an effort to bolster cash reserves, Fannie has been actively selling loans out of its retained portfolio. However, the company -- which is undergoing a massive earnings restatement -- out-purchased its cross-town rival, Freddie Mac, for the second month in a row. In July, Fannie acquired $52.5 billion in mortgages to Freddie's $41.8 billion. In April and May Freddie out-purchased Fannie, something it had not done for years. Fannie Mae also reported that the ARM share of conventional mortgage applications fell by nearly 2% in July to 29.9%, the lowest monthly average share for adjustable-rate mortgages since March of 2004.

Astoria Financial Corp., Lake Success, N.Y., has announced an outsourcing agreement with Dovenmuehle Mortgage Inc., Schaumberg, Ill., under which Dovenmuehle will subservice on a private-label basis the loan portfolio of Astoria Federal Savings & Loan Association, a subsidiary of Astoria Financial.George L. Engelke Jr., Astoria's chairman, president, and chief executive officer, said the decision was "driven entirely by economics" and was not a reflection on the servicing staff of Astoria Federal, whose loan delinquencies "have never been lower." Operating efficiency is the key consideration, he said. "Today, despite the fact that our individual mortgage loan balances are larger, the number of loans we service has decreased over the past several years, thereby lowering operating efficiency," Mr. Engelke said. The agreement will result in a pretax charge of approximately $1 million in the third quarter, the company reported. The thrift can be found online at http://www.astoriafederal.com.

Seven classes from four Morgan Stanley Dean Witter Capital I Inc. mortgage-backed security transactions have been downgraded by Fitch Ratings.The downgrades were as follows: series 2001-AM1, class M-2, from AA to A-plus, and class B-1, from BBB-minus to BB-minus; series 2002-AM1, class M-2, from AA to A, and class B-1, from BBB-minus to BB; series 2002-AM2, class B-1, from BBB-minus to BB-plus, and class B-2, from BBB-minus to BB-plus; and series 2002-AM3, class B-2, from BBB-minus to BB-plus. In addition, Fitch affirmed the ratings on 10 other classes in the deals. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations. The loans consist of fixed-rate and adjustable-rate mortgages extended to subprime borrowers and are secured by first and second liens, primarily on one- to four-family residential properties, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

GMAC Mortgage Corp., Horsham, Pa., has announced an agreement with NetBank, an online bank, under which GMAC Mortgage will service NetBank's option ARMs before their sale into the secondary market.NetBank's option ARM is an adjustable-rate mortgage that offers the option of making one of three mortgage payments: a minimum payment, an interest-only payment, or a fully amortizing payment, based on a 15-, 30-, or 40-year term, depending on the product. The company said NetBank also intends to sell option ARM loans to other GMAC Mortgage clients, "significantly reducing transfer-related expenses for both parties and reducing the borrower confusion associated with loan servicing transfers." The companies can be found online at http://www.gmacmortgage.com and http://www.netbank.com.

First Bancorp, San Juan, Puerto Rico, has reported receiving notification of an informal inquiry into the company by the Securities and Exchange Commission in connection with its accounting for certain mortgage loans, among other things.The company noted that it had recently disclosed a review by its Audit Committee of purchases of mortgage loans originated by other financial institutions. The accounting issues being reviewed include whether the company should have recorded such transactions as loans by the company to the sellers rather than purchases of mortgage loans, and whether any transactions resulted in derivatives requiring the application of Statement of Financial Accounting Standards No. 133. First Bancorp said its Audit Committee has retained two law firms and a forensic accounting firm to assist in the review. The company can be found online at http://www.firstbankpr.com.

Two classes from two Access Financial Manufactured Housing Contract Trust issues have been downgraded by Fitch Ratings.Class B-1 of series 1995-1 and class B-1 of series 1996-1 were downgraded from CCC to C. In addition, one class from series 1995-1 was upgraded and the ratings on three classes from the two deals were affirmed. Losses on series 1995-1 have caused the certificates to be undercollateralized by approximately $2 million, and cumulative losses now represent 24% of the original balance, the rating agency said. Series 1996-1 has also experienced higher losses than expected, and the certificates are undercollateralized by $8.5 million, Fitch said.

Five classes in two CSFB Mortgage Securities Corp. mortgage-backed pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-22 group 3, class DB3, from BBB to BB, class DB4, from B to CC, and class DB5, from CC to C; and series 2002-32R, class M, from BBB-minus to BB-minus, and class B-1, from BB-minus to CCC. In addition, Fitch affirmed the ratings on 10 classes from five CSFB issues. The downgrades were attributed to the deterioration of credit enhancement relative to consistent or rising monthly losses. The underlying trust for series 2002-22 group 3 consists primarily of 15-year and 30-year fixed-rate one- to four-family residential first-mortgage loans.