Origination

Two classes from two Ameriquest Net Interest Margin Trust issues have been downgraded by Fitch Ratings. Class A of series 2005-RN4 and class A of series 2005-RN5 were downgraded from AAA to BBB. "The rating actions reflect actual paydown performance of the NIM securities to date compared to initial projections, as well as changes that Fitch previously made to its subprime loss forecasting assumptions for the underlying transactions," the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

Nine classes of subprime asset-backed pass-through certificates issued by Ace Securities Corp. Home Equity Loan Trust have been downgraded by Standard & Poor's Ratings Services. The affected securities were in series 2004-HS1, series 2006-HE3, and series 2006-HE4. S&P also affirmed the ratings on three classes from series 2004-HS1. The downgrades were attributed to "adverse collateral performance that has caused monthly losses to exceed monthly excess interest." S&P added that the amount of loans in the delinquency pipeline "strongly suggests that monthly losses will continue to exceed excess interest, thereby further compromising credit support." The collateral consists primarily of subprime first-lien mortgage loans.

Forty-seven classes in three commercial mortgage-related transactions from three issuers have been downgraded by Standard & Poor's Ratings Services. The downgrades affected 18 classes from Ansonia CDO 2006-1 Ltd., 16 classes from Greenwich Capital Commercial Mortgage Trust 2007-RR2, and 13 classes from GS Mortgage Securities Corp. II's series 2006-RR3. All the classes were removed from CreditWatch with negative implications. The downgrades were based on a "full analysis of the transaction's assets and liabilities" that incorporated S&P's revised recovery rate assumptions for commercial mortgage-backed securities, the rating agency said. S&P can be found online at http://www.standardandpoors.com.

Hanover Capital Mortgage Holdings Inc., Edison, N.J., has received notification from the American Stock Exchange that its stock will be delisted for failing to meet Amex's continued-listing standards. Hanover said the exchange staff had determined that a plan submitted to Amex on May 8 "does not make a reasonable demonstration of the company's ability to comply" with the continued-listing standards. Amex cited stockholder's equity of less than $2 million, losses from continuing operations, and net losses in two out of Hanover's three most recent fiscal years. The notification also said Hanover's sustained losses are "so substantial" or its financial condition has become "so impaired" that it appeared "questionable, in the opinion of the Exchange, as to whether the company will be able to continue operations or meet obligations as they mature." Hanover said it intends to appeal the decision. The company, a mortgage real estate investment trust, can be found online at http://www.hanovercapitalholdings.com.

Impac Mortgage Holdings, Irvine, Calif., has restructured its repurchase agreement financing facility with UBS Real Estate Securities Inc. The deal is contingent on the signing of a definitive agreement. Impac's remaining repurchase warehouse line, which has a balance of $200 million, will become a term facility with a 12-month period, with options to extend it for 18 months if certain targets are met. The new facility will remove any and all technical defaults Impac has. It will also allow Impac to manage the loans in the facility for eventual refinancing, sale, or securitization while taking away the risk of margin calls. UBS will receive warrants to buy 7% of Impac's common stock, and there is a right to cancel warrants equal to 3% of the company's outstanding common stock if Impac satisfies certain thresholds. Joseph R. Tomkinson, Impac's chairman and chief executive, said the new facility will give the company "more time to maximize recovery on the sale or refinance" of the mortgage loans and enable it "to focus on new initiatives and strategies."

Citing deterioration in the housing market, Milwaukee-based Marshall & Isley Corp. has announced plans to take a second-quarter provision of up to $900 million for loan and lease losses, prompting Fitch Ratings to downgrade the company's short-term Issuer Default Rating. M&I said the provision is expected to be approximately $485 million greater than expected second-quarter chargeoffs of $415 million. The company said it expects to report a loss of $1.50-$1.60 per share for the second quarter. "The continuing deterioration in the housing market, particularly in Arizona, on Florida's west coast, and in selected relationships in our correspondent business, makes this the prudent action to take at this time," said Mark F. Furlong, M&I's president and chief executive officer. Fitch, reporting that M&I's net loss is expected to be around $400 million in the second quarter, lowered the short-term IDRs of the parent company and its subsidiary banks from F1-plus to F1 and their individual ratings from A/B to B. Fitch also placed the company's A-plus long-term IDR and other long-term ratings on Rating Watch Negative. "While [M&I's] problematic areas of its loan portfolio appear to be well contained, construction and land development are sizable exposures for the company," Fitch said. M&I can be found online at http://www.micorp.com.

AmericasBank Corp., Towson, Md., says it will be closing its separate mortgage unit and integrating its operations into existing banking centers. The company said customer mortgage needs would be serviced from its Annapolis, Md., and Towson banking centers. In an 8-K filing with the Securities and Exchange Commission, AmericasBank said it "intends to cease its emphasis on originating mortgage loans for sale that are originated by commissioned salespeople and to focus on the traditional business of a community bank. The company believes that the integration of the mortgage unit into the bank's banking centers will be completed by July 31, 2008." The company estimated that closing the mortgage unit will cause it to incur pretax charges of approximately $250,000 in the second and third quarters of 2008 -- approximately $200,000 in noncash charges related to the writeoff of goodwill, and $50,000 in cash charges related to severance payments. AmericasBank lost $2.55 million in the fourth quarter of 2007, largely due to a $2.9 million writedown related to five fraudulent real estate loans. In May, the company fired its president and chief executive, Mark Anders.

Mortgage servicers increased their loss mitigation efforts by 26% from February to March as 49,000 borrowers agreed to loan modifications or payment plans, according to the first Mortgage Metrics Report from the Office of Thrift Supervision. The new OTS report uses loan-level data to examine the loss mitigation activities of the five largest OTS-regulated thrifts and their affiliates: Washington Mutual, Countrywide Financial, IndyMac, Wachovia FSB, and Merrill Lynch. The data show that 71% of the loss mitigation actions involved loan modifications rather than payment plans. However, subprime borrowers are more likely to get a loan modification than prime borrowers. "Prime mortgages received the fewest loan modifications relative to new foreclosure actions," the OTS report says. The report also indicates that new foreclosures in the first quarter were driven mainly by prime and alternative-A loans, not subprime loans.

The average 30-year fixed mortgage rate fell to 6.35% from 6.45% over the seven-day period ended July 3. The average 15-year fixed mortgage rate dropped to 5.92% from 6.04%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages slipped to 5.78% from 5.99% and the average rate for one-year Treasury-indexed ARMs declined to 5.17% from 5.27%, Freddie Mac reported. Fees and points averaged 0.6 of a point for fixed-rate mortgages and one-year ARMs, and 0.7 of a point for hybrid ARMs. "Mortgage rates reversed their three-week rise, falling this week after the release of the latest Federal Reserve's policy statement that it expects inflation to moderate later this year and the reporting of May's timid increase in core personal consumption prices," said Frank Nothaft, Freddie Mac vice president and chief economist. "According to recent trading activity in federal funds futures, market participants lowered somewhat their expectations of future rate hikes by the Fed compared to last week." A year ago, the average 30-year and 15-year fixed mortgage rates were 6.63% and 6.30%, respectively, and the average hybrid and one-year ARM rates were 6.29% and 5.71%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

Mortgage companies hired 1,500 full-time employees in May, ending 14 consecutive months of workforce reductions, and it could be a sign that the jobs drain may be ending soon. The U.S. Bureau of Labor Statistics reported Friday that employment in the mortgage banker/broker sector rose from 356,300 in April to 357,800 in May. A Mortgage Bankers Association economist expects to see more layoffs over the next few months. However, MBA senior director of economic forecasting Orawin Velz says industry employment could bottom out around 348,000. The previous uptick in mortgage jobs was in February 2007 when the industry had 489,800 employees. Since then, 132,000 people have lost their jobs or left the industry.