Originations

The average 30-year fixed mortgage rate fell from 6.10% to 5.96% over the seven-day period ended Dec. 6, the first time the rate has been below 6% since early October 2005, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.73% to 5.65%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 5.86% to 5.75%, and the average rate for one-year Treasury-indexed ARMs rose from 5.43% to 5.46%, Freddie Mac reported. Fees and points averaged 0.4 of a point for 30-year fixed-rate mortgages, 0.5 of a point for 15-year fixed-rate mortgages and hybrid ARMs, and 0.6 of a point for one-year ARMs. "House prices rose only 1.8% over the 12-months ending Sept. 30th, the slowest rate of growth since the 12-month period ending March 31, 1995, according to the Federal Housing Finance Board's national house price index," said Frank Nothaft, Freddie Mac's chief economist. "With lower consumer spending and personal income gains in October, interest rates on U.S. Treasury securities fell lower this week and mortgage rates followed." A year ago, the average 30-year and 15-year fixed rates were 6.11% and 5.84%, respectively, and the average hybrid and one-year ARM rates were 5.92% and 5.43%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

Two senior members of the Senate Judiciary Committee support the Bush administration's effort to get lenders and servicers to freeze the interest rate resets on adjustable-rate subprime mortgages, but they still want to craft legislation that would allow the bankruptcy courts to provide relief for distressed homeowners.Sens. Richard Durbin, D-Ill., and Arlen Specter, R-Pa., said they support Treasury Secretary Henry Paulson's plan to increase loan modifications. "It can be done promptly and help people," Sen. Specter told reporters. He noted that it is difficult to pass legislation in the Senate. "We don't do anything fast around here," he said. Secretary Paulson's plan to freeze the interest rate on subprime mortgages will reduce defaults and rising foreclosures, Sen. Durbin said. But allowing bankruptcy judges to reduce the principal amount and interest rate on residential mortgages would provide more relief, he said, and encourage more loan modifications. Efforts to pass a similar bill in the House have stalled. The Illinois senator said he plans to redouble his efforts in working out a compromise with his Republican colleague. Sen. Specter said their talks so far have not produced much progress.

The Bush administration's plan to freeze resets on subprime adjustable-rate mortgages is flawed because it will not provide any relief for borrowers with credit scores above 660, according to the chairman of the House Financial Services Committee.Rep. Barney Frank, D-Mass., the committee chairman, said he welcomes the administration's effort to freeze ARM resets for five years. However, it is a "grave error that there is a cutoff at a 660 FICO score," he said. Rep. Frank argued that a credit score is not a good proxy for income and means that people who were careful with their credit may not qualify for relief. "I think it is a great mistake morally and politically," Rep. Frank said. Senate Majority Leader Harry Reid, D-Nev., called the administration's plan a "positive step" that could help about 200,000 people -- but said more needs to be done. Sen. Reid urged Republican senators to stop blocking a vote on a Federal Housing Administration reform bill that could provide refinancing options for troubled subprime borrowers.

Delta Financial Corp., Woodbury, N.Y., says it will file for bankruptcy protection after being unable to successfully securitize a mortgage loan portfolio.The securitization was key to the company's completion of a recapitalization (through the issuance of notes and common stock to an affiliate of Angelo, Gordon & Co.) that was announced on Nov. 15. At the same time, Delta had negotiated a standstill agreement with three of its warehouse providers. But because Delta could not do the securitization, the company's warehouse lenders notified the company that events of default had occurred. This subjected Delta to acceleration clauses under agreements making it subject to substantial payment obligations and causing it to incur cross-default claims from other creditors. The next domino to fall was the agreement with Angelo Gordon. Delta said it does not believe it can continue as a going concern, and it has suspended taking new mortgage loan applications. Delta said it is in discussions with parties interested in acquiring assets or operations in conjunction with a bankruptcy proceeding. But it added a disclaimer that the discussions are preliminary and no assurance can be given that a transaction will be completed. Delta can be found online at http://www.deltafinancial.com.

Two classes from two series of Chase Funding mortgage pass-through certificates have been downgraded by Fitch Ratings.Class IIB of series 2003-3 group 2 and class IIB of series 2003-4 group 2 were placed on Rating Watch Negative. Fitch also affirmed the ratings on 13 classes of Chase mortgage pass-throughs. The rating agency said the group 2 certificates in both series are backed by adjustable-rate loans chiefly secured by first and second liens or deeds of trust on residential properties.

Four classes of GS Mortgage Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings as a result of changes in the rating agency's subprime loss forecasting assumptions.The downgrades in GSAMP Trust 2005-S1 were as follows: class M-2, from A to BBB (and placed on Rating Watch Negative); class B-1, from BBB to CCC/DR2; class B-2, from BB to C/DR5; and class B-3, from BB-minus to C/DR6. Fitch said the updated subprime assumptions "better capture the deteriorating performance of pools from 2007, 2006, and late 2005."

Four classes of First Franklin subprime mortgage pass-through certificates, series 2005-FFH3, have been downgraded by Fitch Ratings.The downgrades were as follows: class B-1, from BB-plus to B-plus; class B-2, from BB to B; class B-3, from BB-minus to C/DR5; and class B-4, from B-plus to C/DR6. In addition, Fitch placed class B-4 of First Franklin series 2005-FF1 and classes M-9, M-10, and B of series 2005-FF5 on Rating Watch Negative and affirmed the ratings on 50 classes from five First Franklin transactions. Fitch said the rating actions were based on changes the rating agency has made to its subprime loss forecasting assumptions. Fitch can be found on the Web at http://www.fitchratings.com.

Nine classes of commercial mortgage pass-through certificates from Morgan Stanley Capital I Trust 2006-IQ11 have been placed on CreditWatch with negative implications by Standard and Poor's Ratings Services.S&P also affirmed the ratings on 13 other classes in the transaction. The negative rating actions were attributed to concerns about the third-largest loan in the pool, LeNature's Headquarters, which is secured by a 530,856-square-foot vacant industrial building in Phoenix. The loan was transferred to the special servicer, LNR Partners Inc., in November after the sole tenant, LeNature Inc., filed for bankruptcy, S&P said.

Twelve classes of certificates from six deals issued by Morgan Stanley ABS Capital I Inc. Trust in 2004 have been downgraded by Moody's Investors Service.Moody's has also confirmed the ratings on four classes from two of the deals. The downgrades were attributed to an analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. The transactions are backed by fixed and adjustable-rate subprime mortgage loans.

Moody's Investors Service has downgraded 162 classes of primarily first-lien subprime mortgage-backed securities from five issuers.In addition, Moody's placed 39 classes of certificates on review for possible downgrade. Among the downgraded securities were 77 classes from 13 deals issued by Morgan Stanley; 59 classes from five deals issued by Bear Stearns; and 11 classes from two deals issued by Nomura. The collateral is experiencing higher-than-expected rates of delinquency, foreclosure, and real estate owned relative to credit enhancement levels, Moody's said.

BioMed Realty Trust, a laboratory and office real estate investment trust, will be added the Standard & Poor's S&P SmallCap 600 index after the close of trading Dec. 6, S&P has announced.The San Diego-based REIT will replace Kansas City Southern, which is moving to the S&P MidCap 400 Index. BioMed will be listed under the index's GICS Office REITs sub-industry category, S&P said. S&P can be found on the Web at http://www.standardandpoors.com.

Impac Mortgage Holdings Inc., a real estate investment trust based in Irvine, Calif., has reported receiving notification from the New York Stock Exchange that it is not in compliance with the exchange's continued-listing standards.The warning letter from NYSE Regulation Inc. said the mortgage REIT had failed to meet the standard requiring a company to maintain a 30-consecutive-day average closing price of over $1 per common share. Impac said its 30-day average price was $0.91 per share as of Nov. 27. Under NYSE rules, the company now has six months to bring its average share price back above $1 per share. Impac's common and preferred stock will continue to be listed and traded on the NYSE, subject to reassessment by NYSE Regulation.

The housing counseling organization NeighborWorks America is urging its colleagues in the Hope Now Alliance to endorse a five-year freeze on resets of adjustable-rate subprime mortgages."We are hoping for at least five years," said Marietta Rodriguez, who serves as NeighborWorks' liaison with the lenders and servicers in the Hope Now alliance. "Three is probably not going to be enough." Treasury Department officials and alliance members are expected to agree on a plan this week to prevent the wave of resets from becoming a wave of foreclosures. The nonprofit organization, which receives federal funding, provides housing counseling services to troubled borrowers who call the Hope toll-free hotline through its network of 245 community originations. NeighborWorks is conducting its own outreach efforts to increase public awareness of the hotline. Ms. Rodriguez noted in an interview with MortgageWire that servicers are responding to the crisis by increasing their capacity to respond to thousands of calls a day from housing counselors and borrowers in distress. But some servicers are "rushing to catch up," she said.

A study by the National Training and Information Centers shows that subprime mortgage defaults nearly doubled in Chicago during the first half of this year compared with the levels recorded in the same period of last year.The Chicago-based organization, which serves as a resource center for community organizations, reported that subprime defaults (loans 90 days or more past due or in foreclosure) jumped to 3,005 in first half of this year from 1,541 last year. "If these families ultimately lose their homes…'for sale' properties will flood the market," the NTIC study says. Defaults on prime loans totaled 2,429 in the first half, up 16% from last year's level. The NTIC study also shows that defaults on "young" subprime loans seasoned less than 24 months doubled to 2,538. Defaults on young loans are "often caused by fraud or abusive lending practices at origination," the study says.

The Market Composite Index, an overall measure of mortgage applications, rose from a revised 646.3 to 791.8 on a seasonally basis during the week ended Nov. 30, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 51.5% on the week (which followed the holiday-shortened Thanksgiving week) and were up 24.2% from the level recorded a year earlier. The Purchase Index rose from a revised 403.2 to 464.3 on a seasonally adjusted basis, while the Refinance Index climbed from a revised 2093.0 to 2761.3. Refinancings represented 56.0% of total applications, up from a revised 51.4% the previous week, while adjustable-rate mortgages accounted for 11.6%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 6.09% to 5.82%, and points (including the origination fee) were unchanged, at 1.07, for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Nine classes of certificates from five deals issued by NovaStar Mortgage Funding Trust in 2003 and 2004 have been downgraded by Moody's Investors Service.The actions were based on an analysis of the credit enhancement provided by subordination, overcollateralization, excess spread, and mortgage insurance relative to the expected loss, Moody's said. Four of the deals have already stepped down, and losses have begun to erode the overcollateralization while reducing credit enhancement provided by subordination, leaving the rated bonds less protected, the rating agency said. The deals are backed by fixed- and adjustable-rate subprime mortgage loans.

Fourteen tranches of mortgage-backed securities issued by CSFB Adjustable Rate Mortgage Trust in 2004 and 2005 have been downgraded by Moody's Investors Service, and seven tranches have been placed on review for possible downgrade.Moody's also downgraded six tranches of CSFB Home Equity Pass-Through Certificates, series 2005-1, which is backed by first-lien subprime mortgage loans. The actions were based on an analysis of the credit enhancement levels provided by excess spread, overcollateralization, and subordinate classes relative to expected losses, Moody's said. The collateral for the tranches issued by CSFB Adjustable Rate Mortgage Trust consists of first-lien alternative-A mortgage loans.

Twenty-two classes of certificates from six deals issued by Aegis Asset-Backed Securities Trust have been downgraded by Moody's Investors Service.The downgrades were attributed to an analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to expected losses. Most of the deals have already stepped down, losing credit enhancement provided by subordination due to stepdown, the rating agency said. For all the deals, losses have begun to erode the overcollateralization, leaving the rated bonds less protected, Moody's said. The transactions are backed by fixed and adjustable-rate subprime mortgage loans.

Forty-one tranches from eight transactions issued by Securitized Asset Backed Receivables LLC Trust in 2007 have been downgraded by Moody's Investors Service, and 15 tranches have been placed under review for possible downgrade.In addition, one downgraded tranche remains on review for possible further downgrade. The collateral is experiencing higher-than-expected rates of delinquency, foreclosure, and real estate owned relative to credit enhancement levels, Moody's said. The collateral consists primarily of first-lien subprime mortgage loans.

Forty-three tranches from eight transactions issued by Merrill Lynch in 2007 have been downgraded by Moody's Investors Service, and 12 tranches have been placed under review for possible downgrade.In addition, two downgraded tranches remain on review for possible further downgrade. The collateral is experiencing higher-than-expected rates of delinquency, foreclosure, and real estate owned relative to credit enhancement levels, Moody's said. The collateral consists primarily of first lien subprime mortgage loans.