Servicing

Class F of Salomon Brothers Mortgage Securities VII Inc. mortgage pass-through certificates, series 1996-C1, has been downgraded from B-plus to CCC by Fitch Ratings.Fitch also upgraded one class and affirmed the ratings on four other classes in the deal. The downgrade is due to the deteriorating performance of the Clubhouse Inn loan portfolio, which is secured by five hotel properties, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Citi has announced the introduction of the Citi Home Rebate Platinum Select MasterCard, featuring a program that turns everyday purchases into rebates to pay down the principal on a mortgage.The company said the program is the first of its kind, and that applicable purchases include everything from gasoline and groceries to mortgage loan application fees and vacation expenses. Gina Doynow, a senior director at Citi, said the program rewards are significant because cardmembers can "build equity in their homes faster, while shortening the length of their mortgage." Citi, a part of Citigroup, can be found on the Web at http://www.citicards.com.

The rating on class A-4 of ABSC Manufactured Housing Contract Resecuritization Trust 2004-OAK1 has been lowered from AA-minus to A by Standard & Poor's Ratings Services and removed from CreditWatch with negative implications.The rating agency also affirmed the ratings on three senior classes in the deal and removed them from CreditWatch. S&P attributed the downgrade to the "continued adverse performance trends" of the underlying securities and the resulting decline in credit enhancement available to support class A-4. Series 2004-OAK1 is a real estate mortgage investment conduit deal consisting of two underlying securities: OMI Trust 2000-B, class A-1, and OMI Trust 2000-C, class A-1. "While each underlying security is currently receiving principal and interest payments, assumptions have been revised regarding cumulative net losses on these securities based on actual performance data and expectations of future trends," S&P said. The rating agency can be found online at http://www.standardandpoors.com.

Three classes of notes issued by SFA Collateralized Asset-Backed Securities I Trust have been downgraded by Fitch Ratings.The downgrades were as follows: class A, from AA-plus to BB; class B-1, from B-minus to CC; and class B-2, from B-minus to CC. The C rating on class C of the deal was affirmed. The transaction, a collateralized debt obligation managed by Structured Finance Advisors Inc., is supported by a diversified portfolio of asset-backed securities, residential mortgage-backed securities, and commercial MBS. Fitch attributed the downgrades to the continued deterioration of the collateral since the last rating action in July 2003. As of March 15, defaulted assets represented 7.98% of the approximately $183.8 million of collateral and eligible investments, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

MERS, the electronic registry for tracking ownership of mortgage servicing rights, is now registering about 50% of new loans that are being originated, MERS president and chief executive officer R. K. Arnold has told MortgageWire.Since its inception, MERS has registered 22 million loans, and today 29 of the 30 largest loan originators are using the system. Mr. Arnold said MERS saves lenders money by eliminating the need to create assignments when loans or servicing rights are sold, and that is having an impact in the market for mortgage assets. "We are seeing, more and more out in the secondary market, a pricing differential between registered and nonregistered loans," Mr. Arnold said.

Five classes of ContiMortgage Corp. home equity loan transactions have been downgraded by Fitch Ratings.The downgrades were as follows: series 1998-2, class B, from BB to B; series 1998-3 group I, class B-I, from B to CCC; series 1998-3 group II, class B-II, from B to CCC; series 1998-4, class B, from B to CCC; and series 1999-3, class B, from B to CCC. In addition, class M-1F of series 1997-2 group I has been placed on Rating Watch Negative, and Fitch affirmed the ratings on 17 other classes from five ContiMortgage deals. The negative rating actions were attributed to the poor performance of the underlying collateral. The rating agency said greater-than-expected losses have "consistently exceeded the amount of available excess interest, resulting in a depletion of overcollateralization." Fitch can be found online at http://www.fitchratings.com.

Prepayment rates for Fannie Mae mortgage-backed securities rose sharply in March as the speed of the massive 5.5% 2003 coupon surged 48%, according to the Bear Stearns Prepayment Commentary.Bear Stearns analysts Dale Westhoff and Bruce Kramer said the speeds of most coupons jumped 25%-30%. The report reflects "two important realities in the current prepayment landscape," they said, namely "ample capacity in the mortgage pipeline" and the "significant drop" in mortgage rates after the March 5 employment report. However, they went on to note the more recent back-up in interest rates. "The sell-off has pushed the mortgage rate back to where it was at the beginning of the year (5.90%), reducing MBS market refinancing exposure from a high of 70% in March to just 37% today," the analysts said. "Similarly, the average borrower refinancing incentive has dropped from a high of 80 basis points the week ending March 12 to just 30 basis points today." Bear Stearns can be found online at http://www.bearstearns.com.

Twelve classes from four series of securities issued by Ocwen Residential MBS Corp. and backed by seasoned, re-performing mortgage loans have been placed under review for possible downgrade by Moody's Investors Service.The affected classes are as follows: series 1998-R1, classes B-2 and B-3; series 1998-R2, classes B-4F and B-5F; series 1998-R3, classes A-1, A-WAC, B-1, B-2, and B-3; and series 1999-R1, classes B-5A, B-4F, and B-5F. Moody's cited higher-than-expected cumulative losses, which it said have caused credit enhancement (relative to expected future losses) to fall below the levels apparently needed to maintain current credit ratings. The rating agency also placed classes B1-A and B2-A of series 1999-R1 on review for possible upgrade.

Falling interest rates forced the nation's mortgage bankers and brokers to add more workers in February, according to new employment numbers released Friday by the Bureau of Labor Statistics.Mortgage-related firms added 4,200 full-time workers during the month, bringing total industry employment to 436,700. Industry employment had been falling steadily since last July, when mortgage rates hit a 40-year low. Rates have risen steadily -- with a few hiccups -- since last summer, but over the past six weeks they have fallen again. However, the yield on the 10-year Treasury spiked Friday when new BLS figures showed the nation's overall employment rate rising. If the yield on the 10-year stays where it is (around 4.1%) or moves higher, mortgage firms may begin cutting workers once again. The yield on the 10-year recently stood at 3.71%. The BLS can be found online at http://stats.bls.gov.

The ratings on four classes of the Merit Securities Corp. series 12-1 manufactured housing securitization are being reviewed for possible downgrade by Moody's Investors Service.The affected classes of the collateralized bond obligation are: 6.45% class 1-A-3, 6.88% class 1-M-1, 7.35% class 1-M-2, and 7.88% class 1-B. Moody's said the review was prompted by the weaker-than-anticipated performance of the MH loans that make up the collateral pool. As of February, cumulative losses exceeded 9%. "Moreover, the high cumulative losses and insufficient excess spread have caused overcollateralization to erode," the rating agency said. "Based on the weak performance, the rating changes could be significant." Merit is a wholly owned subsidiary of Dynex Capital Inc., Glen Allen, Va. The loans that make up the collateral pool are being serviced by Origen Financial.