Servicing

Fitch Ratings has downgraded 21 classes in Conseco Finance/Green Tree Finance manufactured housing transactions.Fitch also affirmed its ratings on 223 classes in 56 Conseco/Green Tree deals. The rating agency said the downgrades stem from collateral losses that have exceeded excess spread, causing bond writedowns and a deterioration in credit enhancement. Fitch said it expects collateral performance to remain "relatively stable" for transactions issued before 1999. But for deals issued since then, despite an expected modest improvement in collateral performance, the rating agency said longer amortization terms, higher percentages of repo-refinances, and generally weaker collateral attributes "will result in only modest decreases in the default rate over the next several years." Fitch can be found online at http://www.fitchratings.com.

Countrywide Financial Corp., Calabasas, Calif., has reported net earnings of $683.5 million ($1.10 per share) for the first quarter, a 1% decline from $688.9 million ($1.13 per share) in the first quarter of 2005.Pretax earnings by the company's mortgage production sector rose from $102 million in the fourth quarter to $284 million, chiefly as a result of improved gain-on-sale margins, the company said. However, these earnings were down dramatically from $735 million a year earlier because of higher interest rates and a flatter yield curve, according to Countrywide. Angelo R. Mozilo, Countrywide's chairman and chief executive officer, said the production sector's pretax margin rose to 30 basis points in the first quarter, compared with 9 bps in the fourth quarter. The loan servicing sector produced $249 million in pretax earnings, up from $17 million a year earlier, the company reported. Countrywide can be found online at http://www.countrywide.com.

Fitch Ratings has announced the introduction of Distressed Recovery ratings for U.S. and European structured finance transactions (including residential and commercial mortgage-backed securities) that are designed to estimate recoveries for distressed and defaulted securities.Fitch said the new DRs will affect 314 RMBS transactions, 60 CMBS deals, 64 asset-backed securities deals, and 101 collateralized debt obligations. Olivier Delfour, a Fitch managing director, said the new ratings are "part of an effort to provide an enhanced analytical approach" to structured finance securities that are rated B or below and are distressed or defaulted. The ratings will range from DR1 (the highest) to DR6 to designate a transaction's recovery prospects. Fitch can be found online at http://www.fitchratings.com.

Fannie Mae needs to "do more" so that working families trying to afford a home have an alternative to exotic mortgages, according to the mortgage giant's top executive.Being a low-risk enterprise does not mean "avoiding risk entirely," Fannie Mae president and chief executive Daniel Mudd told a National Association of Realtors regional summit. "Our job is to look deeply into our mortgage data and try to stretch our tolerances so that we can serve more people who need serving the most -- working families struggling to own or rent a home," Mr. Mudd said. He noted that borrowers are choosing interest-only and payment-option adjustable-rate mortgages so they can "squeeze" into a house. "But there's a problem here, of course. For working families, exotic mortgages can be a poison apple," he said, as the mortgages reset and the monthly payment goes up. Fannie Mae can be found online at http://www.fanniemae.com, and the NAR can be found at http://www.realtor.org.

IndyMac Bancorp, which acquired Freedom Financial from Lehman Brothers in 2004, may now spin off a stake in the nation's largest reverse mortgage lender through an initial public offering.In response to a question during IndyMac's quarterly earnings call, IndyMac chairman and chief executive Michael Perry said his company is "seriously considering" an IPO for its Financial Freedom subsidiary. He added that there is a "75% to 90% chance we'll do it." A spinoff of Financial Freedom would allow the company to recruit and maintain top management with stock options and let them run the company, Mr. Perry said. Financial Freedom, based in Irvine, Calif., closed $2.9 billion of reverse mortgage accounts last year. It is also the largest servicer of reverse home loans, managing a 77,000 loan portfolio.

Four classes of Ocwen Residential MBS Corp. Home Equity Loan Trust securities have been downgraded by Fitch Ratings.The downgrades were as follows: series 1998-R1, class B-3, from BBB-minus to BB; series 1998-R3, class B-1, from A to BBB; series 1999-R1 group A, class B-4A, from BB to B; and series 1999-R1 group F, class B-4F, from CC to C. In addition, Fitch upgraded four classes from two Ocwen deals and affirmed the ratings on 19 classes from five Ocwen transactions. Fitch said the downgrades resulted from a deterioration in the relationship between credit enhancement and loss expectations. Fitch can be found online at http://www.fitchratings.com.

IndyMac Bancorp Inc., Pasadena, Calif., has reported earnings of $80 million ($1.18 per share) for the first quarter, up 26% from $63 million ($0.98 per share) a year earlier, and record mortgage volume of $20 billion.IndyMac touted the record loan production, which was up 72% from the level of a year earlier, and said it had doubled its market share to 3.89%. "In the first quarter, we deployed a total of $509 million of our capital in our mortgage production divisions, an 83% increase over last year," said Michael W. Perry, IndyMac's chairman and chief executive officer. "However, given mortgage industry margin pressures and our lower-margin conduit operations comprising a higher percentage of our production volume, the [return on equity] on this capital declined from 97% last year to 51% this quarter, still a strong return on our capital." The mortgage pipeline totaled a record $10.4 billion as of March 31, up 39% from that of a year earlier, the company said. IndyMac, the holding company for IndyMac Bank FSB, can be found online at http://www.indymacbank.com.

New foreclosure activity fell 16% in New York City in February, according to Foreclosures.com, a real estate investment advisory firm based in Fair Oaks, Calif."While this is an improvement over the slowly rising foreclosure rate of the last few months, you have to remember that New York City is a city of renters," said company president Alexis McGee. "Only 26% of the city's housing stock is owner-occupied." The company can be found online at http://www.foreclosures.com.

Freddie Mac has announced the timeframe for submitting stockholder proposals in connection with its annual stockholders' meeting later this year.To be considered for inclusion in Freddie Mac's proxy statement, stockholder proposals must be submitted in writing to Corporate Secretary, Freddie Mac, 8200 Jones Branch Drive MS 200, McLean, Va., 22102, and received by May 24. Freddie Mac said it will announce the dates for submitting stockholder proposals to be introduced from the floor and for stockholder nominations of candidates for election as directors when it announces the date of the annual meeting. Procedural requirements for such proposals and nominations are available online at http://www.freddiemac.com.

Moody's Investors Service has published a report explaining its approach to assessing the risks of U.S. collateralized debt obligations backed by the debt of real estate investment trusts.CDOs backed by REIT trust securities or subordinate debt are "the newest phase in the continued expansion of the $30 billion trust preferred market," Moody's said. "The TRUPs space also includes transactions backed by bank and insurance sector assets." In the report, titled "Moody's Approach to Rating U.S. REIT CDOs," Moody's said its rating approach to REIT CDOs is an extension of its methodology for CDOs backed by bank and insurance TRUPs. REIT CDOs are important sources of funding for small to midsize REITs that have had limited access to the capital markets, the rating agency said. REIT TRUPs are typically nonamortizing, with 30-year maturities and five- or 10-year noncall periods, while subordinate REIT securities are generally nonamortizing and usually have maturities of 10 to 20 years, Moody's said. The rating agency can be found online at http://www.moodys.com.