Servicing

Two classes of notes issued by Ingress I Ltd., a collateralized debt obligation backed by real-estate-related assets, have been downgraded by Fitch Ratings.The downgrades were as follows: class B, from A-plus to A-minus, and class C, from BB-minus to B-minus. In addition, Fitch affirmed the ratings on two classes in the CDO. The deal is supported by a static pool of asset-backed securities, residential mortgage-backed securities, commercial MBS, and real estate investment trusts. The rating agency attributed the downgrades to declining overcollateralization ratios since April 2003.

Four classes in three CWMBS (Countrywide Home Loans Inc.) mortgage pass-through deals have been downgraded by Fitch Ratings, and one other class was placed on Rating Watch Negative.The downgrades were as follows: series 1998-12 (Alt 1998-4), class B4, from B to CCC and removed from Rating Watch Negative; series 2001-26 (Alt 2001-11), class B4, from B to CCC and removed from Rating Watch Negative; and series 2002-11 (Alt 2002-7), class B3, from BB to B, and class B4, from B to CC. Class B4 of series 1999-6 (Alt 1999-1) was placed on Rating Watch Negative. In addition, four classes were upgraded and the ratings on 15 classes in four transactions were affirmed. The rating agency said the downgrades and Rating Watch action stemmed from actual and expected losses relative to the applicable credit support. Fitch can be found online at http://www.fitchratings.com.

C-BASS has completed a real estate mortgage investment conduit deal backed by approximately $395 million of residential mortgages.The REMIC -- C-BASS mortgage loan asset-backed certificates, series 2004-CB4 -- consists of about $377 million of publicly offered certificates underwritten by J.P. Morgan, Citigroup, and Blaylock & Partners LP, C-BASS reported. The servicer on the deal is Litton Loan Servicing LP, a C-BASS subsidiary. C-BASS can be found online at http://www.c-bass.com.

Bond and securitization trade groups that represent mortgage-related securities market participants, among others, are voicing concerns about the Securities and Exchange Commission's proposed rules for asset-backed securities.The Bond Market Association said that among its concerns are "the risk that shelf registration statements may no longer be available, far-reaching and inflexible static pool disclosure requirements" and "inappropriate regulations covering repackaging transactions." The association's affiliate, the American Securitization Forum, also has concerns about the proposed rules and has detailed them in a 130-page comment letter to the SEC. The forum can be found online at http://www.americansecuritization.com, and the association can be found at http://www.bondmarkets.com.

Lenders are increasingly willing to fight back against fraud, whether committed by consumers, loan officers, or other parties to a mortgage transaction, according to a moderator at the Western Secondary Market Conference in San Francisco."I think that the perception [of fraud] is changing," said Lawrence C. Ward of CMG Mortgage in San Ramon, Calif., who moderated a July 9 panel on dealing with fraud. "Lenders are getting tired of just accepting fraud as being part of their business. Companies are getting tired of that -- there is too much money involved." Mr. Ward said there are now "all these wonderful systems" to discover fraud and identify the perpetrators, and he predicted that companies will put such systems in place. "Lenders are tired of saying fraud is part of the cost of doing business because, no, it is not," he said. "The same way bank robberies are considered criminal acts, lenders will not accept fraud, either." The 32nd Annual Western Secondary Market & Mortgage Banker Conference was sponsored by the California Mortgage Bankers Association.

Class B of Residential Asset Mortgage Products Inc. home equity mortgage asset-backed pass-through certificates, series 2001-RZ3, has been downgraded from BB to B by Fitch Ratings.In addition, the ratings on four other classes in the deal were affirmed. The downgrade was attributed to a decline in enhancement relative to the applicable credit support.

Cendant Corp.'s announcement that it will consider selling its mortgage business represents "a positive development" for the credit profiles of Cendant and its PHH Corp. subsidiary, according to Fitch Ratings.The rating agency said a divestiture of the mortgage origination platform and mortgage servicing business would help the companies "by removing an interest-rate-sensitive business involving complex hedging strategies." (Cendant's mortgage business is a unit of PHH Corp.) Divestiture would also represent another step by Cendant toward simplifying its business model, Fitch said. "A divestiture of the mortgage business would not necessarily reduce Cendant's corporate debt unless proceeds from the sale are applied to debt reduction," the rating agency observed. "However, a divestiture would eliminate risks associated with mortgage servicing rights" and securitizations of residential mortgages, Fitch said, adding that the main credit risk is the MSRs. Fitch can be found online at http://www.fitchratings.com.

Three classes of certificates issued by Bear Stearns Structured Securities Inc. mortgage pass-through certificates, series 1997-2, have been downgraded by Moody's Investors Service.The downgrades were as follows: class 1-B-3, from Baa2 to Caa1; class 1-B-4, from Ba2 to C; and class 1-B-5, from B2 to C. Moody's also upgraded four classes in the transaction. The deal is a senior/subordinated structure with a fixed-rate and an adjustable-rate group that are not cross-collateralized. The downgrades were attributed to cumulative losses that have exceeded expectations for Pool 1. The 1-B-6, 1-B-5, and 1-B-4 tranches have been completely written down and the 1-B-3 tranche has taken $378,482 of writedowns.

Prepayment rates for Fannie Mae and Freddie Mac mortgage-backed securities slowed significantly among 5.5%-6.5% coupons during the June reporting period, while Ginnie Mae MBS speeds held steady or slowed only "modestly," according to the Bear Stearns Prepayment Commentary."In contrast to conventional speeds that were down 20%-25% in the largest issues, [Ginnie Mae] prepayments for the June reporting period were flat to very modestly slower across the entire coupon stack -- well above most expectations," Bear Stearns analysts Dale Westhoff and Bruce Kramer reported. They attributed the disparities between Fannie/Freddie speeds and Ginnie speeds -- which "have almost become the norm in recent years," the analysts said -- to several factors. The factors include the ability of many Ginnie borrowers to qualify for conventional financing, "more aggressive pricing and competition" for subprime loans, expansion by the government-sponsored enterprises into the alternative-A sector, and servicer buyouts, Mr. Westhoff and Mr. Kramer said. Bear Stearns can be found online at http://www.bearstearns.com.

Cendant Corp., New York, has announced that it will consider strategic options that include the sale of its mortgage origination platform and its mortgage servicing business.However, the company said any transaction would be aimed at preserving "the cross-selling benefits of a 'value circle' that exists between the mortgage business and the company's residential real estate brands and relocation and resettlement services businesses." Henry R. Silverman, chairman, chief executive officer, and president of Cendant, said the company's mortgage business, which is expected to represent "only a fraction" of the company's income this year, "continues to perform in line with our expectations. However, our mortgage banking activities can produce volatility in Cendant's earnings inconsistent with our business model and the remainder of our portfolio." Cendant also announced that it now expects to exceed the high end of its recently announced earnings projection of $0.42-$0.44 per share from continuing operations by $0.02 to $0.03. Cendant can be found online at http://www.cendant.com.