Servicing

CDS IndexCo LLC and Markit Group Ltd., both based in New York, have announced the launch of ABX.HE, a synthetic ABS index of U.S. home equity asset-backed securities.The index is a family of five subindices, each consisting of 20 credit default swaps related to U.S. subprime home equity securities. To qualify for inclusion in the index, an issuer must have rated bonds for each of the AAA, AA, A, BBB, and BBB-minus categories, the companies said. CDS IndexCo is a consortium of 16 investment banks licensed as market makers in the Dow Jones CDX indices, and Markit Group is a provider of independent mark-to-market pricing and valuations. The consortium consists of ABN Amro, Bank of America, Barclays Capital, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, UBS, and Wachovia. Markit Group can be found online at http://www.markit.com.

Wells Fargo Home Mortgage has passed the $1 trillion mark in housing receivables, joining an exclusive club that includes itself and Countrywide Home Loans.At Dec. 31, the San Francisco-based WFHM had an "owned servicing" portfolio of $989 billion and $27 billion in subservicing contracts, bringing its total to $1.016 trillion. Compared with the same period a year ago, its home mortgage receivables -- including servicing and subservicing -- increased by 22%. (It values those housing receivables at $12.5 billion.) The figures were released Jan. 17 when Wells Fargo & Co. released fourth-quarter earnings. Despite reaching the $1 trillion mark, Wells' mortgage revenue fell by 20% in the fourth quarter compared with that of the previous quarter. WFHM funded $366 billion in home mortgages in 2005, its second-best production year ever.

Classes B-1 and B-2 from Credit Based Asset Servicing and Securitization LLC series 2000-CB4, a mortgage loan securitization, have been placed on Rating Watch Negative by Fitch Ratings.Fitch also upgraded four classes from two other C-BASS transactions and affirmed the ratings on five classes. The negative rating actions reflect a deterioration in the relationship between credit enhancement and loss expectations, the rating agency said. Series 2000-CB4 consists primarily of subprime conventional fixed-rate and adjustable-rate mortgage loans.

Dallas-based H-Cube LLC, in conjunction with its Zenta subsidiary, has acquired Global Realty Outsourcing, a Stamford, Conn.-based business process outsourcing company specializing in the real estate and mortgage industries.GRO's services include master and primary mortgage servicing, cash flow modeling, lease abstraction, loan underwriting, real estate accounting, and mortgage due diligence, according to GTCR Golder Rauner LLC, which formed H-Cube last year in partnership with Henry Hortenstine. H-Cube later acquired Zenta, a company based in Wayne, Pa. (with primary operations in Mumbai, India) that provides outsourcing services to the financial services industry. "The combination of Zenta's strong capabilities with GRO's high-end analytical services allows H-Cube to offer a broader suite of services to its customers," said Collin Roche, a principal of GTCR. The companies can be found online at http://wwwh-cubeinc.com, http://www.zentagroup.com, http://www.gro.com, and http://www.gtcr.com.

Delinquencies at MGIC Investment Corp., the nation's largest mortgage insurer, rose 13% in the fourth quarter, in part because of storm damage caused by hurricanes Katrina, Rita, and Wilma.MGIC said its delinquency inventory rose to 85,788 at the end of December -- with 5,300 loans going late because of hurricane damage. New insurance written in the quarter fell to $15.3 billion from $15.8 billion a year earlier. (The company continues to rely heavily on bulk insurance, which rose 23% in the quarter.) MGIC's book of business had a delinquency ratio of 4.52% at year-end, up from 3.99% a year earlier. Its earnings fell 4% to $128.1 million. The company is based in Milwaukee.

Friedman Billings Ramsey has identified 56 metropolitan statistical areas that have persistently high default rates on subprime and alternative-A loans.According to FBR research, subprime loans in these MSAs (which cover 16 states) have a default rate of 13.82%, more than double the national subprime delinquency rate of 6.16% (for 331 MSAs). Alt-A loans in the 16 states carry a 2.54% delinquency rate, compared with 0.77% nationally. The MSAs include Buffalo, N.Y.; Charlotte, N.C.; Cincinnati; and Cleveland. FBR analyst Michael Youngblood told MortgageWire that the problem MSAs have "rust belt, cotton belt, and farm belt economies that are stuck in the 19th century." He said delinquencies are rising in these areas in part because of layoffs in the automotive and auto parts industries. Mr. Youngblood said it's appropriate for lenders to "price each loan based on its individual risk."

Meanwhile, RealtyTrac, another online foreclosure marketplace based in Irvine, Calif., has reported that the number of new properties in some stage of foreclosure rose 13.5% in December.The company's Monthly U.S. Foreclosure Market Report indicates that 81,290 new foreclosure properties were added to the rolls in December. "December's higher U.S. foreclosure rates were almost exactly the same foreclosure rates reported in October, which means that the two months with the highest numbers of foreclosures were both in the fourth quarter of 2005," said Jim Saccacio, RealtyTrac's chief executive officer. "These rising numbers to finish off the year may indicate that economic factors such as higher interest rates are making it harder for some homeowners to stay current on their mortgage payments." The company said Texas recorded the highest foreclosure rate of any state in December, surging 61% (to 12,753 new foreclosures) and accounting for over 15% of new foreclosures in the nation. RealtyTrac can be found online at http://www.realtytrac.com.

The nationwide inventory of foreclosed U.S. residential properties jumped 12.7% in December, the biggest surge since March 2005, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.The inventory totaled 91,905 properties. Meanwhile, there were 24,124 new foreclosed residential properties listed in December, an increase of 7.7%, the company reported. "The relative stability of U.S. foreclosure inventory ended in December," said Brad Geisen, president and chief executive officer of Foreclosure.com. "With lending institutions closing their books at the end of the year, it is somewhat common for the foreclosure inventory to rise. It is premature to predict that December's inventory indicates a foreclosure crisis in the U.S. However, this rise in inventory, which is higher than in recent years, should be closely monitored as 2006 begins." The company can be found online at http://www.foreclosure.com.

Fannie Mae says it wants to work with lenders and homebuilders to bring standardization to the underwriting and servicing of construction loans and bring down costs, according to Fannie Mae president and chief executive Daniel Mudd.Fannie is developing back-office support for lenders doing acquisition, development, and construction lending, he told the National Association of Home Builders at its national convention in Orlando, Fla. He noted that Fannie Mae is already a "smaller player" in construction lending. The government-sponsored enterprise purchased 42,000 ADC loans in 2004, and it plans to do $10 billion in such lending over 10 years as part of its commitment to affordable housing. The CEO stressed that Fannie wants to bring its expertise in single-family mortgages to the ADC lending market, but not to dominate it. "We're not striving to put a big hairy King Kong footprint on the market," Mr. Mudd said. "We're striving to serve the market."

First Community Bancshares Inc., Bluefield, Va., has announced the prepayment of $77 million in Federal Home Loan Bank advances, resulting in $3.7 million in penalties, as part of a restructuring of long-term borrowings.The holding company said the advances, which were prepaid Dec. 23, bore a weighted average interest rate of 5.96%. On Jan. 3, the company drew new FHLBank advances of $75 million with a floating interest rate based on the three-month London interbank offered rate and a maturity of 15 years. The FHLBank has the option to convert the new advances to a fixed interest rate of 4% after five years. Concurrently, the company entered into an interest rate swap agreement that effectively fixed the rate on $50 million of the new advances for five years. Under the swap, First Community will pay fixed interest of 4.335% on a notional $50 million and receive interest payments based on a floating rate of 45 basis points below the three-month LIBOR, the company said. First Community can be found online at http://www.fcbinc.com.