Servicing

Mortgage companies cut their payrolls by 3,900 full-time employees in April, and it looks like the industry will continue to shed jobs now that the unemployment rate has jumped to 5.5%, dashing hopes for a recovery in the housing market this year. The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector fell from 360,700 in March to 356,800 in April. But the real bad news for the industry is that Friday's jobs report showed an increase of 861,000 (to 8.5 million) in the number of unemployed people in May, the biggest monthly increase since 1996. Wells Fargo & Co. senior economist Scott Anderson said the dismal jobs report confirms that the downturn in the housing market will be prolonged. He said he expects house price declines to continue into 2009 and that a bottom for home sales might be pushed back to the end of the year or the first part of 2009. "This is what we were afraid of," Mr. Anderson said, that a weakening jobs market would compound the problems in the housing market.

Six classes in four net-interest-margin mortgage securities from two issuers have been downgraded by Fitch Ratings. The affected securities were as follows: five classes from three Ixis NIM issues; and one class from an Ameriquest NIM issue. The rating agency said the actions "reflect actual pay-down 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."

Twenty-seven tranches from five scratch-and-dent transactions issued by GSAMP Trust have been downgraded by Moody's Investors Service. The downgrades were based on the fact that many scratch-and-dent pools originated since 2004 are experiencing higher-than-expected rates of delinquency, foreclosure, and real estate owned, Moody's reported. "The rating adjustments will vary based on current ratings, level of credit enhancement, collateral characteristics, pool-specific historical performance, quarter of origination, and other qualitative factors," the rating agency said. Moody's can be found online at http://www.moodys.com.

Seventy-three classes of subprime mortgage pass-through certificates from five issuers have been downgraded by Fitch Ratings. The affected securities were as follows: 37 classes from 18 Morgan Stanley deals; 18 classes from seven IndyMac deals; 14 classes from seven Chase deals; three classes from one Industry Mortgage Co. deal; and one class from a Metropolitan Mortgage deal. Fitch also affirmed the ratings on more than 90 classes from over 40 subprime transactions. The rating agency can be found on the Web at http://www.fitchratings.com.

New York Mortgage Trust Inc., New York, has announced the completion of all steps required for listing on the NASDAQ Stock Market. The real estate investment trust's stock began trading June 5 under the symbol NYMT. Its shares were previously quoted on the OTC Bulletin Board. The company, which invests in and manages a portfolio of mortgage loans and mortgage-backed securities, can be found online at http://www.nymtrust.com.

GMAC Financial Services, New York, and its wholly owned subsidiary, Minneapolis-based Residential Capital LLC, have announced a global refinancing totaling more than $60 billion that they termed one of the largest ever completed. In a series of transactions, the companies extended and expanded key bank facilities and ResCap extended the maturities of unsecured debt, renewed "critical funding lines," and boosted its liquidity support from GMAC. The global refinancing included over $60 billion of refinanced debt and new facilities involving the participation of more than 50 institutions from around the world, the companies reported. GMAC provided a $3.5 billion, two-year credit facility to ResCap that includes $750 million of first-loss protection from General Motors Corp. and Cerberus Capital Management LP, which owns a majority interest in GMAC. In addition, the refinancing includes $2.4 billion of actions by GMAC and Cerberus to support ResCap's near-term liquidity. (ResCap said in a recent public filing that it might need $1.4 billion in additional liquidity by June 30 because of "the inability to consummate certain asset sales, due to adverse conditions.") The companies can be found on the Web at http://www.gmacfs.com and http://www.rescapholdings.com.

The number of loans entering foreclosure and in foreclosure, in addition to the number of loans more than 30 days delinquent, all reached record highs in the first quarter, according to the Mortgage Bankers Association. The MBA's quarterly delinquency survey showed that overall, 8.82% of loans were at least 30 days past due or in foreclosure during the first quarter. When the foreclosure inventory of 2.47% is considered separately, 6.35% of loans were at least 30 days past due. The foreclosure inventory rose 43 basis points from the level of the fourth quarter of 2007 and 119 bps from that of one year earlier. That means the number of loans in foreclosure is nearly double what it was a year earlier. Loans entered foreclosure at a 0.99% rate in the first quarter. Jay Brinkmann, the MBA's vice president for research and economics, said the deterioration in credit quality was largely driven by certain loan products in certain states. Specifically, subprime adjustable-rate mortgage loans, which accounted for 39% of foreclosures started in the first quarter, helped push up foreclosure and delinquency rates. Two states, California and Florida, also continued to drive up national delinquency and default figures, Mr. Brinkmann said. The MBA can be found online at http://www.mortgagebankers.org.

Seventeen classes in 12 net-interest-margin mortgage securities from three issuers have been downgraded by Fitch Ratings. The affected securities were as follows: nine classes from seven First Franklin NIM issues; seven classes from four Park Place Securities Inc. NIM Trust issues; and one class from a Merrill Lynch Mortgage Investors NIM Trust issue. The rating agency said the actions "reflect actual pay-down 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."

Franklin Credit Management Corp., Jersey City, N.J., has announced an agreement under which it will service approximately $245 million in home equity lines of credit for Bosco Credit LLC. Franklin Credit said the HELOC loans were acquired on May 28 by Bosco, which is owned and controlled by Thomas J. Axon, chairman of Franklin Credit. "This represents a major step forward for our company in the execution of its business strategy targeting the provision of services for third parties on a fee-paying basis," said Gordon Jardin, Franklin Credit's chief executive officer. The company can be found on the Web at http://www.franklincredit.com.

Debt Settlement USA, Phoenix, has announced the introduction of the Consumer Debt Index, which the company says indicates a slowdown in the rise of the mortgage delinquency rate in recent quarters. The CDI stood at 11.76 in the first quarter, up from 9.60 in the second quarter of 2007, Debt Settlement said. But the mortgage delinquency rate rose only 11% in the first quarter after rising 20%-25% in the third and fourth quarters, according to the company. The consumer loan delinquency rate fell during the first quarter after rising about 10% in the third and fourth quarters. Debt Settlement said the CDI is based on a combination of the Consumer Price Index and the following statistics calculated by the Federal Reserve Board: the mortgage delinquency rate, consumer credit outstandings, and the unsecured consumer loan delinquency rate.