Servicing

Fannie Mae is encouraging lenders and servicers to participate in a Mississippi housing assistance program, despite some legal concerns about the subordination agreements they have to sign to work with homeowners receiving the assistance grants."Servicers that opt-in have our consent to subordinate our lien to the required covenant and will have no liability to Fannie Mae for the consequences of such subordination," the government-sponsored enterprise says in a letter to lenders and servicers. The deadline for signing up for the state housing program is April 21. Homeowners can receive up to $150,000 in grants to rebuild homes that were destroyed or damaged by Hurricane Katrina. By participating, lenders and servicers will help homeowners with the execution of the closing documents for the grants. Lenders are assured that the loan will be made current and taxes will be paid. But after that point, the homeowner has complete control of the funds and there is no guarantee or requirement that the assistance be used to repair the property or pay down the mortgage.

The Prestwick Mortgage Group, Alexandria, Va., is brokering the sale of mortgage servicing rights on a $1.8 billion portfolio of Fannie Mae and Freddie Mac loans.The weighted average note rate is 5.664%, and the weighted average servicing fee is 0.3869%. The portfolio has 33 months of weighted average seasoning and a 1.86% delinquency rate, including foreclosures. The vast majority of the loans, 88.3%, are backed by homes in North Carolina, with most of the rest coming from Virginia, South Carolina, or Georgia. The seller is a Southeastern bank. The bid deadline is April 26.

The net income of Washington Mutual Inc.'s mortgage segment plunged from $323 million in the first quarter of 2005 to $38 million in the first quarter of this year, although profits rose overall, the Seattle-based thrift has reported.WaMu attributed the nosedive in the Home Loans Group's profits to higher short-term interest rates and a flat yield curve, which produced a decline in net interest income and a significant increase in the cost of risk management for mortgage servicing rights. Originations of home loans were actually higher, at $44.998 billion, than they were in the first quarter of 2005, when they totaled $44.495 billion. Overall, WaMu reported net income of $985 million ($0.98 per share) for the first quarter, up from $902 million ($1.01 per share) a year earlier. WaMu can be found online at http://www.wamu.com.

Federal Trust Corp., a holding company based in Sanford, Fla., has announced the sale of 850,000 shares of its common stock at $10 per share in a private placement aimed at raising funds to support mortgage subsidiary operations, among other things.Federal Trust estimated net proceeds at $7.9 million. "Approximately $5.5 million of the proceeds from the offering will be used to repay our holding company revolving credit line," said James V. Suskiewich, the company's president and chief executive officer. Federal Trust can be found on the Web at http://www.federaltrust.com.

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that the number of new properties in some stage of foreclosure fell 13% in March.The company's Monthly U.S. Foreclosure Market Report indicates that 101,597 new foreclosure properties were added to the rolls in March. "After rising more than 20% during each of the first two months of the year, foreclosure numbers experienced a fairly sharp correction in March," said James J. Saccacio, RealtyTrac's chief executive officer. "We saw a similar drop in March of '05, followed by four consecutive months of increases. Many buyers and investors typically start looking for properties in the spring, and that could have provided distressed homeowners a better chance of selling their properties to avoid default or foreclosure." The company said Colorado recorded the highest foreclosure rate of any state in March, jumping 31% (to 5,392 new foreclosures) from February's level. RealtyTrac can be found online at http://www.realtytrac.com.

Wells Fargo & Co., San Francisco, has reported record net income of $2.02 billion ($1.19 per share) for the first quarter, up 9% from $1.86 billion ($1.08 per share) a year earlier, despite a revenue plunge at Wells Fargo Home Mortgage.Home Mortgage revenue totaled $853 million, down $665 million from $1.5 billion in the first quarter of 2005, Wells Fargo reported. Mortgage originations totaled $91 billion in the first quarter, up 40% from the first quarter of 2005. "While we have seen a slowdown in refinancing activity, the purchase market where we are the leading lender remained historically strong," said Mark Oman, senior executive vice president in the Wells Home and Consumer Finance Group. "We also saw double-digit growth in our trillion-dollar owned servicing portfolio." The portfolio stood at $1.04 trillion as of March 31, up 24% from that of a year earlier. The company can be found online at http://www.wellsfargo.com.

Four classes of Bear Stearns Asset Backed Securities Inc., series 1999-1, have been downgraded by Fitch Ratings.The downgrades were as follows: class MF-1, from AA-plus to AA-minus; class MF-2, from A-plus to BBB-plus; class BF, from BB-minus to CCC; and class BV, from BB to B-plus. Fitch attributed the downgrades to high delinquencies and deteriorating credit support. The securitization is backed by fixed-rate and adjustable-rate subprime mortgage loans.

Amherst Funding Group LP, an Austin, Texas-based company that buys and trades newly originated residential mortgage loans, has announced an agreement with Denver-based SN Capital Markets LLC to market Amherst's alternative-A correspondent conduit.SNCM (formerly known as Matrix Bancorp Trading) provides whole loan and servicing trading and analytics for financial institutions and mortgage bankers. Touting Amherst's "income and asset verification combinations, ease of delivery, and flexible forward delivery program" for correspondents, Amherst president Phillip Daskevich said SNCM is "the perfect business partner to bring AFG's correspondent conduit and capital markets experience to mortgage bankers across the country." Jonas Roth, SNCM's national sales director, said the arrangement with Amherst to source newly originated residential loans "goes a long way towards offering a more complete menu of services to our client relationships nationwide." The companies can be found online at http://www.amherstfunding.com and http://www.snsc.com.

Residential Capital Corp., Minneapolis, has priced senior and subordinated bond offerings totaling $3.5 billion in principal.The senior offering consists of $1.75 billion of 6.5% fixed-rate notes due in 2013 and $750 million of floating-rate notes due in 2009, ResCap said. The subordinated offering consists of $1.0 billion of floating-rate notes due in 2009. ResCap said it plans to use the proceeds of the offerings, along with cash from other funding sources, to repay all domestic borrowings from General Motors Acceptance Corp., its parent.

Zacks.com, the online unit of Zacks Investment Research Inc., Chicago, has reported a recent posting on its Analyst Blog noting that the company is maintaining its Hold recommendation on Saxon Capital but cautioning about its risks.In the Zacks weblog commentary on Saxon, the analyst said the company had a weak fourth quarter and noted that competition is driving down margins. "We feel that the company will have a difficult time making money in 2006; margins will remain low and production volumes will be stagnant," the analyst said. "On the other hand, the dividend yield is extremely attractive and the company now trades at a significant discount to book value. However, this is a risky stock, and large dividend cuts could come if the mortgage business does not improve in the next year." Saxon, a residential mortgage lender and servicer based in Glen Allen, Va., is a real estate investment trust. Zacks can be found online at http://www.zacks.com.