Servicing

Two classes of Cityscape Corp. Home Equity Loan Trust, series 1997-C group 1, have been downgraded by Fitch Ratings.The downgrades were as follows: class M-2F, from A to BBB; and class B-1F, from BB to CCC. In addition, Fitch affirmed the ratings on three other classes in the transaction. The downgrades were attributed to monthly realized losses that have exceeded the monthly excess spread, depleting the overcollateralization amount. Fitch can be found online at http://www.fitchratings.com.

American Home Mortgage Investment Corp., Melville, N.Y., has announced the sale of an additional 650,000 shares of series A cumulative redeemable preferred stock at $25 per share in a reopening of a public offering.After the closing of the sale, the outstanding shares of preferred stock will total 2.15 million, including 1.4 million shares from the original offering and the exercise of the underwriters' option to buy 100,000 additional shares to cover overallotments, the company said. Total proceeds are estimated at $53.75 million from the offering and the reopening. The underwriters have been also granted an option to buy up to 97,500 shares of preferred stock in connection with the reopening to cover any overallotments. Citigroup Global Markets Inc. acted as sole bookrunning and lead manager of the offering. American Home, a mortgage real estate investment trust, can be found online at http://www.americanhm.com.

Although total residential mortgage originations will likely be off by 30% this year, securitization levels for private-label mortgages are off by only about 15%, according to Standard & Poor's Ratings Services.S&P forecast on July 15 that $475 billion in residential mortgage-backed securities will be issued in 2004, down from approximately $550 billion in 2003. S&P can be found on the Web at http://www.standardandpoors.com.

Ginnie Mae's first strip security offering has come to market, a $2.2 billion Ginnie Mae II deal with a 5.5% coupon.The deal will be helpful to those who could previously hedge their Ginnie Mae servicing only with Fannie Mae and Freddie Mac principal-only strips, said Linda Lowell, a mortgage-backed securities researcher at RBS Greenwich Capital Markets. In addition, it will allow players in the interest-only strip market to diversify, she said. Goldman Sachs & Co. is the lead underwriter for the offering. Ginnie Mae can be found online at http://www.ginniemae.gov.

Innovations in mortgage servicing technology over the past 10 years have been very helpful in keeping families in their homes after a mortgage default, according to a study by Freddie Mac.The study by Freddie Mac deputy chief economist Amy Crews Cutts and Professor Richard Green of George Washington University found that repayment plans and loan modifications are very effective at keeping borrowers in their homes. "We found that repayment plans lower the probability of home loss by 80% among all borrowers and by 68% among low- to moderate-income borrowers," Ms. Cutts said. "In addition, for servicers, foreclosure alternatives cost less than acquiring the actual property, which may carry legal and home repair costs." Freddie Mac said innovations that have proven beneficial for borrowers and servicers alike include automated reporting, remitting, and tracking; automated voice response systems; and servicing tools based on credit scores. The technology has enabled servicing costs to fall "dramatically" in the past 10 years, from an average of $120 per loan in the early 1990s to $79 per loan in 2001, the government-sponsored enterprise said. Freddie Mac can be found online at http://www.freddiemac.com.

Class B-2 of Ocwen Residential MBS Corp., series 1998-3, has been downgraded from BB to CCC by Fitch Ratings.Fitch also removed the rating on class B-1 in the same deal from Rating Watch Negative and affirmed that rating and those of two others in the transaction. The downgrade was attributed to loss levels and high delinquencies in relation to the applicable credit support.

Class B of Option One MESA Trust asset-backed certificates, series 2001-2, has been downgraded from BB to B-plus by Fitch Ratings and removed from Rating Watch Negative.Fitch also affirmed the ratings on classes A and M of the transaction and removed class M from Rating Watch Negative. The downgrade was attributed to the poor performance of the underlying collateral. "The amount of available excess interest has not sufficiently covered the greater-than-expected level of losses incurred, resulting in a depletion of overcollateralization," the rating agency said.

CoreStar Financial Group, Timonium, Md., has announced a $4 million investment in the company by Edison Venture Fund that CoreStar says will be used to expand its marketing and sales programs.The company, which specializes in consumer debt consolidation through mortgage refinance transactions, said it expects the marketing and sales expansion to enable it to "more than double" its production within a year. Bruce Luehrs, a general partner at Edison, said the experience of CoreStar's executives in the mortgage industry from both a consumer and a market perspective "set this company apart." Mr. Luehrs and Ross Longfield, a former chief executive officer of Beneficial National Bank USA, have joined CoreStar's board of directors, the company reported. WWC Capital Group, Reston, Va., was the exclusive placement agent for CoreStar in connection with the transaction. The companies can be found on the Web at http://www.corestar.com and http://www.edisonventure.com.

Barclays Capital has made two more appointments to its new mortgage-backed securities trading desk operation.Chris Leslie, who previously worked in MBS sales at Citigroup, has been named managing director responsible for MBS sales in the United States at Barclays, and Steve Cozine, who was head of non-agency collateralized mortgage obligations at Citigroup, has been named director and senior mortgage CMO trader and structurer. Barclays Capital can be found online at http://www.barcap.com.

A $650 million private placement of debt securities by Berkshire Hathaway Finance Corp. that will be used in part to finance a mortgage subsidiary of Clayton Homes Inc. (a Berkshire Hathaway company) has been rated triple-A by Standard & Poor's Ratings Services.The medium-term notes will be issued with three- and 10-year maturities. S&P said the net proceeds of the issuance are expected to be used to fund the finance operations of Vanderbilt Mortgage and Finance Inc., a wholly owned subsidiary of Clayton Homes, a manufactured housing company acquired by Berkshire Hathaway in 2003. S&P can be found online at http://www.standardandpoors.com.