Servicing

Fannie Mae is "not actively" seeking to buy a servicing platform, according to its chief executive officer, Daniel Mudd, but he says he is concerned about a shortage of servicing capacity due to a growing number of troubled loans and servicers that are going out of business.There have been reports that the mortgage giant has its eye on Litton Loan Servicing, but Fannie's president and CEO declined to comment specifically on the Houston servicer in taking questions from reporters. "Keeping that capability out there is much more important to us than that being a line of business per se," Mr. Mudd said after speaking to the National Association of Federal Credit Unions. Mr. Mudd stressed that Fannie's mission is to provide stability in the secondary mortgage market, and servicing capacity is important to the stability of the secondary market. Since April, Fannie's Home Stay program has helped 33,000 subprime borrowers refinance into safer loans totaling $6 billion, Mr. Mudd told the credit union executives. Fannie can be found online at http://www.fanniemae.com.

Bear Stearns & Co. has hit Impac Mortgage Holdings with new margin call requests, according to a source familiar with the situation.Under a margin call, a lender is asked to post additional capital because of concerns about loan buybacks. In Bear's case, the margin calls are not huge, the source said, but will put additional pressure on the nondepository lender/servicer. Officials at the Irvine-based Impac did not return telephone calls about the matter by deadline time. A Bear spokeswoman declined to comment.

Countrywide Financial Corp. declined to comment late Tuesday on published reports that said it is working on a "strategic investment" with a possible suitor.The company said, "Regarding media reports today about Countrywide Financial Corp., it is the company's policy not to comment on market rumors." A few weeks ago, Bank of America invested $2 billion in CFC, bolstering its liquidity. Countrywide said it has already taken "decisive steps to address the challenges arising in this environment and thereby enable Countrywide to meet its funding needs and position the company for continued growth and success." Meanwhile, according to new filings with the Securities and Exchange Commission, three different financial institutions recently slashed their ownership stakes in Countrywide. The three include: AXA Financial, Barclays Global Investors NA, and Legg Mason Capital Management. Until recently, the three were the largest institutional investors in CFC. Countrywide can be found online at http://www.countrywide.com.

Class B-4 of NovaStar 2004-3 mortgage pass-through certificates has been downgraded from BBB-minus to BB by Fitch Ratings.Fitch also affirmed the ratings on 10 other classes in the transaction. The rating agency attributed the downgrade to a deterioration in the relationship between credit enhancement and loss expectations. The collateral consists of fixed- and adjustable-rate residential mortgage loans secured by first and second liens.

Two classes of Finance America Mortgage Loan Trust 2004-2 mortgage pass-through certificates have been downgraded by Fitch Ratings.Class M-8 has been downgraded from BBB-minus to BB, and class M-9 has been downgraded from BB-minus to B. Fitch also affirmed the ratings on seven other classes in the transaction. The rating agency attributed the downgrade to a deterioration in the relationship between credit enhancement and loss expectations. The collateral consists of fixed- and adjustable-rate residential mortgage loans secured by first and second liens.

Two classes of notes issued by Enhanced Mortgage-Backed Securities IV Ltd. have been downgraded by Derivative Fitch and placed on Rating Watch Negative.The class A-3 subordinated notes were downgraded from BBB-plus to BB, and the class A-4 junior subordinated notes were downgraded from BBB to BB-minus. "The net asset value of the transaction has declined, and assets may need to be sold for the transaction to stay in compliance with overcollateralization tests," Fitch said, citing concerns about the resulting proceeds in light of price volatility. EMBS IV, a collateralized debt obligation, consists of mortgage- and asset-backed securities, collateralized mortgage obligations, U.S. government obligations, corporate securities, cash, and cash equivalents.

Three classes of notes issued by Enhanced Mortgage-Backed Securities V Ltd. have been downgraded by Derivative Fitch.The downgrades were as follows: class A-2 senior subordinated notes, from BBB to BB; class A-3 subordinated notes, from B-minus to CC/DR3; and class A-4 junior subordinated notes, from CCC to C/DR6. Class A-4 was removed from Rating Watch Negative, but the other two classes remain there. EMBS V, a collateralized debt obligation, consists primarily of mortgage- and asset-backed securities. "This transaction has violated overcollateralization tests, and its asset portfolio is currently being liquidated," Fitch said. ".... Losses incurred during the liquidation process have increased the risk that the class A-2 notes may not be paid in full. It is likely that class A-3 will incur a significant loss, and class A-4 may suffer a complete loss." Derivative Fitch can be found online at http://www.derivativefitch.com.

In addition to the more than 130 additional classes of subprime mortgage-backed securities downgraded because of revised subprime loss assumptions (see item above), Fitch Ratings has also downgraded 43 additional classes of B&C MBS that it did not link to the changed assumptions.Fitch also affirmed the ratings on 49 classes from the same transactions. Among the MBS affected by the downgrades were: 15 classes from seven Structured Asset Securities Corp. deals; 11 classes from four IndyMac SPMD deals; eight classes from five Meritage Mortgage Corp. deals; five classes from four Centex Home Equity Loan deals; and four classes from one Terwin Mortgage Trust deal. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations.

Over 130 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 more than $12 billion. Among the mortgage pass-through certificates affected by the latest downgrades were: 58 classes from nine First Franklin issues; 19 classes from two C-BASS issues; 14 classes from one IndyMac ABS Inc. issue; 13 classes from two SACO issues; 13 classes from one Soundview Home Equity Loan Trust issue; 12 classes from one Merrill Lynch issue; and 11 classes from four Structured Asset Securities Corp. issues. 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."

Freddie Mac's board of directors has announced a dividend of $0.50 per share on the corporation's voting common stock for the third quarter, unchanged from that of recent quarters.The board also declared the following preferred stock dividends per share: $0.59 on its 1996 and 1998 variable-rate stock; $0.72625 on its 1997, 2001, and 2002 5.81% stock; $0.625 on its 5% stock; $0.6375 on its 1998 and 1999 5.1% stock; $0.6625 on its 5.3% stock; $0.72375 on its 5.79% stock; $0.4475 on its 1999 variable-rate stock; $0.585 on its January 2001 variable-rate stock; $0.63889 on its March 2001 variable-rate stock; $0.645 on its May 2001 variable-rate stock; $0.75 on its 6% stock; $0.7125 on its 5.7% stock; $0.75 on its 2006 variable-rate stock; $0.8025 on its 6.42% stock; 0.36875 on its 5.9% stock; 0.348125 on its 5.57% stock; 0.35375 on its 5.66% stock; and 0.27592 on its 6.02% stock. The dividends will be payable on Sept. 28 to stockholders of record as of Sept. 17.