Servicing

GMAC Commercial Holding was the leading commercial mortgage servicer, by total primary and master servicing volume, at the end of 2004, according to data compiled by the Mortgage Bankers Association.GMAC, which had a servicing portfolio of $208.14 billion for the period, was also at the top of the list for 2003. Wachovia is next, at $184.83 billion, followed by Midland Loan Services, with $98.365 billion. (They also held the same positions for 2003.) The association plans to release its servicer rankings data in conjunction with its annual commercial real estate finance/multifamily convention Feb. 6-9 in San Diego. Ranked by commercial mortgage-backed securities primary and master servicing volume, Wachovia topped the list as of Dec. 31 with a servicing volume of $117.56 billion, the MBA reported. GMAC was next, at $111.49 billion, followed by Midland Loan Services at $72.28 billion. The MBA also reported that GMAC ($65.09 billion), GEMSA ($32.40 billion), and Prudential Asset Resources ($24.29 billion) were the largest servicers for life insurance companies and other private investors.

Employment in the mortgage industry held steady in December after lenders added 32,200 new employees to their payrolls in 2004, according to Friday's jobs report by the Bureau of Labor Statistics.The BLS reported that employment in the mortgage banking/broker sector rose by only 200 full-time positions in December to 486,400. (There is a one-month delay in the release of mortgage employment data. The BLS will release the January data on March 4.) Data for the full year show that the annual rate of employment in the mortgage industry rose by 6% in 2004, to 473,800. Meanwhile, Friday's employment report showed that the economy generated 146,000 new jobs in January, and the unemployment rate declined to 5.2%.

Stockholders of Fieldstone Investment Corp., Columbia, Md., have been authorized to resell approximately 43.3 million shares of its common stock, according to the residential mortgage banking company.The authorization came from the Securities and Exchange Commission, which has declared effective a Fieldstone registration statement, the company said. Under the registration statement, the stockholders are permitted (but not obligated) to sell some or all of the shares covered by the prospectus, which were originally sold in a private placement late in 2003. The common stock of Fieldstone, a real estate investment trust, has begun trading on the NASDAQ National Market under the symbol FICC. The REIT can be found online at http://www.fieldstoneinvestment.com.

Fannie Mae will be deleted from the Dow Jones Select Dividend Index and replaced by Astoria Financial because Fannie's recently announced halving of dividends caused the company to fall below the index's yield requirement, Dow Jones Indexes has announced.To be listed in the index, which includes 100 stocks from the Dow Jones U.S. Total Market Index, companies must be among the top 200 by yield, Dow Jones Indexes said. The replacement of Fannie with Astoria will be effective on Feb. 4. Dow Jones said additions to and deletions from the Select Dividend Index do not reflect an opinion on the investment merits of the companies. In January, Fannie Mae announced a reduction in its common stock dividend from $0.52 per share to $0.26 per share in order to boost the company's capital. Dow Jones Indexes can be found online at http://www.djindexes.com.

The senior unsecured debt ratings of PHH Corp., Mount Laurel, N.J., have been lowered from Baa1 to Baa3 by Moody's Investors Service, and PHH's commercial paper program has been downgraded from Prime-2 to Prime-3.The outlook is stable, Moody's said. The downgrades follow an announcement that Cendant Corp. has completed the spinoff of PHH and its mortgage banking and fleet management businesses to shareholders. "These rating downgrades are reflective of the rating agency's assessment that, following the spinoff, PHH will have diminished credit strength due to reduced business and cash flow diversity, and a smaller operating and capital base," Moody's said. The stable outlook reflects an expectation that PHH will focus on maintaining a stable capital structure while leveraging its relationship with Cendant's relocation and real estate businesses, and on preserving liquidity and the stability of its funding sources, the rating agency said. Moody's can be found online at http://www.moodys.com.

The Bond Market Association has indicated that it supports some aspects of the Securities and Exchange Commission's offering reform proposal but has concerns about its application to asset-backed securities.The bond group has filed two comment letters about the proposal, one regarding broad fixed-income markets and the other specific to ABS. The association said it "finds the proposal in general to be a positive step toward modernizing the offering process, especially the guidance allowing established bond issuers greater flexibility in the offering process via automatic shelf registration and new communications guidelines." However, the bond group added that it "does not believe the proposal goes far enough in extending some of the same provisions to ABS." The association said it is "especially concerned that the proposal holds an ABS underwriter liable for investment decisions based on preliminary information." The bond group can be found online at http://www.bondmarkets.com.

In the fourth quarter, 56% of the homeowners who refinanced their homes got a mortgage at least 5% larger than the original loan, down from 59% in the previous quarter, according to Freddie Mac.However, the percentage was higher than the 45% level recorded a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "The dip in 30-year fixed mortgage rates that happened in the fourth quarter brought down the cash-out share of new refinancings even though the total share of refis went up," said Frank Nothaft, Freddie Mac's chief economist. "When homeowners decide to refinance because of falling interest rates, they might take cash out of home equity because it is convenient, but it is not the main reason they are seeking a new loan. As interest rates rise over this year we should see higher cash-out shares among refi loans, but total dollars cashed out should be lower than in 2004."

Countrywide Financial Corp., Calabasas, Calif., has reported that fourth-quarter earnings declined to $343 million ($0.56 per share) from $564 million ($0.94) in the fourth quarter of 2003 as a hedging loss took a bite out of the company's results.Overall, Countrywide said loan production volume totaled $95 billion in the fourth quarter, up 25% from the fourth quarter of last year. For the full year, loan production totaled 363 billion, down 17% from the record-breaking volume of 2003. The servicing portfolio grew to $838 billion, maintaining Countrywide's status as the largest originator and servicer of home loans. Fourth-quarter results were hurt by the loan servicing sector, where earnings declined by $255 million from those of the third quarter as a result of a flattening of the yield curve, a tightening of mortgage swap spreads, and a reduction in interest rate volatility. These factors diminished the value of hedging instruments. At the same time, flat mortgage rates meant that the value of the MSR asset did not increase as much as expected to offset the hedge losses. Countrywide was the most actively traded stock on the New York Stock Exchange Wednesday morning. It was down 4.2% ($1.61) at noon. The company can be found online at http://www.countrywide.com.

Standard & Poor's Ratings Services says it has evaluated the impact of anti-predatory-lending statutes on the funding of high-cost loans through the capital markets and found that only 0.01% of the U.S. residential mortgage loans it rated last year were high-cost loans.Given that only $87 million of the approximately $758 billion rated in 2004 were high-cost loans, S&P said it is clear that the capital markets are not financing the origination of such loans. Since the anti-predatory-lending legislation that has become effective over the past couple of years generally targets high-cost loans, it would appear that such legislation has limited the origination of these loans. However, S&P said it is unable to determine whether such loans are being originated but not included in securitizations.

Class B of Aames Mortgage Trust 2001-2 has been downgraded from B2 to Caa3 by Moody's Investors Service, and class B of Aames Mortgage Trust 2001-1 has been placed on review for possible downgrade.The transactions are backed mostly by first-lien fixed-rate mortgage loans originated by Aames Financial Corp. and serviced by Countywide Home Loans Inc., Moody's said. "The transactions have taken significant losses causing gradual erosion of the overcollateralization," the rating agency said. The credit enhancement levels no longer provide adequate protection to support the ratings on the most subordinate certificate classes, Moody's said. The rating agency can be found online at http://www.moodys.com.