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Annaly Mortgage Management, a New York-based real estate investment trust, has announced a rebalancing of its portfolio through asset sales and a reinvestment of proceeds that resulted in total losses of approximately $148 million in the fourth quarter.The REIT said about $83 million of the total stemmed from noncash losses on securities reclassified as other-than-temporarily impaired, and the other $65 million was a realized loss resulting from the sale of $2.3 billion (in face amount) of securities. "Certain assets that were purchased in the much lower interest rate environment of 2003 and 2004 are unlikely to recover to their amortized cost basis," said Michael A. J. Farrell, Annaly's chairman, chief executive officer, and president. "However, the returns for new capital invested in short-duration assets have improved significantly. As a result, we are taking advantage of the current market conditions by either selling or reducing the cost basis of these assets, and by repositioning the portfolio into higher-yielding investments." The REIT can be found online at http://www.annaly.com.

The Federal Agricultural Mortgage Corp., Washington, D.C., has announced a $500 million offering of guaranteed notes by the newly created Farmer Mac Guaranteed Notes Trust 2006-1.The notes will be collateralized by an obligation of Metropolitan Life Insurance Co. that is, in turn, collateralized by Farmer Mac-eligible agricultural real estate mortgage loans, Farmer Mac said. The government-sponsored enterprise said the transaction is part of the company's effort to diversify its marketing focus "to include large program transactions that emphasize high asset quality, with greater protection against adverse credit performance and commensurately lower compensation for the assumption of credit risk and administrative costs...." The GSE can be found online at http://www.farmermac.com.

Summit Financial Group Inc., Moorefield, W. Va., has announced a fourth-quarter pretax impairment charge of $1.5 million related to preferred stock issued by Fannie Mae and Freddie Mac.Summit said the reason for taking the charge involves the difficulty of projecting the future recovery period of the $5.7 million in preferred stock. "Although the securities are still rated as investment grade, the company recognized the impairment charge at this time, in accordance with generally accepted accounting principles," the holding company said. Summit explained that the securities are held in its available-for-sale portfolio, and therefore the unrealized losses associated with them had already been recorded as "reductions of other comprehensive income." This means that no reductions of investment securities or shareholders' equity were required, and the charge had "no significant effect" on summit's consolidated balance sheet, the company said.

TD Banknorth Inc., a financial services company based in Portland, Maine, has announced a balance sheet restructuring program involving the sale of approximately $2.6 billion of mortgage-backed securities in connection with a pending acquisition.The company said the asset sales would reduce the earnings volatility inherent in MBS as a result of prepayments and call-related features. TD Banknorth will incur a pretax loss of approximately $45 million in the fourth quarter in connection with the restructuring. The company said it expects that approximately $2.7 billion in additional investment securities to be acquired from of Hudson United Bancorp will be sold after the acquisition, with the proceeds used to repay an equal amount of debt. TD Banknorth can be found online at http://www.tdbanknorth.com.

Sanders Morris Harris Group Inc., a Houston-based investment banking firm, has announced the formation of an expanded fixed-income unit based in New York.William Sprague, a Sanders Morris Harris managing director, said the firm capitalized on a unique opportunity after Merrill Lynch acquired assets of the Advest Group from AXA Financial. "A complete 30-person fixed-income team chose to join Sanders Morris Harris, giving us the nucleus that we plan to expand in the months ahead," Mr. Sprague said. The firm offers a full range of investment banking services, including brokerage services for hedge funds and mortgage-related fixed-income security sales and trading. It can be found online at http://www.smhgroup.com.

The delinquency rate on home equity loans fell 42 basis points in the third quarter, reflecting overall improvement in the consumer credit sector, according to the American Bankers Association.The delinquency rate on home equity loans dropped from 2.75% in the second quarter to 2.33%. However, past-due accounts among home equity lines of credit increased slightly to 0.46%, from 0.43% in the second quarter, according to the ABA survey. The delinquency rate on mobile home loans fell from 3.74% to 3.31%. ABA chief economist James Chessen said that despite improvement in consumer credit overdue rates, there are still "signs of financial stress" related to rising short-term interest rates, higher fuel prices, and last year's hurricane season. The ABA can be found on the Web at http://www.aba.com.

Eight classes from Long Beach Mortgage Loan Trust, series 2002-2, have been downgraded by Fitch Ratings.The downgrades were as follows: group 1, class I-M2, from A to BBB, class I-M3, from BBB-minus to B, and classes I-M4A and I-M4B, from B to CCC; and group 2, class II-M2, from A to BBB, class II-M3, from BBB-minus to B, and classes II-M4A and II-M4B, from B to CCC. Fitch also affirmed the rating on one other class in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement levels and loss expectations. Group 1 of the transaction is backed by first-lien adjustable- and fixed-rate conforming mortgage loans, and group 2 is backed largely by first- and second-lien adjustable- and fixed-rate nonconforming mortgage loans. Fitch can be found online at http://www.fitchratings.com.

Investment banking firm Sandler O'Neill has dropped coverage of Fannie Mae and Freddie Mac due to what it calls a "realignment" of the companies it covers.Analyst Laura Kaster, who last covered the government-sponsored enterprises for Sandler, could not be reached for comment by MortgageWire's deadline. Prior to Ms. Kaster, Sandler analyst Mike McMahon had covered the two GSEs for several years but moved on in 2005 to following only depositories. Until accounting scandals at Fannie and Freddie, Mr. McMahon had been mostly bullish on the stocks. When Sandler terminated coverage, it had a "buy" rating on Fannie and a "hold" on Freddie.

Prepayment rates for 30-year mortgages in Fannie Mae mortgage-backed securities fell by only 10% in December despite a 28-basis-point rise in mortgage rates, but the aggregate speed was the lowest in five years, according to Bear Stearns & Co.The aggregate speed on 30-year Fannie Maes was a constant prepayment rate of 13.8 CPR, down from 15.4 CPR in November, marking the first time it has been below 15 CPR since January 2001, said Bear Stearns analyst Dale Westhoff. The aggregate prepayment rate on Freddie Mac 30-year collateral declined 13%, from 14 CPR in November to 12.1 CPR in December. Meanwhile, aggregate speeds for 30-year Ginnie Mae collateral fell by 10%, from 21.4 CPR in November to 19.3 CPR in December. Mr. Westhoff said the speed decline for Ginnie Maes was uniformly distributed across the coupon stack. "Despite the relatively stable mortgage rates over the last two months, we would expect prepayments to decline by over 15% [in January], with premium coupons showing a larger decline," the analyst said. Bear Stearns can be found online at http://www.bearstearns.com.

A National Association of Realtors study last year found that investors accounted for about 23% of home sales transactions, but the NAR's chief economist said investor activity in 2006 is a "wildcard" that could affect home prices and home sales activity.David Lereah, like other economists who participated in a Homeownership Alliance teleconference, said he expects investor activity to decline in 2006. If investors pull out of the market too quickly, that could "hurt housing," he said. David Seiders, chief economist at the National Association of Home Builders, said the biggest risk would be that investors not only stop buying, but also move the properties they have purchased back onto the market en masse, putting downward pressure on prices. Economists said that investor activity will have the most impact in markets where home values have risen quickly in recent years and those with significant resort and tourism industries. The alliance can be found online at http://www.homeownershipalliance.com.