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Servicer Ratings Announced for Bank of America, HSBC, Litton, Bayview

Fitch RatingsFitch Ratings today announced numerous residential servicer ratings actions for four large mortgage loan servicing operations, including Bank of America, HSBC, Litton and Bayview. Bank of America, N.A.’s ‘RPS1’ residential primary servicer rating for prime and Alt-A products was affirmed, while a residential primary servicer rating of ‘RPS1-‘ for its home equity and home equity lines of credit (HE/HELOC) product was assigned by Fitch auditors. At June 30, 2006, Bank of America serviced over 4.5 million loans totaling more than $391.2 billion, of which $69.3 billion were HE/HELOC product. Bank of America’s HE/HELOC business has received significant management attention and is the focus of the company’s aggressive growth plan, which led to the bank’s decision to undergo a formal review of its HE/HELOC servicing capabilities. HSBC Mortgage Corporation was assigned a ‘RPS2+’ residential primary servicer rating for prime, Alt-A and Home Equity/Home Equity Lines of Credit (HE/HELOC) products. As of June 30, 2006, HMC serviced more than 427,000 loans totaling $66.3 billion. The company’s portfolio consists of approximately $52.2 billion prime loans, $6.9 billion Alt-A loans, and $1.3 billion HE/HELOC loans. Litton Loan Servicing L.P. was assigned a ‘RPS2’ residential primary servicer rating for manufactured housing (MH) product. In addition, Fitch affirmed Litton’s primary and special servicer ratings at ‘RPS1’ and ‘RSS1’, respectively. As of June 30, 2006 Litton’s servicing portfolio consisted of over 368,000 residential mortgage loans totaling more than $53.3 billion. This included approximately $47 billion of subprime loans, $3.7 billion HLTV loans and $727 million of manufactured housing loans. In their review, Fitch auditors noted that Litton has developed a new rules based system to interact with its core servicing system to provide tighter controls, timely notifications and improve compliance to internal and external sources. The new system incorporates legal rules and requirements from Pooling and Servicing Agreements to prevent any actions that would have otherwise caused violations in an effort to ensure Litton remains in compliance. Fitch also affirmed Bayview Loan Servicing, L.L.C.’s (BLS) ‘RSS2′ residential special servicer rating. As of Aug. 31, 2006, BLS special serviced 18,514 residential loans totaling more than $1.8 billion. The ratings affirmation comes in spite of recent turmoil at the Coral Gables, FL-based financial operation. In July 2006, Bayview announced that an employee had been altering loan level data for several years. Bayview said that company officials uncovered the wrongdoing in late March 2006 and the partner was terminated for cause. Bayview has been working to identify all of the loans that were altered and to cure, through repurchase or substitution, any affected loans that were securitized in outstanding transactions which materially and adversely affected the securitizations. According to Bayview, approximately 3 percent in outstanding securitized loans were affected. Bayview has repurchased or substituted approximately $66 million of affected outstanding loans out of a total population of $3.3 billion in outstanding residential loans, or 2 percent of the total outstanding population. The loans were repurchased/substituted as a breach of a loan level representation and warranty per the transactions’ legal documents. Bayview also disclosed that on July 14, 2006, the Securities and Exchange Commission (SEC) had requested certain information, including documents or materials that relate to any changes that may have been made to their capital markets database, and that the company was fully cooperating with the request. Fitch Ratings rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within some of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information on Fitch’s residential servicer rating program, please see Fitch’s report ‘Rating US Residential Mortgage Servicers,’ dated November 29, 2006, which is available on Fitch’s web site at

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