Servicing

Two classes from Salomon Brothers Mortgage Securities VII Inc.mortgage pass-through certificates, series 1997-HUD1 and 1997-HUD2, have been downgraded by Fitch Ratings.Class B-4 of series 1997-HUD1 was downgraded from B to CCC, and class B-3 of series 1997-HUD2 was downgraded from BBB-minus to BB. Fitch also affirmed the ratings on seven other classes in the two deals. The downgrades reflect credit enhancement levels relative to future loss expectations, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Eight classes from three BankAmerica manufactured housing securitizations have been downgraded by Fitch Ratings, and two were removed from Rating Watch Negative.The downgrades were as follows: series 1995-BA1, class B-1, from BBB to B, and class B-2, from CCC to C; series 1998-1, class M, from AA-minus to BBB (and removed from Rating Watch Negative), class B-1, from BBB to B (and removed from Rating Watch Negative), and class B-2, from B to C; and series 1998-2, class B-1, from B to CCC, and class B-2, from CCC to C. In addition, Fitch affirmed the ratings on five other classes in the transactions and on nine classes in three other BankAmerica manufactured housing deals. The rating agency noted that BankAmerica Housing Services was purchased by Greenpoint Credit in 1998, and that despite Greenpoint's later exit from the MH lending business, the company continues to service its manufactured housing portfolio. "Higher-than-expected losses have caused significant interest shortfalls to various subordinate bonds in all of the transactions," Fitch said. The deals allow interest to accrue on the shortfall amount and to be recovered if there is sufficient available cash flow, but Fitch said classes rated CCC, CC, and C are "unlikely to recover interest due at any point in the future."

The American Stock Exchange has suspended trading indefinitely in the preferred stock of Metropolitan Mortgage & Securities Co., Spokane, Wash., according to Metropolitan.The company said Amex had expressed concerns about the closure of Metropolitan Investment Securities Inc. and about issues raised by the National Association of Securities Dealers (in a waiver-and-consent agreement between NASD and MIS) regarding the sales practices of MIS. "Additionally, Amex expressed a desire to review the company's annual report on Form 10-K, which has not yet been filed," Metropolitan reported. "The Amex has not indicated when, or if, trading would resume." The company can be found online at http://www.metmtg.com.

Luminent Mortgage Capital Inc., a San Francisco-based real estate investment trust, has announced the pricing of an initial public offering of 11.4 million shares of common stock at $13 per share.Luminent was formed in April to invest primarily in U.S. agency and other highly rated mortgage-backed securities. The underwriters have been granted an option to buy up to 1.71 million additional shares to cover any overallotments. The managing underwriter of the offering is Friedman, Billings, Ramsey & Co. The REIT can be found online at http://www.luminentcapital.com.

Impac Mortgage Holdings Inc., Newport Beach, Calif., has priced an offering of 2 million shares of its common stock at $17.75 per share, producing estimated net proceeds of $34 million.The proceeds are expected to be used to expand Impac's long-term investment operations and for general corporate purposes, the company said. The lead manager of the offering was JMP Securities LLC, and the co-manager was Sandler O'Neill & Partners LP. The company has granted the underwriters a 30-day option to buy up to 300,000 additional shares to cover any overallotments. Impac, a mortgage real estate investment trust, can be found online at http://www.impaccompanies.com.

Class B4 of Chase Mortgage Finance Trust mortgage pass-through certificates, series 1999-S12, has been placed on Rating Watch Negative by Fitch Ratings.Fitch also affirmed the ratings on five other classes in the securitization. The rating agency attributed the Rating Watch placement to loss levels and high delinquencies relative to the applicable credit support.

Class B of American Residential Home Equity Loan Trust, series 1998-1, has been downgraded from BBB to B and removed from Rating Watch Negative by Fitch Ratings.Fitch also affirmed the ratings on two other classes in the deal. Fitch downgraded class B because the overcollateralization for the class remains below the target, the rating agency said.

Three classes of Diversified Asset Securitization Holdings I LP have been downgraded by Fitch Ratings.The downgrades were as follows: classes A-1 and A-2, from AAA to AA-plus; and class B, from B to C. Fitch said DASH I is a collateralized debt obligation that was originated and managed by Asset Allocation & Management LLC. The portfolio backing the CDO consists of residential and commercial mortgage-backed securities and commercial and consumer asset-backed securities. Fitch said its review of the credit quality of the collateral and a cash-flow analysis indicated that the original ratings on the downgraded classes no longer reflect the current risk to noteholders. Fitch can be found online at http://www.fitchratings.com.

Principal Financial Group, Des Moines, Iowa, will write down the value of its residential servicing assets in the fourth quarter, reducing net income and operating earnings by $70 million to $110 million.According to figures compiled by National Mortgage News, the insurance giant's mortgage affiliate, Principal Residential Mortgage, is the nation's 11th-largest servicer, with a $117 billion portfolio. "We are highly confident our model reflects the economic value of the asset," said company president John Aschenbrenner. He added, however, that generally accepted accounting principles "require mortgage servicing rights to be carried at market value, and market valuations of MSRs are not precise in an environment like the current one, where there have been limited sales to use as comparables."

Delinquencies in California decreased in the third quarter and so did the percentage of loans in foreclosure, according to the California Mortgage Bankers Association.The CMBA reported that the delinquency rate for mortgage loans on one- to four-unit residential properties fell 16 basis points to 2.57% in the third quarter. The percentage of loans in which foreclosure was started rose 1 bps to 0.16% in the third quarter, while the percentage of loans in the foreclosure process fell 2 bps to 0.35%. "In the 3rd quarter, we see some leveling off of delinquencies as energy prices have subsided and low interest rates have sparked a mortgage origination and refinance wave," said Matthew M. Soto Sr., chairman of the CMBA.