Servicing

Two classes of Residential Accredit Loan Inc. mortgage asset-backed pass-through certificates, series 2000-QS1, have been downgraded by Fitch Ratings.Class M-3 was downgraded from BBB to BB-plus, and class B-1 was downgraded from B-minus to CCC. In addition, Fitch upgraded 17 classes in nine RALI transactions, and affirmed the ratings on more than 100 classes in 17 RALI deals. Fitch attributed the downgrades to "poor performance of the underlying collateral, as well as high delinquencies in the transaction." Fitch can be found online at http://www.fitchratings.com.

Ten classes of senior and mezzanine certificates from two IndyMac manufactured housing securitizations have been downgraded by Moody's Investors Service.The downgrades in series 1997-1 were as follows: class A-2, from Aa3 to B1; class A-3, from Aa3 to B1; class A-4, from Aa3 to B1; class A-5, from Aa3 to B1; class A-6, from Aa3 to B1; and class M, from Ba2 to C. The downgrades in series 1998-1 were as follows: class A-3, from Aa3 to B3; class A-4, from Aa3 to B3; class A-5, from Aa3 to B3; and class M, from Ba3 to C. Moody's said the downgrades stemmed from the fact that delinquencies and repossessions have remained high, leading to high cumulative losses and the depletion of overcollateralization. As in other manufactured housing securitizations, the deteriorating performance is due to "weak underwriting standards, combined with macroeconomic factors, such as high unemployment levels in the manufacturing sector where many borrowers are employed," Moody's said. The loans were originated and are being serviced by IndyMac Inc., which exited the manufactured housing sector in 1999 but continues to service the loans from its Pasadena, Calif., servicing center. Moody's can be found online at http://www.moodys.com.

Four certificates from three transactions issued by Aames Mortgage Trust in 2001 have been placed under review for possible downgrade by Moody's Investors Service.The affected certificates are as follows: series 2001-1, class b; series 2001-2, class m-2; series 2001-2, class b; series 2001-3, class b. In addition, Moody's has placed under review for possible upgrade three certificates from one Aames deal. The transactions are backed mostly by first-lien fixed-rate mortgage loans originated by Aames Financial Corp. and serviced by Countywide Home Loans Inc. The certificates were placed under review for possible downgrade "because existing credit enhancement levels may be low given the current projected losses on the underlying pools," Moody's said. "The transactions have taken significant losses, causing gradual erosion of the overcollateralization."

George Miller, deputy general counsel of The Bond Market Association, is stepping down from that post in order to step up to his new position as executive director at one of the association's affiliates, the American Securitization Forum.An ASF spokeswoman said she had no immediate comment on how the move would affect the work Mr. Miller has been responsible for at the association. The Bond Market Association is a trade group that has long worked to promote best-practices guidelines for sell-side debt market participants. The ASF is a newer affiliate that more specifically focuses on U.S. securitization market issues and has a broader membership that includes buy-side as well as sell-side market participants. The memberships of both groups include mortgage industry professionals. TBMA can be found on the Web at http://www.bondmarkets.com.

Freddie Mac is planning to hold an investor conference call on Nov. 1 to lay out a timetable for releasing its 2004 financial results.As a result of its restatement process, Freddie has not released any quarterly financial reports this year -- although the publicly trade company has pledged to deliver both quarterly and full-year 2004 results by March 31. Meanwhile, Freddie Mac released its 2003 annual report on Sept. 24, and it warns investors that 2004 results, as measured by generally accepted accounting principles, will be volatile due to changes in the value of nonhedged derivatives. "We expect this type of volatility to adversely affect our GAAP results in the first half of 2004," the annual report says. Freddie Mac can be found online at http://www.freddiemac.com.

Class B-1 of Metropolitan Mortgage series 2000-B has been downgraded from B to CCC by Fitch Ratings.In addition, Fitch affirmed the ratings on four other classes in the deal. The rating agency attributed the downgrade to poor collateral performance and the deterioration of asset quality "beyond original expectations."

Class B-2 of C-BASS's series 2000-CB4 issue of mortgage-backed securities has been downgraded from BBB to BBB-minus by Fitch Ratings.In addition, Fitch affirmed the ratings on four other classes in the deal as well as four classes in a separate deal. The downgrade "reflects some level of concern with the high level of losses incurred to date and the high delinquencies in relation to diminished credit support levels," the rating agency said. However, the losses are "somewhat mitigated" by the fact that about 10% of the pool consists of loans guaranteed by the Federal Housing Administration or the Department of Veterans Affairs, and therefore class B-2 can maintain an investment-grade rating, Fitch said. The rating agency can be found on the Web at http://www.fitchratings.com.

Persistent high unemployment in the New York metropolitan area may combine with rising interest rates to spur a new wave of foreclosures in the near future, according to Foreclosures.com, a distressed investment property advisory firm based in Fair Oaks, Calif.Company president Alexis McGee noted that citywide unemployment rate actually rose from 7.4% to 7.6% in July, and increased in Kings County (Brooklyn) from 8.0% to 8.4%. "We saw 1,325 new foreclosure cases filed in Kings County and 1,646 in Queens County in the first half of 2004," Ms. McGee said. "These are the counties that have the highest percentage of owner-occupied dwellings. Now we're seeing a lull in foreclosure activity, but view that as temporary." The high unemployment plus rising rates will create a "double whammy" for homeowners in financial distress, she said.

Three classes of Bear Stearns asset-backed securities series 1999-2, groups 1 and 2, have been downgraded by Fitch Ratings.The downgrades were as follows: group 1, class MF-2, from A to BBB, and class BF, from BBB-minus to B and removed from Rating Watch Negative; and group 2, class BV, from BBB-minus to BB. In addition, the ratings on seven classes in the securitization have been affirmed. Fitch attributed the downgrades to "the worse-than-expected performance of the underlying collateral in these deals and its potential negative impact on the most subordinate classes of debt." The underlying trust is backed by two collateral loan groups: group 1 (fixed-rate) and group 2 (adjustable-rate) originated by Conseco Finance Corp. (69.17%) and Amresco Residential Mortgage Corp. (20.92%). The group 1 and group 2 mortgage pools are not cross-collateralized, but there is limited cross-collateralization in the form of excess spread, Fitch said.

Servicers of loans in commercial mortgage-backed securities deals are using practices that have "dramatically increased" their responsiveness, according to Fitch Ratings."Dedicated surveillance teams and enhanced technology that has improved day-to-day work flow have dramatically increased servicer responsiveness to issues and improved operational efficiency," said Stephanie Petosa, a Fitch senior director. "Additionally, the advent of 24-hour borrower websites and borrower surveys has contributed to borrower satisfaction. Increasingly interactive investor websites that allow for customized portfolios and reports has also emerged as a best practice for the sector." Fitch's review of CMBS servicing, titled "Trends and Best Practices in CMBS Servicing," can be found on the rating agency's website at http://www.fitchratings.com.