Originations

Three classes of Salomon Brothers Mortgage Securities VII Inc., series 2002-CIT1, have been downgraded by Fitch Ratings.The downgrades were as follows: class M-3, from BBB to BB-plus; class M-4, from BB to B-minus/DR1; and class M-5, from BB-minus to B-minus/DR2. Fitch also affirmed the ratings on three other classes in the deal. The downgrades were attributed to deterioration in the relationship between credit enhancement and expected losses. The collateral for the transaction consists of first- and second-lien subprime mortgage loans.

Eighteen classes of mortgage-backed securities from several issuers have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also placed nine classes on Rating Watch Negative and affirmed the ratings on classes with outstanding balances of over $3 billion. Among the securities affected by the latest downgrades were: 11 classes from four issues of Soundview Home Equity Loan Trust asset-backed certificates; three classes from Fremont Home Loan Trust mortgage pass-through certificates, series 2005-1; two classes from Meritage Mortgage Corp. asset-backed certificates, series 2005-2; one class from UBS MASTR Asset Backed Securities mortgage pass-through certificates, series 2005-NC1; and one class from Terwin Mortgage Trust asset-backed certificates, series 2005-5SL. The rating actions were attributed to changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness." The rating agency can be found online at http://www.fitchratings.com.

Chase has announced the introduction of New Additions, a discounted home equity loan program aimed at helping families pay the expenses of adopting a child.The program offers an introductory rate discount and provides online and telephone access to lenders. "Adding a child to the family brings great joy, but the costs involved -- fees, travel, time missed at work, and upgrading your home -- can be sobering," said Brad Conner, president of Chase Home Equity. "So we created Chase New Additions, which will help homeowners tap their equity more easily and less expensively." Further information on the program can be found online at http://www.chase.com/newadditions.

The Federal Housing Administration is willing to refinance certain delinquent borrowers with interest-only and payment-option adjustable-rate mortgages under the FHASecure program, which is designed to rescue subprime borrowers.However, the delinquency on an IO or option ARM must be the result of an interest rate reset or the full amortization of the mortgage, according to the Department of Housing and Urban Development. Shortly after HUD launched FHASecure on Sept. 5, lenders began asking whether IO and option ARMs would be eligible. HUD finally provided the answer in a newly revised "FHASecure Frequently Asked Questions" on the FHA website. Mortgage industry consultant Bud Carter pointed out the revision. "FHA will refinance almost any loan, except a conventional fixed-rate mortgage that is delinquent," he said. Mr. Carter is with Potomac Partners in Washington. The FHA can be found online at http://www.fha.gov.

Paul Financial, the nation's 40th-largest residential wholesaler, says it has "temporarily" stopped taking new submissions from loan brokers.According to a posting on its website, "All loans that are currently in process will be evaluated based on current underwriting guidelines, and completed as appropriate." According to exclusive survey figures compiled by the Quarterly Data Report, Paul Financial of San Rafael, Calif., funded $391 million in the second quarter, most of it through the wholesale channel. Among all lenders, it ranked 71st, according to the QDR. Paul Financial was launched in 2003 by industry veteran Peter Paul.

The C-BASS-owned Fieldstone Mortgage of Maryland -- which closed its doors last week -- has filed for Chapter 11 bankruptcy protection.According to the Mortgage Industry Directory, Fieldstone ranked 26th among all subprime lenders last year, funding $5.2 billion. According to its bankruptcy filing, its creditors include Morgan Stanley, Bear Stearns, and Countrywide Financial, among others. C-BASS (Credit-Based Asset Servicing and Securitization LLC), in turn, is owned by two publicly traded mortgage insurance companies, MGIC and Radian, which have been trying to sell the company and its servicing unit, Litton Loan Servicing of Texas. In February, C-BASS bought Fieldstone, a publicly traded real estate investment trust, for $260 million. This past summer, in the wake of the margin calls, MGIC and Radian wrote down their interest in C-BASS by $1 billion. Fieldstone can be found online at http://www.fieldstoneinvestment.com.

Thirty-three classes of mortgage-backed securities have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also affirmed the ratings on classes with outstanding balances of over $4 billion. Among the securities affected by the latest downgrades were: 26 classes from four issues of Long Beach mortgage pass-through certificates; four classes from one issue of Residential Asset Securities Corp. mortgage pass-throughs; two classes from one Residential Asset Mortgage Product transaction; and one class from a Fieldstone Mortgage Investment Trust deal. The rating actions were attributed to changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness."

In addition to downgrading Triad (see item above), Standard & Poor's also downgraded the ratings of Milwaukee-based MGIC Investment Corp. and three of its subsidiaries (including its Australian business) by one notch.S&P credit analyst James Brender said the rating agency believes that MGIC's near-term results will compare "somewhat unfavorably with those of its peers because of MGIC's higher risk tolerance, particularly for borrowers with low credit scores." S&P projects that MGIC will have underwriting losses for this year plus the next two, but should have underwriting profits by 2010. In other actions, S&P affirmed the ratings of Radian Group, Philadelphia; The PMI Group, Walnut Creek, Calif.; and Old Republic International Corp., the Chicago-based parent of a mortgage insurer and a title insurer. While MGIC and Triad have a stable ratings outlook, S&P said Radian, PMI, and Old Republic have negative outlooks. The rating agency can be found online at http://www.standardandpoors.com.

The counterparty credit rating of Triad Guaranty Inc., Winston-Salem, N.C., has been downgraded from A to A-minus by Standard & Poor's, and the counterparty credit and financial strength ratings of its mortgage insurance subsidiary, Triad Guaranty Insurance Corp., have been cut from AA to AA-minus.Commenting on the rating actions, Triad Guaranty president and chief executive Mark Tonnesen said it is "unfortunate that concerns regarding the mortgage and housing industries and their effect on near-term performance" had prompted the moves. S&P credit analyst James Brender said the rating agency believes it is harder to estimate insured loan portfolio losses for Triad than for some of its peers. "Triad has an above-average concentration of risk in force from products that have not been tested in a difficult environment," such as alternative-A loans (23% of Triad's risk in force) and negative amortization loans (13%), Mr. Brender said. S&P did say that Triad has strong capitalization and liquidity. "We believe the S&P comment regarding our capital strength and prospects for the future are particularly important in these uncertain times," Mr. Tonnesen said. The mortgage insurer can be found on the Web at http://www.triadguaranty.com.

Delinquencies on U.S. commercial mortgage-backed securities held steady in October, declining by a mere basis point to 0.28%, according to Fitch Ratings.The rating agency said the most notable decline was in the hotel property sector. "As a percentage of the delinquent loan population, hotels fell to 5.4% of the total in October from 13.6% in September," said Michelle Bayard, a Fitch director. By vintage, 1998 and 1999 securitizations accounted for 33.2% of all delinquencies as of October, though the vintages accounted for only 10.8% of Fitch-rated transactions. "Delinquencies typically peak in the eighth year after issuance," Ms. Bayard said. "However, Fitch is concerned that most of these 1998 and 1999 loans are scheduled to mature within the next two years." For the fourth month in a row, the multifamily sector experienced a rise in delinquencies. Delinquencies have also increase in the health care sector. Fitch can be found on the Web at http://www.fitchratings.com.

Countywide Bank turned to the Atlanta Federal Home Loan Bank during the tumultuous third quarter and dramatically increased its borrowings of advances to $51 billion.While other mortgage lenders were facing a funding crunch, Countrywide Financial Corp., Calabasas, Calif., had integrated its mortgage lending operations into its McLean, Va.-based thrift, which is the Atlanta FHLBank's largest borrower, with 36.8% of outstanding advances. Nearly 90% of Countrywide's loan production was funded through the thrift in September. Countrywide Bank is the third-largest federal savings bank in the United States. At the end of 2006, Countrywide Bank had $28.2 billion in advances from the Atlanta FHLBank. The FHLBank's second-largest borrower was SunTrust Bank, with $7.4 billion in advances. Countrywide can be found on the Web at http://www.countrywide.com.

The title insurance industry will not show significant improvement until 2009 at the earliest, a report from Fitch Ratings, New York, said."Fortunately, industry participants took advantage of prosperous years between 2002 and 2005 to strengthen balance sheets and should weather the current down cycle," the rating agency said in its "Review and Outlook 2007-2008: Title Insurance Industry." Fitch noted that for the six publicly traded title insurance underwriters, the average combined ratio worsened by 350 basis points to 101.8% at the end of the third quarter. The report claims "the real story" behind the problems with title insurers is the decline in operating margins, from 6.6% in 2006 to 2.3% this year. Where the subprime crisis affects the title insurance business is in fraud situations, where a default is more likely to result in a claim against a title insurer, Fitch said. Because title insurer resources were stretched thin during the refinance boom, the likelihood that thorough underwriting procedures for policies were not followed increased, it noted.

The Market Composite Index, an overall measure of mortgage applications, fell from 707.3 to 681.7 6 on a seasonally adjusted basis during the week ended Nov. 16, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 5.2% on the week and were up 9.8% from the level recorded a year earlier. The Purchase Index decreased from 432.6 to 424.1 on a seasonally adjusted basis, while the Refinance Index fell from 2315.7 to 2199.9. Refinancings represented 50.3% of total applications, up from 50.2% the previous week, while adjustable-rate mortgages accounted for 15.8%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 6.19% to 6.18%, and points (including the origination fee) decreased from 1.16 to 1.01 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

The average 30-year fixed rate tracked by Freddie Mac's Primary Mortgage Market survey fell from 6.24% to 6.20% for the week ending Nov. 21.The average 15-year fixed mortgage rate dropped from 5.88% to 5.83%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages decreased from 5.96% to 5.88%, and the average rate for one-year Treasury-indexed ARMs declined from 5.50% to 5.42%, Freddie Mac reported. Fees and points averaged 0.5 of a point for fixed-rate mortgages and hybrid ARMs and 0.6 of a point for one-year ARMs. "Both the producer price index and the consumer price index remained contained in October while industrial production fell," said Frank Nothaft, Freddie Mac's chief economist. "This allowed interest rates for the 30-year FRM to decline to the lowest levels since early May 2007 and the 15-year FRM to decline to a level not experienced since early last year." A year ago, the average 30-year and 15-year fixed rates were 6.18% and 5.91%, respectively and the average hybrid and one-year ARM rates were 5.99% and 5.49%, Freddie said. Freddie can be found online at http://www.freddiemac.com.

Despite a broad decline in sales, the median price of existing single-family homes has fallen only 2% over the past four quarters, according to a National Association of Realtors quarterly survey of 150 metropolitan statistical areas.The national median house value was $220,800 in the third quarter, compared to $225,300 in the third quarter of 2006. The report shows that house prices rose in 93 MSAs and fell in 54 MSAs. Regionally, prices of previously owned homes rose 3.2% in the Northeast and 0.5% in Midwest, but fell 3.6% in the South and 3.8% in the West. Total existing home sales, including single-family, condominiums and co-ops, were off by 13.7% compared to the third quarter of 2006. In the West, sales were off by 21.5%. "The housing market correction is clearly focused on transaction volume and not in home prices," NAR chief economist Lawrence Yun said.

BNY Mortgage Co., formerly of West Patterson, N.J., has changed its name to EverBank Reverse Mortgage.Furthermore, the company has moved into new headquarters in Bloomfield, N.J. Back in March 2007, EverBank, Jacksonville, Fla., purchased the ownership stake in BNY Mortgage held by Bank of New York. The remaining ownership position is still held by company management. At the time of the sale, BNY Mortgage was restructured to concentrate solely on the reverse mortgage business. The company claims that under EverBank ownership, it has brought more reverse mortgage products to market than what's been introduced in the last 17 years. This includes the introduction of Reverse Select, the first fixed-rate jumbo reverse mortgage.

Single-family housing starts fell 7.3% in October as problems in the mortgage and housing markets make it difficult for builders to work down large inventories of newly constructed houses.The U.S. Census Bureau reported that single-family housing starts declined from a seasonally adjusted annual rate of 954,000 in September to 884,000 in October. SF starts are down 25% from October 2006 and 34% from October 2005. The National Association of Home Builders/Wells House Market Index shows that builders' sales expectations are at the lowest level since the index was started in 1985. NAHB president Brian Catalde said many builders are reporting that special sales incentives are having "limited success" in attracting buyers. Meanwhile, NAHB chief economist David Seiders does not see a bottom in housing starts until mid-2008. Builders realize it will be "some time before market conditions support an upswing in building activities," he said. The Census Bureau also reported that multifamily starts rebounded 47% in October to 312,000 units.

Thrift institutions originated 30% of all 1-4 family mortgages in the third quarter but their earnings tumbled to $704 million, down from $3.83 billion in second quarter, according to the Office of Thrift Supervision.OTS officials blamed the 82% drop in earnings mainly on secondary market conditions that forced 10 thrifts recognize on losses on their mortgage pipelines and reduced gains on sales. Portfolio lenders did not fairly well in the third quarter. Federally chartered thrifts also increased the loan provisions to 0.92% from 0.38% in the second quarter as charge-offs rose 8 basis points to 0 .43% Charge-offs on single-family loans jumped to $569.5 millions from $312.6 million the second quarter. OTS officials expect charge-offs to increase in coming quarters. Meanwhile, thrifts originated $165.1 billion in 1-4 family mortgages, down 5% from the second quarter, but up 10% from a year ago. Refinancings accounted for 44% of loan production.

The Mortgage Bankers Association, the American Land and Title Association, and the American Escrow Association have announced the development of uniform mortgage closing instructions.The instructions, which are being proposed to members for comment, are designed to improve efficiencies and lower costs by replacing numerous instructions with two standard sets, and to help stem mortgage fraud and facilitate automated mortgage originations, the associations said. When finalized, they will not be required to be used by lenders but are likely to be widely accepted, the groups said. "The instructions promise to save money and increase efficiency across the lending and settlement industries, which will ultimately help borrowers reduce their closing costs," said Ken Markison, the MBA's senior director and regulatory counsel. "It's critical that companies across the industry understand the instructions and provide useful comments so that MBA, ALTA, and AEA can move forward to finalize the instructions for industry use."

Property values in 17 states showed a 12-month decline in September, according to the latest LoanPerformance Home Price Index."However, most states continue to have stable home values, while states like Wyoming, Utah, and North Carolina show a moderate growth in prices," said Damien Weldon, vice president of collateral and prepayment analytics for the San Francisco-based First American LoanPerformance. The LoanPerformance HPI provides a comprehensive set of monthly home price indices and median sales prices covering 7,416 ZIP codes and 659 counties in all 50 states and the District of Columbia, the company said. The index incorporates more than 30 years of repeat sales transactions from the property database of its parent company, First American CoreLogic Inc. First American LoanPerformance can be found online at http://www.loanperformance.com.