Origination

Nine classes of variable-rate notes issued by Abacus 2006-NS1 Ltd., a collateralized debt obligation referencing commercial mortgage-backed securities and others, have been placed on review for possible downgrade by Moody's Investors Service. The affected securities are classes B through H and classes J and K. Moody's also affirmed one class in the CDO, which references a portfolio of synthetic CMBS and commercial real estate CDO securities. The negative rating actions were attributed to a deteriorating pool performance. As of the June 30 distribution date, the transaction consisted of 57 classes of CMBS from 57 separate deals and 13 classes of CRE CDO securities from 13 separate deals, Moody's said.

Seven classes of notes issued by Tallships Funding Ltd., a collateralized debt obligation composed largely of subprime residential mortgage-backed securities, have been downgraded by Fitch Ratings. The downgrades were as follows: advance swap, from BBB to CCC; revolver, from BBB to CCC; class A-1, from B-plus to CC; class A-2, from B-minus to CC; class B, from CCC to C; class C, from CC to C; and class D, from CC to C. Fitch attributed the downgrades to "significant collateral deterioration within the portfolio, specifically subprime RMBS. Since the last review conducted in November 2007, approximately 84.2% of the portfolio has been downgraded." Tallships Funding is an arbitrage hybrid synthetic and cash CDO that includes an unfunded super senior liquidity facility consisting of an advance swap and a revolving credit agreement.

Nine classes of Crystal River CDO 2005-1 Ltd., a collateralized debt obligation backed partly by subprime residential mortgage-backed securities, have been downgraded by Fitch Ratings. Eight of the nine classes were removed from Rating Watch Negative. Fitch attributed the downgrades to "significant collateral deterioration" in the portfolio, specifically regarding subprime RMBS and structured finance CDOs with underlying exposure to subprime RMBS. "Since the last review conducted in November 2007, approximately 48.8% of the portfolio has been downgraded," Fitch said, adding that 95.9% is rated below investment grade. The rating agency can be found online at http://www.fitchratings.com.

FNB United Corp., Asheboro, N.C., has reported that it took a goodwill impairment charge of $1.8 million ($0.16 per share) in the second quarter related to its Dover Mortgage Co. subsidiary. The charge reduced second-quarter earnings for FNB United to $140,000 ($0.01 per share), compared with net earnings of $3.7 million ($0.33 per share) for the same period a year earlier. FNB United said it made changes to Dover's business model, which included the closing of certain offices that were not accretive to earnings. "Dover is far better structured to succeed in today's mortgage market," said Mike Miller, president and chief executive officer of FNB United. "It is well-positioned to take advantage of its 20-plus-year experience in FHA and government-backed mortgages, along with its menu of conforming and reverse mortgages." Dover can be found on the Web at http://www.dovermortgage.com.

The Office of the Comptroller of the Currency has seized First National Bank of Nevada, Reno, and First Heritage Bank NA, Newport Beach, Calif., both formerly owned by First National Bank Holding Co., Scottsdale, Ariz. On June 30, First National Bank of Arizona -- the nation's 39th-largest wholesaler and 65th-largest mortgage lender overall in 2006, according to the latest edition of the Mortgage Industry Directory -- was merged into First National Bank of Nevada. The branches and deposits were acquired by Mutual of Omaha Bank, Omaha, Neb. Mutual of Omaha purchased $200 million in assets from the receiverships at a 4.41% premium, but it said most of the First National loan portfolio will be retained by the Federal Deposit Insurance Corp.

The Senate voted 72-13 on Saturday to pass a landmark housing bill that will provide up to $300 billion in new FHA money for distressed homebuyers and create a new, tougher regulator for Fannie Mae, Freddie Mac, and the other housing GSEs. President Bush is expected to sign the bill by midweek. The House passed the bill last week. Among other things, the "Housing and Economic Recovery Act of 2008" permanently raises the Fannie/Freddie loan limit to $625,000 and bans downpayment assistance programs in regard to Federal Housing Administration loans. It also allows for the Treasury Department to invest in Fannie/Freddie securities, if need be. "For Americans out there today with distressed mortgages and worried about their economic future, we hope this legislation could be the first piece of good news in a long time," Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., told reporters over the weekend.

Three classes of Wachovia Bank Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2005-C20, have been downgraded by Moody's Investors Service. The downgrades were as follows: class F, from Baa1 to Baa2; class G, from Baa2 to Baa3; and class H, from Baa3 to Ba2. Moody's also placed classes D, E, F, and G on review for possible downgrade. The negative rating actions were due to expected losses associated with the specially serviced Macon & Burlington Mall Pool Loan, the rating agency said. The loan is secured by the borrower's interest in two regional malls, one in Macon, Ga., and the other in Burlington, N.C.

Four classes of notes issued by C-BASS CBO XVII Ltd., a collateralized debt obligation consisting largely of subprime and alternative-A residential mortgage-backed securities, have been downgraded and removed from Rating Watch Negative by Fitch Ratings. The downgrades were as follows: class A, from BBB to CCC; class B, from BBB-minus to CC; class C, from BB to C; and class D, from B-plus to C. The downgrades were attributed to "significant collateral deterioration" in the portfolio, especially regarding the subprime and alt-A RMBS. Fitch can be found online at http://www.fitchratings.com.

The Issuer Default Ratings of Associated Banc-Corp have been downgraded by Fitch Ratings, and the rating outlook of its subsidiaries has been revised to negative due to growth in nonperforming assets linked to residential land development and construction loans. The company's long-term IDR was downgraded from A-minus to BBB-plus and its short-term IDR was downgraded from F1 to F2. The downgrades reflect Associated Banc-Corp's "continued reliance on short-term borrowings while maintaining a modest level of liquid assets and bank-level capital ratios that remain less" than those of most peers, the rating agency said. The ratings of the company's principal subsidiaries were affirmed, but the outlook was revised to negative because of "marked increases" in its NPAs and net chargeoffs that were attributed largely to weakness in the residential land development and construction loan book. Fitch said the company "has a lengthy track record of very manageable credit losses even during periods of elevated NPAs," but that real estate prices and mortgage market conditions are likely to "challenge" it in remediating problem credits.

Irwin Financial Corp., Columbus, Ind., has announced an agreement to sell its residual interests in approximately $1 billion of home equity loans to Roosevelt Management Co., New York, noting that home equity lending has been "a principal driver" of recent losses. Irwin chairman and chief executive Will Miller also announced a pact with Roosevelt, which specializes in investing in and servicing seasoned residential mortgage loans and securities, to deliver "substantially all of the remaining loans in our home equity business into a securitization structure that will cap our remaining exposure at less than $100 million." The company said the transactions, and several others, were aimed at achieving a strategic restructuring of Irwin Financial and Irwin Union Bank that will enable them to refocus on core banking services to small businesses and branch-based customers. The company can be found online at http://www.irwinfinancial.com.