Servicing

The share price of Doral Financial Corp., Puerto Rico's largest mortgage lender, fell by as much as 16% Thursday after Merrill Lynch downgraded the company to "sell" from "neutral."At MortgageWire's deadline, the shares had recovered somewhat and were trading at $17, down 12% on the day. Merrill analyst Kenneth Bruce cited concerns about Doral's first-quarter earnings and "the potential for significant changes to the company's business model, which we think could introduce yet more volatility into the stock." Doral is the 70th-largest residential servicer in the U.S. or its territories. The lender's shares have fallen significantly in recent weeks over concerns about how it is valuing some of its mortgage-backed securities. Last month Doral said it was in preliminary talks to sell some interest-only strips to an unspecified financial institution.

Laureate Capital, Charlotte, N.C., a subsidiary of Branch Banking and Trust Company, has acquired R.J. Twitty & Co., a Tampa, Fla.-based mortgage banker.The terms of the transaction were not disclosed. The acquisition adds R.J. Twitty's $275 million loan servicing volume to Laureate's $6.64 billion commercial and multifamily servicing portfolio and also gives the company another loan production office in Florida (in addition to its existing one in Naples). The company's new Tampa office will be led by Steven Marshall from R.J. Twitty & Co, Laureate said. R.J. Twitty's chief executive officer, Robert Twitty, plans to pursue other interests following the sale.

Freddie Mac says it will buy back, at market prices, any of 48 mortgage pools totaling $178 million that contain loans involving "unacceptable refinance practices" by a loan broker that was doing business with one of its seller/servicers.The company made the announcement after the market closed April 13, noting that it is investigating a "limited number of loans" where a mortgage broker paid kickbacks to consumers who were willing to refi their mortgages at above-market rates. A Freddie Mac spokeswoman said the consumers agreed to refi the loans at higher rates because the broker gave them "cash compensation" for doing so. The mortgages that were sourced to Freddie through National City Mortgage are now prepaying at a noticeable pace. Both Freddie and NatCity are investigating the matter. Saying it recently discovered the problem, the government-sponsored enterprise could not quantify how many loans are involved but said at least 48 pools are affected. "It could be just one loan per pool," said the spokeswoman. Freddie declined to identify the broker.

American Home Mortgage Investment Corp., Melville, N.Y., has announced that it will restate its 2004 financial results to revise the timing of revenue recognition from a fourth-quarter securitization.The reason for the timing revision (from the fourth quarter to the first quarter) is that approximately $97.6 million of the $3.5 billion of securities created and retained by American Home in the fourth quarter were benefited by embedded derivatives contracts, the company said. As a result, the entire securitization was ineligible for sale treatment under Statement of Financial Accounting Standards No. 140. The restatement will reduce 2004 income by about $71.4 million and increase income for the first quarter by an equal amount, American Home reported. The company can be found online at http://www.americanhm.com.

Clayton Services, a Shelton, Conn.-based provider of loan and portfolio analysis, operations support, and consulting services, and the Murrayhill Co., a Denver-based securities surveillance and credit risk management business, have united under a newly formed holding company, Clayton Holdings.Frank Filipps, currently chairman and chief executive officer of Radian Guaranty, is slated to become the new chairman and CEO of Clayton Holdings upon his pending retirement from Radian. The private equity firm TA Associates is the controlling shareholder of both Clayton Services and Murrayhill and has invested $134 million of capital into Clayton Holdings, the company said. The new firm will leverage each company's technology, databases, and analytic and consulting capabilities to provide a spectrum of information-based services to support loan origination, securities issuance, securities monitoring, and loan servicing. Joining Mr. Filipps is Steve Lamando, founder and CEO of Clayton Services, who has been named president of Clayton Holdings and joins its board of directors. Sue Ellis, CEO and founder of Murrayhill, will move from her Murrayhill post to join the Clayton Holdings board of directors. Kevin Kanouff will continue as president of Murrayhill.

Fitch Ratings' recent actions on American International Group Inc. will not affect the ratings of state housing finance agency bonds partially supported by investment contracts of AIG Matching Fund Corp., according to the rating agency."The majority of the triple-A rated tax-exempt housing bonds that Fitch rates are part of large parity indentures, with the AIGMFC contracts only comprising a minimal portion of the investment portfolios, making the exposure to AIGMFC limited," said Vincent Barberio, a managing director at Fitch. "Further, AIG's current AA-plus rating still meets the requirements of Fitch's criteria for qualified investments." Fitch said it will continue to monitor the credit implications of the pending resolution of AIG's Rating Watch Negative for the tax-exempt housing bonds. The rating agency can be found online at http://www.fitchratings.com.

The overall volume of originations and loan securitizations will likely decline 30% this year in the prime jumbo mortgage sector, from $225 billion in 2004 to $160 billion, according to Standard & Poor's Ratings Services.The report, titled "Trends in U.S. Residential Mortgage Products: Jumbo Sector Fourth-Quarter 2004," says the reduction in the number of deals should be less than 30%, however, as a result of several factors. They include continued house price appreciation; the introduction of new mortgage products; efficiencies in deal execution; and a shift in origination and securitization from fixed-rate mortgages and hybrid adjustable-rate mortgages to ARMs with no initial fixed-rate period and IO mortgage product. "Over the past few years, many issuers have chosen to issue more deals backed by smaller, more homogeneous collateral pools," said Steve Tencer, a director in S&P's residential mortgage group, and co-author of the article. ".... We expect this form of issuance to gain momentum and continue the trend of smaller, more-targeted issuance patterns." The report is available on RatingsDirect, S&P's Web-based credit analysis system, at http://www.ratingsdirect.com.

Class B4 of Financial Asset Securitization Inc.'s mortgage pass-through certificates, series 1997-NAMC2, has been downgraded from CCC to CC by Fitch Ratings.In addition, Fitch affirmed the ratings on four other classes in the transaction. The rating agency attributed the downgrade to principal writedowns and the fact that more than 9% of the pool is over 90 days delinquent. Fitch can be found on the Web at http://www.fitchratings.com.

Sixteen certificates from six deals issued by Long Beach Mortgage Co. in 2000 and 2001 have been downgraded by Moody's Investors Service.The downgrades of asset backed certificates issued by Long Beach Home Mortgage Loan Trust were as follows: series 2000-1, class M-1, from Aa2 to A2; class M-2, from Baa3 to B1, and class M-3, from B2 to Caa2; series 2001-1, class M-1, from Aa2 to A1, class M-2, from Baa2 to Ba3, and class M-3, from B1 to Caa1; series 2001-2, class M-1, from Aa2 to A1, class M-2, from Baa2 to B1, and class M-3, from B2 to Ca; series 2001-3, class M-2, from Baa2 to Ba3, and class M-3, from B1 to Caa3; and series 2001-4, class M-3, from Ba3 to Caa1. In the sixth deal, issued by Asset Backed Securities Corp., Long Beach Home Equity Loan Trust 2000-LB1, class M1F was downgraded from Aa2 to A3, class M2F from Ba1 to B3, class BF from Ca to C, and class BV from Baa3 to B3. The downgrades were attributed to credit enhancement levels that may be low given the projected losses on the underlying pools, Moody's said. The deals are backed primarily by first-lien adjustable- and fixed-rate subprime mortgage loans originated by Long Beach.

LSI, a provider of property valuation and settlement services, has announced the introduction of a program that enables servicers to outsource the fulfillment of private mortgage insurance release requests.Under the Outsourced Private Mortgage Insurance Release Program, servicers can outsource the requests to an unaffiliated third-party provider, eliminating liability and increasing quality control of the process and documentation requirements, LSI said. (The federal Homeowners Protection Act requires lenders to cancel, or release, PMI automatically when loan-to-value ratios fall to 78% of the property's original value.) For servicers seeking intermediate levels of involvement in the PMI release process, the company is offering two additional versions of the program: insourced and hybrid. "The Insourced program will provide servicers with increased control over borrower interaction as compared to the Outsourced program," LSI said. "The Hybrid version combined elements of both the Outsourced and the Insourced programs." LSI is a division of Fidelity National Financial Inc., Jacksonville, Fla., which can be found online at http://www.fnf.com.