Servicing

Foreclosure sales rose 10.4% in California in August, and speculator-owned properties represent a growing percentage of the foreclosed properties, according to ForeclosureRadar, Discovery Bay, Calif.The company reported that 9,477 California foreclosures (with a total loan value of $3.86 billion) were sold at auction in August. Non-owner-occupied properties accounted for $1.71 billion of the total and represented 44.3% of the properties, the company reported. "Many blame subprime lending for our current real estate crisis, but rampant speculation, even by those with great credit, played a leading role," said Sean O'Toole, founder and chief executive officer of Foreclosure Radar. "The subprime market took the first hit, as those borrowers had the least to lose when they walked away. Now that nearly half of foreclosures represent non-owner-occupied properties, it is clear that speculators are walking away, too." ForeclosureRadar, a foreclosure listings and software company, can be found on the Web at http://www.foreclosureradar.com.

The Senate has passed a Department of Housing and Urban Development appropriations bill that provides $100 million for counseling for homeowners facing foreclosure."Across the country too many families are facing the nightmare threat of foreclosure," said Sen. Christopher S. Bond, R-Mo. "This is a good step to help stem the tide of foreclosures without bailing out risky lenders and speculators in the market." Sen. Christopher J. Dodd, D-Conn., co-sponsored the counseling amendment with Sen. Bond. The $100 million can go to public, private, and nonprofit entities (including the Neighborhood Reinvestment Corp. and state housing finance agencies) that provide foreclosure counseling. No federal funds can go directly to lenders or homeowners, according to the Bond/Dodd amendment. The Senate has passed the Transportation/HUD appropriations bill by an 88-7 vote. The HUD bill also increases Federal Housing Administration multifamily loan limits in high-cost areas and suspends for one year a cap on the number of reverse mortgages the FHA can insure. The bill does not include any funding for President Bush's downpayment assistance program.

Countrywide Financial Corp., Calabasas, Calif., says it recently obtained $12 billion in additional "secured" financing through new and existing credit facilities.The company also announced that it funded $34 billion of new loans in August, a 17% decline from the level recorded in the same month last year and a 12% drop from that of July. In a new research note, Credit Suisse says, "We believe the company's recent actions to secure additional funding, as well as the migration of funding its originations through the thrift should substantially address funding concerns at the company." Countrywide can be found online at http://www.countrywide.com.

Six certificates from three subprime deals issued by Countrywide Home Loans Inc. in 2002 and 2003 have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are as follows: CWABS Inc. Asset-Backed Certificates, series 2002-BC2, classes M-2 and B-1; series 2003-BC1, classes M-2 and B-1; and series 2003-BC2, classes M-3 and B-1. The negative rating actions were attributed to credit enhancement levels that may be low given the projected losses on the underlying pool. The transactions are backed by first-lien, fixed-rate subprime mortgage loans.

Two certificates issued by Centex Home Equity Loan Trust, series 2002-D, have been downgraded by Moody's Investors Service.Class M-2 has been downgraded from A2 to Baa2, and class B has been downgraded from Ba3 to B3. The downgrades were attributed to credit enhancement levels that are deemed to be low in view of loss projections. "The credit support is declining due to the loan defaults," Moody's said. The subprime deal consists of fixed- and adjustable-rate residential mortgage loans. The rating agency can be found online at http://www.moodys.com.

Four classes of IndyMac MBS RAST 2006-A10 mortgage-backed securities have been downgraded by Fitch Ratings.The downgrades were as follows: class B-1, from AA to AA-minus; class B-2, from A to BBB; class B-3, from BBB to B; and class B-4, from BB to C/DR5. Fitch also affirmed the rating on one other class in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations. The collateral for the deal consists of fixed-rate, first-lien residential mortgages.

Seven classes of notes issued by Lexington Capital Funding III Ltd., a hybrid collateralized debt obligation composed primarily of residential mortgage-backed securities, have been downgraded by Fitch Ratings.The downgrades were as follows: class A-3, from AAA to AA; class B, from AA to A; class C, from AA-minus to A-minus; class D, from A to BBB; class E, from A-minus to BBB-minus; class F, from BBB to BB; and class G, from BBB-minus to B-plus. Fitch also affirmed the ratings on two other classes in the CDO. The downgrades resulted from collateral deterioration, as 26.9% of the portfolio has been downgraded by at least one rating agency since the closing of the transaction, Fitch reported.

Twenty-two additional classes of subprime mortgage- and asset-backed securities 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 nearly $2 billion. Among the securities affected by the latest downgrades were: 12 classes from two Structured Asset Investment Loan Trust issues; four classes from one issue of Wells Fargo Home Equity asset-backed certificates; 14 classes from one SACO issue; and two classes from one CSFB HEMT issue. 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.

New York Mortgage Trust Inc., a New York-based real estate investment trust, has reported that its shares are being delisted from the New York Stock Exchange.The REIT said it will now be traded on the OTC Bulletin Board under the symbol NMTG. The company said it has applied to list its common stock on another national securities exchange.

The Federal Home Loan Bank of Des Moines has received regulatory approval to accept one- to four-family construction loans as collateral for advances at a time when many members have stepped up their borrowings from the bank.For many community banks, "construction loans are an important part of their lending portfolio," said Richard Swanson, president and chief executive of the Iowa-based FHLBank. Expanding the list of eligible collateral will help to "maximize their borrowing capabilities," he said. In August, members of the Des Moines bank borrowed $2 billion in advances. During the first six months of 2007, the Des Moines bank's advance business grew by only $700 million. Mr. Swanson noted that several other FHLBanks take construction loans as collateral, and his members expressed an interest. So an application was filed with the Federal Housing Finance Board six months ago. "We have determined that the proposed activity has sufficient controls that minimize the risk to the Bank," the approval letter says.