Servicing

All the members of the Hope Now alliance have adopted the "Project Lifeline" approach focused on helping prime and subprime borrowers who are 90-days past due avoid foreclosure, according to the Treasury Department. Six alliance members endorsed the expanded Hope Now effort last week, and now the rest of the alliance servicers, including GMAC ResCap and HSBC North American Holdings Inc., have signed up for Project Lifeline. "Now that all the Hope Alliance members have signed on, more than 90% of the subprime servicing market and nearly 70% of the entire mortgage servicing market is committed to this coordinated method of reaching more homeowners," Treasury Secretary Henry Paulson said.

New York Mortgage Trust Inc., New York, has announced a private placement of 15 million shares of its common stock with new and existing institutional investors at a price of $4 per share. The real estate investment trust said it plans to use the proceeds of the offering to invest in agency mortgage-backed securities.

Eleven classes from three subprime second-lien issues of Soundview Home Loan Trust mortgage pass-through certificates have been downgraded by Fitch Ratings. Fitch also placed one class on Rating Watch Negative and affirmed the ratings on 16 other classes. The negative rating actions were based on deterioration in the relationship between credit enhancement and loss expectations, and "reflect continued poor loan performance and home price weakness," Fitch said.

Nineteen classes from five subprime second-lien issues of Terwin Mortgage Trust mortgage pass-through certificates have been downgraded by Fitch Ratings. Fitch also placed five classes on Rating Watch Negative and affirmed the ratings on eight other classes. The negative rating actions were based on deterioration in the relationship between credit enhancement and loss expectations, and "reflect continued poor loan performance and home price weakness," Fitch said.

Higher-balance loans now temporarily eligible for Federal Housing Administration and government-sponsored enterprise programs are slated to be securitized outside the "to-be-announced" market under updated Securities Industry and Financial Markets Association guidelines. The new higher-balance FHA/GSE loans are slated to trade under unique pool codes on a specified pool basis or to be included in real estate mortgage investment conduit transactions, according to SIFMA. SIFMA can be found on the Web at http://www.sifma.org.

More than 750 additional classes of subprime mortgage pass-through certificates 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 more than $14 billion. Among the securities affected by the latest downgrades were: 177 classes from 16 Morgan Stanley deals; 158 classes from 14 SASCO deals; 87 classes from seven HASCO deals; 84 classes from seven SAIL deals; 64 classes from five Nomura deals; 44 classes from four NovaStar deals; 43 classes from four Soundview deals; 27 classes from two BNC deals; 26 classes from two Renaissance deals; 25 classes from two UBS deals; 22 classes from two Citigroup deals; and 13 classes from one GE-WMC deal. All were first-lien subprime transactions. 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." Fitch can be found online at http://www.fitchratings.com.

Senate Democrats have crafted a second stimulus bill that includes bankruptcy changes lenders will oppose and a net operating loss carry-back supported by homebuilders. "This package is aimed at the bull's-eye of our economic crisis -- the housing market," said Sen. Charles E. Schumer, D-N.Y. Included in the package was a bill by Sen. Richard Durbin, D-Ill., that would allow bankruptcy judges to restructure subprime mortgages. "Small changes to the bankruptcy code could help 600,000 at-risk families keep their homes," the Illinois senator said. The Mortgage Bankers Association said there is "much in this bill to applaud." However, the MBA served notice that it will oppose the bill because the bankruptcy provision will increase the cost of mortgage credit. The National Association of Home Builders has been pushing for an NOL carry-back. But it wants a tax credit for homebuyers even more. The builders have frozen all political contributions because the first stimulus bill did not include a homebuyers' tax credit.

New York Gov. Eliot Spitzer has set a three- to five-day deadline for bond insurers hurt by certain mortgage securities exposures to bolster their flagging ratings, according to the Wall Street Journal. A call to the New York insurance department about the deadline had not been returned by deadline time. Mr. Spitzer indicated in congressional testimony Feb. 14 that he feels officials in his state should take the lead in tackling the bond insurance issue because "insurance is regulated by the states, and most of the bond insurance companies are domiciled in and primarily regulated by New York." Moody's Investors Service on Thursday downgraded some ratings of bond insurer FGIC, a New York-based company in which mortgage insurer PMI owns a 42% stake.

Countrywide Financial Corp., the nation's largest servicer (with a market share of almost 17%), says its foreclosure rate almost doubled in January from that of a year earlier, according to new figures released Friday. At Jan. 31, 1.5% of the loans in its massive $1.48 trillion servicing portfolio ($21.8 billion) had entered the foreclosure process, a 92% increase from the level of a year earlier. Moreover, 7.5% of loans serviced by Countrywide were 30 days or more late. A year ago the ratio stood at 4.3%. Countrywide would not provide separate figures for subprime foreclosures, lumping all its servicing into one number. As for originations, Countrywide funded $21.8 billion in residential loans during January, a 41% decline from the level of a year earlier. Countrywide, which is being sold to Bank of America, saw its wholesale fundings plunge by 65%. Retail production was off 26%, with correspondent purchases falling 38%. Retail originations totaled $9.4 billion and wholesale just $2.5 billion, with correspondent coming in at $9.8 billion. The company also saw its commercial production plunge to just $50 million, a stunning 92% decline from the same month last year.

Two classes of subprime certificates issued by Aames Mortgage Trust have been downgraded by Moody's Investors Service, and nine classes have been placed on review for possible downgrade. Class M-2 of Aames Mortgage Trust 2002-1 has been downgraded from Baa1 to Baa2, and class B has been downgraded from B1 to Caa2. The securities placed under review are classes M-6, M-7, M-8, and M-9 of Aames Mortgage Investment Trust 2004-1 and classes M-5, M-6, M-7, M-8, and M-9 of Aames Mortgage Investment Trust 2005-1. The actions were based on an analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to expected losses, Moody's said.