Servicing

Fitch Ratings has upgraded Option One's special servicer rating to RSS1, its top rating.Kathleen Tillwitz, a senior director at Fitch, said Option One's expansion and portfolio growth initiatives have been accompanied by the recruitment of industry veterans, including chief servicing officer John Vella, to oversee loan administration and default management. Fitch also affirmed Option One's RPS1 rating for primary servicing of subprime loans. Option One services more than $27 billion of home loans. It employs more than 800 associates at its servicing facilities in Irvine, Calif., and Jacksonville, Fla.

Hanover Capital Mortgage Holdings, Edison, N.J., has announced the recent repurchase of 34,975 shares of its common stock from Thomas P. Kaplan, a managing director of the company.Mr. Kaplan used the proceeds to repay in full a loan that had been extended to him by Hanover. Hanover Capital, a mortgage real estate investment trust, can be found online at http://www.hanovertrade.com.

Class B3 of Salomon Brothers Mortgage Securities VII Inc.'s mortgage pass-through certificates, 1997 HUD-2, has been downgraded from BBB to BBB-minus by Fitch Ratings.The rating agency attributed the actions to high losses and delinquency levels relative to applicable credit support. Fitch can be found online at http://www.fitchratings.com.

Two classes of the BCF LLC 1997-R3 residential mortgage-backed securities deal have been downgraded by Fitch Ratings, and one of them has been removed from Rating Watch Negative.Class B2 was downgraded from A-minus to BBB and removed from Rating Watch Negative, and class B3 was downgraded from C to D (default). The ratings on two other classes in the deal were affirmed. Fitch said the actions were based on loss levels and high delinquencies relative to applicable credit support as of the November distribution.

The Bond Market Association says it will monitor the potential New York transit strike closely, but so far anticipates that mortgage-backed security traders and other members will be able to operate during normal trading hours even if it occurs.The association said it has determined by surveying its New York-based membership that they will most likely be able to operate "in a normal or nearly normal manner" in the event the strike becomes a reality. However, the association said it would "modify its trading recommendation accordingly" if the strike turned out to have more of an impact on the bond market than expected. The association can be found online at http://www.bondmarkets.com.

The B classes of ContiMortgage Home Equity Loan Trust's series 1999-1 and 1999-2 have been downgraded by Standard & Poor's Ratings Services, while the ratings on 101 other classes from 21 ContiMortgage deals were affirmed.Class B of series 1999-1 was downgraded from BBB-minus to B and class B of 1999-2 was downgraded from BBB-minus to BB. The downgrades reflect a decline in credit support for the subordinate classes due to an erosion of overcollateralization stemming from the fact that net losses have consistently exceeded excess interest, S&P said. The rating agency projected that overcollateralization will be depleted for the downgraded classes within 12 months. S&P can be found on the Web at http://www.standardandpoors.com.

Capstead Mortgage, a real estate investment trust that invests in adjustable-rate mortgages, has seen so much of its portfolio prepay that it is sending cash back to investors.Capstead has announced that it will pay a dividend of $8.35 per common share on Jan. 21 to stockholders of record as of Dec. 31. The dividend combines the regular fourth-quarter dividend of $1.16 per share with a special dividend of $7.19 per share, representing about $100 million of the company's common stockholders' equity. Because of the size of the distribution, the shares will not trade ex-dividend until Jan. 22, 2003. Common stockholders who sell their shares after the record date, and through the payment date, will also be selling their right to receive the dividend. Wesley Edens, Capstead's chairman and chief executive officer, said that because of the steady decline in the size of Capstead's portfolio of ARM securities as a result of prepayments, the company's capital is not optimally utilized. The special dividend "should serve to enhance future returns on remaining common equity, particularly under current market conditions, while maintaining adequate liquidity to take advantage of investment opportunities as they arise," Mr. Edens said. The company can be found online at http://www.capstead.com.

Fannie Mae acquired $129.13 billion in home mortgages in November, yet another record month for the company.National Mortgage News measures Fannie's acquisitions by adding together its portfolio purchases and a data point called "lender-originated" mortgage-backed securities. Fannie measures its purchases through a figure called "business volume." In November Fannie's business volume reached $95.59 billion, also a record. Although purchases were red hot, retained commitments (which measures future activity) slipped a bit. In November the company reported $52.76 billion in retained commitments, its third-best showing of the year, but a weaker number than in the spectacular months of September and October. If retained commitments continue to decline, it could be an indication that the refinancing boom is finally loosing some of its steam.

Standard & Poor's says ABN Amro Mortgage Group is an 'above average' servicer and benefits from strong management.S&P affirmed ABN Amro's above-average servicer rating while raising the organization and management rating for the company to "strong" due to its seasoned management team and experienced loan servicing staff. The rating agency can be found on the Web at http://www.standardandpoors.com.

Four classes of Deutsche Financial Capital manufactured housing transactions have been downgraded by Fitch Ratings, and 16 classes have been placed on Rating Watch Negative.The downgrades were as follows: class B-1, series 1997-I, from BBB to BBB-minus; class B-2, series 1997-I, from BB to CCC; class B-1, series 1998-I, from BBB to BB; and class B-2, series 1987-I, from BB to CCC. All four classes were placed on Rating Watch Negative, as were the following classes: classes A-3 to A-6 and class M, series 1997-I; and classes A-2 to A-7 and class M, series 1998-I. Fitch said DFC was a joint venture of Deutsche Financial Services Corp. and Oakwood Acceptance Corp. Contracts included in the deal are serviced by OAC, a wholly owned subsidiary of Oakwood Homes Corp., which filed for Chapter 11 bankruptcy protection Nov. 15. The classes will remain on Rating Watch Negative "until more information is available regarding the effects, if any, of the bankruptcy filing on the servicing operation," Fitch said.