Servicing

The House has passed a predatory-lending bill by a bipartisan vote of 291-127 that clamps down on abusive lending practices, makes securitizers responsible for loans they package, and lowers the points-and-fees trigger on the Home Ownership and Equity Protection Act to cover more high-cost subprime loans.Mortgage lenders, along with the Bush administration, oppose key provisions of the bill, contending that the lending standards are too subjective and that the assignee liability provisions (along with the HOEPA provisions) will reduce access to mortgage credit. However, Rep. Spencer Bachus, R-Ala., said the bill will "protect consumers from predatory lending practices" and preserve access to credit. "We are dealing with legislation that seeks to prevent a repetition of the events that caused one of the most serious financial crises in recent times," said House Financial Services Committee Chairman Barney Frank, D-Mass. The National Association of Mortgage Brokers succeeded in getting language in the bill (H.R. 3915) clarifying that a broker's fee can be financed into the loan. However, mortgage bankers are concerned that this language might require the disclosure of servicing-released premiums for the first time. Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., said he will introduce a predatory-lending bill soon.

Class B4 of Lehman Mortgage Trust series 2006-1 has been downgraded from Baa3 to Ba2 by Moody's Investors Service, and class M of series 2006-3 has been placed under review for possible downgrade.The negative rating actions were based on 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-rate alternative-A mortgage loans.

Six tranches from three deals issued by HarborView Mortgage Loan Trust in 2006 and late 2005 have been downgraded by Moody's Investors Service, and two tranches have been placed under review for possible downgrade.The downgrades were as follows: series 2005-14, class B-4, from Ba2 to Ba3; series 2006-11, class B-4, from A1 to A2, class B-5, from A3 to Baa1, and class B-6, from Baa2 to Ba1; and series 2006-3, class B-2, from A2 to Baa3, and class B-3, from Baa2 to B3. Class B-3 of series 2006-11 and class B-1 of series 2006-3 were placed on review for possible downgrade. The negative rating actions were based on higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels, Moody's said. The collateral consists primarily of first-lien, fixed- and adjustable-rate alternative-A mortgage loans.

Thirteen tranches from five alternative-A mortgage securitizations issued by American Home in 2006 and late 2005 have been downgraded by Moody's Investors Service, and six tranches have been placed under review for possible downgrade.The negative rating actions, affecting classes in American Home Mortgage Assets Trust and American Home Mortgage Investment Trust transactions, were based on higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels, Moody's said. The collateral consists primarily of first-lien, fixed- and adjustable-rate alt-A mortgage loans.

Fifteen tranches from five alternative-A mortgage deals issued by Terwin Mortgage Trust in 2006 have been downgraded by Moody's Investors Service, and three tranches have been placed under review for possible downgrade.Moody's said the negative rating actions were based on 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.

The issuer default ratings and senior unsecured debt ratings of GMAC LLC and its foreign subsidiaries have been placed on Rating Watch Negative by Fitch Ratings.The long-term IDRs and senior unsecured debt ratings of GMAC and its subsidiaries stand at BB-plus, and the short-term IDRs stand at B. The rating agency said the actions "reflect the ongoing pressure in the company's residential mortgage subsidiary, Residential Capital LLC." Fitch said its review of GMAC and ResCap will consider the ability of ResCap to return to profitability in the near term; the potential for additional financial support from GMAC; unencumbered asset coverage; and risk-adjusted capital levels. The rating agency said it expects to complete its review in four to six weeks.

The short-term issuer default ratings and debt ratings of The Bear Stearns Cos. and subsidiaries have been downgraded from F1-plus to F1 by Fitch Ratings, but their long-term ratings have been affirmed.The rating outlook has been revised from stable to negative. Fitch said it believes that Bear Stearns has been managing its balance sheet well through the "credit-stressed environment," but that its financial performance has been hurt by "management's decision to support a sponsored structured credit fund." The negative outlook stems from various factors, including "deteriorating housing metrics, credit risk repricing, widespread illiquidity, and diminished investment banking opportunities." Bear Stearns' near-term profitability is "expected to be pressured given Bear Stearns' franchise exposure to the total U.S. mortgage market," Fitch said. The rating agency can be found online at http://www.fitchratings.com.

IndyMac Bank FSB, Pasadena, Calif., has announced a partnership with NeighborWorks America to sponsor the NeighborWorks Center for Foreclosure Solutions as part of an effort to implement a coordinated, nationwide foreclosure intervention strategy.The Center for Foreclosure Solutions focuses on outreach to homeowners in financial distress, with special attention to low- and moderate-income borrowers, by directing them to call 1-888-995-HOPE, a toll-free number where financial counselors are available around the clock. The program also includes online and face-to-face credit counseling. IndyMac can be found online at http://www.indymacbank.com, and NeighborWorks can be found at http://nw.org.

Hanover Capital Mortgage Holdings, which was scheduled to release third-quarter earnings on Nov. 14, has delayed posting its results until Nov. 19, with a conference call scheduled for Nov. 20.John Burchett, president and chief executive of the real estate investment trust, said that "continued turmoil and uncertainty in the capital markets and lack of trading in similar securities" has made it difficult for the mortgage REIT to establish the fair value of certain assets. Hanover invests in prime credit quality mortgage loans and mortgage securities backed by prime loans.

Nearly one in three buyers between June 2006 and June 2007 had no skin in their deals, according to new research that represents further evidence of the poor quality of loans that helped fuel the rising tide of delinquencies and foreclosures.Though the study of nearly 10,000 transactions by the National Association of Realtors did not note whether the loans were prime or subprime, it found that 29% of all buyers -- and 45% of all first-timers -- financed the entire purchase price. Somewhat surprisingly, considering that they usually have money from the sale of their previous residence to put into the transaction, 18% of repeat buyers also put up none of their own money. In addition, the study found that more existing-home buyers than new-home purchasers used 100% financing, 30% vs. 25%. More than half -- 53% -- of all buyers made downpayments of 10% or less, and almost three out of four -- 72% -- financed 80% or more of what they paid. As for the source of their downpayments, 10% of all buyers used money from gifts, 8% sold stocks or bonds, 6% raided their retirement accounts, and 3% got a loan from a relative or a friend. The NAR study was released at the group's annual convention in Las Vegas. The association can be found online at http://www.realtor.org.