Servicing

The outlook is stable for U.S. bank and insurance Trust Preferred Securities collateralized debt obligations, but it is negative for real estate investment trust TruPS and REIT TruPS CDOs, according to Moody's Investors Service. In an annual sector review and outlook report, Moody's said problems among REIT TruPS CDOs have largely been limited to the mortgage REIT and homebuilder areas. Some portfolios holding REIT obligations have been directly affected by the subprime crisis, the rating agency said. Meanwhile, most bank and insurance issuers in TruPS CDOs have "minimal exposure" to subprime residential mortgages, Moody's said.

A new management consulting firm, T. Hancock Consulting Group LLC, has been formed in Scottsdale, Ariz., to help financial institutions manage and dispose of their portfolios of real estate owned. "At most financial institutions, having experienced personnel to manage the cyclical management demands of their REO portfolios is not practical or economically feasible in today's environment," said Trevor Hancock, who heads the new company. "They need a partner with a comprehensive understanding of the residential building and development business."

Freddie Mac is telling its lenders that it will start purchasing "conforming jumbos" in May and that jumbo loans originated "retroactive to March 1" will be accepted for delivery. In issuing interim guidance on the new jumbo program, the secondary-market agency laid out the loan-to-value ratios on fixed- and adjustable-rate mortgages and the delivery fees. "For deliveries in the May/June timeframe, we expect to offer 90-day pricing and credit coverage for newly originated conforming jumbos using a guarantor execution," Freddie Mac said. Freddie will allow jumbo borrowers to take out $100,000 in a refinancing, but the GSE is charging a 1.0% fee, with a 50-basis-point fee on no-cash-out refinancings. Fannie Mae is limiting cash-out refinancings to $2,000. Freddie's standard delivery fee for a fixed-rated mortgage is 25 bps, and 75 bps for a jumbo ARM. But a jumbo ARM with an LTV ratio above 80% would have a 1.50% fee.

Investment fund Carlyle Capital Corp. Ltd. says it expects its lenders to "promptly" seize substantially all its remaining assets as a result of margin calls linked to a slump in the prices of top-rated agency mortgage-backed securities. The fund had tried to negotiate with its lenders, but it said those negotiations "deteriorated late on March 12 when, among other things, the pricing service utilized by certain lenders reported a drop in the value of [residential] MBS collateral that is expected to result in additional margin calls of $97.5 million." Through March 12, the company had defaulted on $16.6 billion of indebtedness. "Overall, it has become apparent to the company that the basis on which lenders are willing to provide financing against the collateral has changed so substantially that a successful refinancing is not possible," the fund said.

Eighty-four tranches from 11 alternative-A transactions issued by Countrywide in 2006 have been downgraded by Moody's Investors Service. Forty-four of the downgraded tranches remain on review for possible further downgrade, and 52 other tranches were placed on review for possible downgrade. The negative rating actions were attributed, in general, to higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels. The collateral consists primarily of first-lien, fixed- and adjustable-rate, alt-A mortgage loans. Moody's can be found on the Web at http://www.moodys.com.

Countrywide Financial Corp. funded $26 billion of mortgages in February, up 17% from the level recorded in January, but the company said foreclosures in its servicing portfolio continued to rise. The company's pipeline totaled $48 billion at the end of February, down from $51 billion in January. The company serviced $1.48 trillion of home loans as of Feb. 29. The delinquency rate on the servicing portfolio was 7.44% by dollar volume, down 3 basis points from the rate in January. However, foreclosures stood at 1.64% at the end of February, double the rate of a year earlier and up 16 bps from that of January. Countrywide also announced that it will no longer report monthly operational results and will report data quarterly, "consistent with industry practice." The company can be found online at http://www.countrywide.com.

The long-term Issuer Default Ratings of Countrywide Financial Corp., Calabasas, Calif., and its related subsidiaries have been downgraded from BBB-plus to BBB-minus by Fitch Ratings as a result of deteriorating home equity portfolios. Fitch said the move "in no way reflects doubts" about the prospects for completion of Countrywide's acquisition by Bank of America, and the ratings remain on Rating Watch Positive. Various other IDR, debt, and deposit ratings of Countrywide and its affiliates were also downgraded. "Although CFC had expected credit quality to continue to deteriorate, as observed in significantly higher provisions and chargeoffs taken, indications from rated banks in the past few weeks suggest that home equity delinquency rates are rising at a far more rapid pace than many had anticipated," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that new foreclosure filings fell 4% in February but were still nearly 60% higher than the level recorded a year earlier. The company's U.S. Foreclosure Market Report indicates that 223,651 new foreclosure properties were added to the rolls in February. "The 4% monthly decrease this February was similar to the 6% monthly decrease we saw in February 2007," said James J. Saccacio, RealtyTrac's chief executive officer. "However, the year-over-year increase of 60% this February was significantly higher than the 19% year-over-year increase in February 2007, indicating that we have still not reached the peak of foreclosure activity in this cycle." The company said Nevada, California, and Florida once again recorded the highest foreclosure rates. RealtyTrac can be found online at http://www.realtytrac.com.

New York Mortgage Trust Inc., a New York-based real estate investment trust, has announced the sale of approximately $211 million of Fannie Mae mortgage-backed securities in an effort to reduce the leverage in its agency MBS portfolio. As a result of the sales and the termination of associated interest rate hedges, the company said it had realized losses of approximately $6 million. "We believe that reducing our overall portfolio leverage is a prudent decision given the recent unprecedented volatility in the agency MBS markets," said Steven Mumma, co-chief executive officer, president, and chief financial officer of the REIT.

The floating-rate notes of Thornburg Mortgage Capital Resources LLC have been downgraded from F1-plus to C by Fitch Ratings. Fitch said all the outstanding floating-rate notes in the program have extended for 30 business days, with a final maturity of April 14. The downgrade was attributed to concerns regarding further declines in the market value of the collateral supporting the program, continued deterioration in the liquidity of the mortgage-backed securities market, the reduced availability of repo financing, and the potential for additional liquidations of similar collateral by other market participants. Fitch can be found on the Web at http://www.fitchratings.com.