Servicing

Bank of America Corp., Charlotte, N.C., has announced a reorganization of two global business segments that it says will enable it to better serve the needs of investors in residential mortgages, car loans, commercial credits, and other products.Under the reorganization, the bank's Global Business & Financial Services segment and its Global Capital Markets & Investment Banking segment will be combined into the Global Corporate & Investment Banking business, BoA said. Gene Taylor, who heads Global Business & Financial Services, will become the executive in charge of the combined business and has been named vice chairman of BoA, the company said. In addition, Alvaro G. de Molina has been named chief executive officer of Banc of America Securities. "We are bringing together in one group all the products and distribution teams that serve all businesses from smaller businesses to the largest multinational corporations," said Kenneth D. Lewis, chairman and CEO of BoA. The company can be found online at http://www.bankofamerica.com.

Three classes of notes issued by Sunrise CDO I have been downgraded by Fitch Ratings.The downgrades were as follows: class A, from AAA to BBB; class B, from BBB-minus to B; and class C, from CCC-plus to C. The transaction is a collateralized debt obligation supported by other CDOs, residential and commercial mortgage-backed securities, asset-backed securities, and corporate debt securities. Fitch said the downgrades stemmed from declining overcollateralization ratios, primarily as a result of $14 million in writedowns related to four assets. The rating agency can be found on the Web at http://www.fitchratings.com.

IndyMac Bancorp Inc., Pasadena, Calif., has reported record mortgage loan volume and record net earnings of $83.1 million ($1.26 per share) for the second quarter, compared with pro forma net earnings of $54.6 million ($0.90 per share) a year earlier.(IndyMac earned $23.0 million, or $0.38 per share, in the second quarter of 2004 under generally accepted accounting principles. The difference between pro forma and GAAP earnings in 2004 was related to a Securities and Exchange Commission staff accounting bulletin that took effect April 1, 2004, IndyMac said.) IndyMac's mortgage loan production totaled a record $14.2 billion in the second quarter, up 51% from that of a year earlier, the company said. Richard H. Wohl, IndyMac Bank's newly appointed president, said the bank boosted its mortgage market share to 1.82%, a 56% year-over-year increase. "A significant portion of this increase was driven by our re-entry into the correspondent and conduit channels, which contributed 35%, and our new reverse mortgage company, Financial Freedom, which contributed 13%," Mr. Wohl said.

The risk of price declines over the next two years has increased in 36 of the nation's 50 largest housing markets, according to the latest PMI U.S. Market Risk Index.PMI Mortgage Insurance Co., the Walnut Creek, Calif.-based mortgage insurer that created the index, said markets with a greater than 50% chance of such price declines are Boston-Quincy (Mass.), at 553; Nassau-Suffolk (N.Y.), at 540; San Diego-Carlsbad-San Marcos (Calif.), at 528; San Jose-Sunnyvale-Santa Clara (Calif.), at 513; Santa Ana-Anaheim-Irvine (Calif.), at 512; and Oakland-Fremont-Hayward (Calif.), at 509. The index values mean, for example, that Boston has a 55.3% probability of experiencing a home price decline in the next two years. "The latest PMI Market Risk Index numbers show that house price risk continues to be concentrated along the coasts, as it has been for some time," said Mark Milner, chief risk officer of PMI Mortgage Insurance. "But what we are seeing with these numbers is that risk has increased in many noncoastal markets as well." PMI can be found online at http://www.pmigroup.com.

Two classes of certificates issued by Delta Funding Home Equity Loan Trust have been placed under review for possible downgrade by Moody's Investors Service.The affected classes are: series 1998-2, class B-1A; and series 2000-3, class B. Both transactions are primarily backed by first-lien adjustable- and fixed-rate subprime mortgage loans. The rating actions were attributed to diminishing credit enhancement levels relative to the projected losses on the underlying pools. "The 2000-3 transaction, in particular, has experienced rapid deterioration of overcollateralization in recent months," Moody's said. The rating agency can be found online at http://www.moodys.com.

The Federal Home Loan Banks funded only $2 billion in originations under the Mortgage Partnership Finance program in the second quarter, down from $7.6 billion in the same quarter of 2004, according to the Chicago FHLBank.MPF single-family originations totaled $72.1 billion in 2003, $18.4 billion in 2004, and only $4.8 billion in the first half of this year. Chicago FHLBank officials attribute the decline to a shift in the market to adjustable-rate mortgages and new products such as interest-only loans. The MPF program provides a secondary market solely for standard fixed-rate mortgages. The Chicago FHLBank launched the MPF program in 1997, and it is the biggest investor in MPF loans among nine participating FHLBanks. However, the Chicago bank has been under a Federal Housing Finance Board supervisory agreement for the past year. In addition, the MPF program is being strangled because it does not have a mechanism for selling loans to investors outside the FHLBank System. "Until the Finance Board works with the FHLBanks to develop a way for them to manage and sell the [MPF] assets, it would be imprudent for the FHLBanks to grow their assets," one industry source said.

Issuance of U.S. private-label residential mortgage-backed securities could reach $1 trillion this year, according to Standard & Poor's Ratings Services.The rising issuance is being driven by numerous factors, including low interest rates, rising home prices, innovative lenders, favorable demographic factors, and "insatiable" borrowers, the rating agency said. "The current run of unprecedented issuance began in 2001, with $267 billion, a record at the time, and continued unabated with $414 billion in 2002, $586 billion in 2003, $865 billion in 2004, and already $536 billion in the first half of 2005," S&P reported. Private-label issuance eclipsed that of the agency markets for the first time in the fourth quarter of 2004, and it has continued, according to the rating agency. "Contributing to the decline in agency issuance since 2003 has been a movement from conventional, fixed-rate loans, toward more innovative loan types popular with today's highly leveraged borrowers," S&P said. "The attraction of 'affordability products,' whose main purpose is to reduce the monthly payment owed by the borrower in the first few years of a loan's life, has kept production levels high." S&P can be found online at http://www.standardandpoors.com.

Countrywide Financial Corp., Calabasas, Calif., has reported consolidated net earnings of $566 million ($0.92 per share) for the second quarter, down 28% from $786 million ($1.29 per share) in the second quarter of last year.Pretax earnings by the company's mortgage banking operations totaled $526 million, down from $1.0 billion a year earlier. However, loan production in the mortgage banking segment increased to $101.15 billion, compared with $78.75 billion in the first quarter and $88.49 billion a year earlier, Countrywide reported. "Production sector margins decreased from 93 basis points for loans produced in the first quarter of 2005 to 40 basis points in the second quarter as a result of various factors," said Angelo R. Mozilo, Countrywide's chairman and chief executive officer. "These include lower pricing margins in prime and nonprime loans; a shift in channel mix toward the lower-margin correspondent channel; and ... the decision to increase loan retention during the second quarter." Countrywide's mortgage servicing portfolio stood at a record $964 billion as of June 30, a 33% increase from that of a year earlier. The company can be found online at http://www.countrywide.com.

Keefe, Bruyette & Woods Inc., New York, has announced the launch of the KBW Mortgage Finance Index, consisting of 24 mortgage bankers, mortgage insurers, title insurers, government-sponsored enterprises, and banks and thrifts with considerable mortgage portfolios or operations.The index includes Fannie Mae, Freddie Mac, Countrywide Financial Inc., Golden West Financial Corp., and Washington Mutual Inc. Options on the index were scheduled to begin trading July 26 on the Philadelphia Stock Exchange. "Our growing family of publicly traded index products empower market participants to make and hedge investments in each of the primary subsectors of the financial services sector of the market," said Thomas Michaud, KBW's vice chairman and chief operating officer. KBW can be found on the Web at http://www.kbw.com.

First American Default Technologies has launched an updated version of its VendorScapeCMS default management technology.Version 3.0 of the case management software includes an enhanced screen layout that allows users to access more data at one time, a redesigned navigation system that helps users locate relevant data faster, and more work queues to locate and address the most urgent tasks, the company said. The original version of VendorScapeCMS was launched in 2003. First American Default Technologies, Anaheim, Calif., is a unit of the First American Corp., which can be found on the Web at http://www.firstam.com.