Servicing

A new loss mitigation assistance company aimed at helping homeowners prevent foreclosures has been formed in Coeur d'Alene, Idaho. The new company, Apply 2 Save.com, said it offers homeowners information on foreclosure laws around the country as well as on how the company can help them get the best workout plan for their situation. Loss mitigation specialists can help homeowners keep their properties by negotiating with their lenders to accept workout plans ranging from "accepting a simple repayment plan, to modifying payment terms, to performing what is called a 'short sale'," the company said. Apply 2 Save.com can be found on the Web at http://www.apply2save.com.

The Office of Federal Housing Enterprise Oversight has corrected its risk-based capital rules so that Fannie Mae and Freddie Mac are no longer rewarded for loans that go into foreclosure. Under current rules, the loss-severity equations result in profits, not losses, for the government-sponsored enterprises on foreclosed properties. OFHEO identified this anomaly a few years ago and issued a proposed rule last December to fix it. Fannie presented evidence showing that the company has realized gains on 20% of mortgages with loan-to-value ratios of 60% or less and on 6% of loans with private mortgage insurance in certain markets with declining house prices. But OFHEO said it was unlikely that those gains would offset the losses on the 80% of the loans with low LTV ratios and the 94% with private MI. Freddie Mac and the Mortgage Insurance Companies of America "commented in favor" of the changes to the RBC rules, OFHEO said.

The Securities and Exchange Commission wants the credit rating agencies to publicly disclose the information they use in rating mortgage-backed securities (including information about the underlying mortgages) to provide more transparency for investors and other rating agencies. "That would permit broad market scrutiny, as well as competitive analysis by other rating agencies that are not paid by the issuer," SEC Chairman Christopher Cox said. The proposal approved by the commissioners for public comment would prohibit credit rating agencies from assisting MBS issuers in structuring their deals to get a certain rating. However, it would be acceptable to tell the issuer how much overcollateralization is needed to achieve a triple-A rating, an SEC staffer said. The rating agencies would also have to maintain a history of their rating actions, including default statistics for the initial rating and defaults that occur after a rating is withdrawn. The wide-ranging proposal addresses conflicts of interest, disclosures, internal practices, and business practices of the rating agencies and is designed to prevent another "subprime mess," Mr. Cox said.

Eight classes of subprime mortgage pass-through certificates from two issuers were downgraded by Fitch Ratings on June 9. The affected securities were as follows: seven classes from two Option One deals, and one class from a Long Beach deal. Fitch also affirmed the ratings on over 60 classes from 29 subprime transactions.

Six attorneys general have stood out for their creative leadership and aggressive response to the nation's foreclosure crisis, according to a new report from ACORN. The organization said these AG's -- Connecticut's Richard Blumenthal, Massachusetts' Martha Coakley, New York's Andrew Cuomo, Illinois' Lisa Madigan, Iowa's Tom Miller, and Minnesota's Lisa Swanson -- earned A-plus grades for actively seeking real data from mortgage servicing companies, pursuing cutting-edge cases against the industry's bad actors, speaking out on matters of state and federal importance, and putting their offices to work for distressed borrowers. ACORN -- the Association of Community Organizations for Reform Now -- says these AGs are cracking down on rescue scams and pushing the industry to perform better. ACORN collected examples of the work done by all 51 attorneys general and has recommended best practices and strategies used by the AGs. The report lists 18 attorneys general who earned A's, six with B's, eight with C's, one with a D, 12 with F's, and six with Incompletes.

Residential Finance Corp., a nationwide mortgage lender, has announced plans to hire 75 to 100 people in the third quarter, the majority of them to fill positions in the company's Columbus, Ohio, headquarters and its office in Tampa, Fla. "The slowdown in the housing market has put more than 200 U.S. lending operations out of business, leaving nearly 1,000 talented mortgage professionals jobless in Ohio, and even more in Florida," said company president Michael Isaacs. "We'd like to invite those seasoned loan officers with extensive mortgage banking experience and a commitment to excellence to give us a call." Residential Finance said its mortgage professionals receive 25 hours of intense mortgage training, including team training in its proprietary "incubator," a simulated classroom environment where experienced trainers provide additional training support. The company can be found online at http://www.myrfc.com.

Lehman Brothers expects to see a net loss of $2.8 billion in its fiscal second quarter (which included the extreme market dislocation seen in March) but says it was able to make progress in reducing troubled residential and commercial mortgage exposures during the quarter. The company also estimates that it will take a $3.7 billion net loss for mark-to-market adjustments on partially mortgage-related holdings for the quarter ended May 31. Chairman and chief executive Richard Fuld said he was "disappointed" by the company's expected first-ever quarterly net loss, but added that he was heartened by Lehman's "strengthened balance sheet and the improvement in financial markets since March." Lehman Brothers can be found on the Web at http://www.lehman.com.

Sixty-three classes of subprime mortgage pass-through certificates from nine issuers were downgraded by Fitch Ratings on June 6. The affected securities were as follows: 17 classes from nine Delta Funding deals; 10 classes from four Asset-Backed Securities Corp. deals; eight classes from three First Franklin Mortgage Loan Trust deals; seven classes from three CDC Mortgage Capital Trust deals; six classes from two Wilshire deals; four classes from one Ameriquest Mortgage Securities deal; four classes from two Equity One deals; four classes from two Ameriquest Mortgage Securities Inc. deals; and three classes from one CSFB deal. Fitch also affirmed the ratings on over 70 classes from 41 subprime transactions.

The commercial mortgage-backed securities special servicer rating of CWCapital Asset Management LLC has been upgraded from CSS2 to CSS2-plus by Fitch Ratings. Fitch also affirmed the primary and master servicer ratings of CWCapital LLC at CPS2 and CMS3, respectively. The upgrade "reflects the group's highly experienced asset management staff, its robust asset management technology platform, and the company's ability to successfully manage substantial portfolio growth, as demonstrated through its favorable interaction with Fitch's CMBS surveillance group," the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

Citizens Republic Bancorp, a bank holding company based in Flint, Mich., that provides mortgage banking and other financial services, has priced concurrent offerings of $79.6 million worth of common stock and $120.4 million worth of convertible preferred stock. The common stock offering was priced at $4 per share, and the series A contingent, convertible, perpetual, noncumulative preferred stock has a liquidation preference of $50 per share, the company reported. Citizens granted the underwriters an option to buy up to an additional 15% on each offering to cover any overallotments. The company can be found online at http://www.citizensbanking.com.