Servicing

Fixed Income Clearing Corp., New York, has announced plans to develop services to support a central counterparty for mortgage-backed securities that it hopes to establish within two years.In phase I of a three-phase process, FICC said it will allow for the matching of specified pool trades via its real-time trade matching service. Phase II will focus on simplifying and automating routines for substituting the mortgages allocated to a pool, and phase III will allow for central counterparty netting and guaranteed settlement of specified pool trades, the company said. "When we get the central counterparty fully operational, we expect to lower clearing costs, reduce operational and counterparty risk, decrease our customers' capital charges, and bring down the fail and financing expenses of our clearing members," said Tom Costa, head of FICC and managing director of clearance and settlement for The Depository Trust & Clearing Corp., FICC's parent company. DTCC can be found online at http://www.dtcc.com.

Mortgage industry veteran John Gibbons has been named head of capital markets for the residential lending businesses of Wells Fargo & Co.'s Home and Consumer Finance Group.Mr. Gibbons' responsibilities will include all loan sale, securitization, and hedging activities, Wells Fargo said. He will support Wells Fargo Home Mortgage, Des Moines, Iowa; Wells Fargo Financial, a Des Moines-based provider of consumer and commercial credit products; and Wells Fargo Consumer Credit Group, a San Francisco-based provider of home equity and personal credit accounts. Mr. Gibbons was most recently a senior consultant with Hollister LLC and vice chairman of Overture Corp. During his 20-plus years in the mortgage industry, he has been employed by Federal Home Loan Banks, insurance companies, banks, and investment management firms, and he was executive vice president and chief financial officer of Freddie Mac from 1996 to 2000, Wells Fargo said. The company can be found online at http://www.wellsfargo.com.

Twelve major mortgage lenders have allied with the NeighborWorks Center for Foreclosure Solutions, Washington, D.C., to launch a campaign to avert foreclosures in demographic and geographic hot spots.The national partnership aims to minimize foreclosures by providing better research and early alert systems, improving counseling capacity, and expanding partnerships among cities, lenders, and servicers. The lenders will provide more than $1 million to the NeighborWorks Center for the campaign, along with trade insights and information, NeighborWorks said. "This show of support from the lending community demonstrates the enormous stake we share with lenders in the effort to stop foreclosures," said Ken Wade, chief executive officer of NeighborWorks America. The participating lenders are Bank of America, Citigroup, Countrywide Home Loans, HSBC-North America, Chase, National City Mortgage Co., New Century Financial Corp., Ocwen Loan Servicing LLC, Option One Mortgage, Residential Capital Corp., Washington Mutual, and Wells Fargo.

Classes M-2 and M-3 of RFC's RFSC series 2003-RP1 securitization have been placed on review for possible downgrade by Moody's Investors Service.The negative rating actions were attributed to weaker-than-expected performance by the underlying pool of mortgage loans and the resulting decline in credit enhancement. The underlying collateral is composed of subprime and re-performing residential mortgage loans. Moody's can be found online at http://www.moodys.com.

Class B5 of Structured Asset Securities Corp. residential mortgage-backed certificates, series 2001-16H, has been downgraded from B to CCC by Fitch Ratings.In addition, Fitch affirmed the ratings on 18 classes from three SASCO issues. The downgrade was attributed to cumulative pool losses and high delinquency levels. All the loans have a weighted average original loan-to-value ratio of greater than 101%, Fitch reported.

Three classes from First Franklin Mortgage Loan Trust, series 2002-FF2, have been placed under review for possible downgrade by Moody's Investors Service.The actions were taken on classes M-1, M-2, and M-3 because credit enhancement is low given the projected losses on the underlying pools, the rating agency said. The pools were "below the 25 bps overcollateralization floor as of the March reporting date because loss severities on liquidated loans were on the rise," Moody's said. The transaction consists of subprime mortgage loans originated by First Franklin Financial Corp. Moody's can be found online at http://www.moodys.com.

Class B of Remodelers Home Improvement Loan asset-backed certificate series 1995-2 has been downgraded from BBB to BB by Fitch Ratings.The rating agency attributed the downgrade to elevated credit risk caused by a low collateral balance of $460,000 and the smaller number of loans (60) remaining in the trust, which increases the volatility of the transaction. The loans were originated or acquired by Remodelers Home Improvement, which was later acquired by FirstPlus Financial, a consumer finance company that has since been liquidated, Fitch said.

Class B-1 of Fund America Investors Corp. mortgage pass-through certificates, series 1994-A, has been downgraded from A-minus to BBB-minus by Fitch Ratings.Fitch also affirmed the ratings on two other classes in the subprime transaction. The downgrade was attributed to increased credit risk caused by a low collateral balance and the small number of loans (five) remaining in the trust, which increases the volatility of the deal.

Prepayment rates on 30-year fixed-rate mortgages in Fannie Mae and Freddie Mac mortgage-backed securities increased by 21% in March, according to the Bear Stearns Prepayment Commentary.Overall speeds on 30-year Fannie Mae collateral came in at a constant prepayment rate of 13.6 CPR for the month, up 2.4 CPR from February, Bear Stearns analyst Dale Westhoff reported. Speeds for comparable Freddie Mac mortgages averaged 11.8 CPR, up 2.1 CPR. "With 30-year mortgage rates relatively unchanged, the increase in prepayments can be attributed to a four-day increase in the business calendar and a seasonal uptick in housing turnover activity," Mr. Westhoff said. The analyst said the one surprise in the prepayment report was "the sharp increase in speeds on the 2005 cohort," which he said is probably a response to the "significant levels of appreciation" that many homeowners have seen over the past year. Overall speeds for 15-year Fannie and Freddie MBS collateral rose by 20%, comparable to the rise in 30-year prepayments, but the speeds of agency hybrids rose sharply and continue to prepay "significantly faster" than their fixed-rate counterparts, the analyst said. Bear Stearns can be found online at http://www.bearstearns.com.

Employment in the mortgage industry hit a new high in February as lenders added 6,500 full-time employees after trimming their payrolls during the previous three months.The U.S. Bureau of Labor Statistics reported that employment in the mortgage industry jumped from 498,399 in January to 504,000 in February. Freddie Mac deputy chief economist Amy Crews Cutts said originations declined in the first quarter but that refinancings held up better than expected as homeowners got out of their adjustable-rate home equity and home improvement loans. Refi activity also got a boost from resets on hybrid adjustable-rate mortgages. Ms. Cutts noted that one large company fired a lot of workers, but had to hire them back again. "They thought the refi boom was totally dead, but it turned out to be just slower," she said. Anticipation that originations will increase in the spring selling season may also be a factor in hiring decisions. Freddie Mac estimates that originations will jump from $540 billion in the first quarter to $655 billion in the second quarter. In addition, lenders are willing to take on the more complex and labor-intensive loans to borrowers who are going through divorces or face other issues. "In the past, these borrowers would not have gotten a return phone call," the Freddie economist said.