Servicing

Friedman, Billings, Ramsey Group Inc., Arlington, Va., has announced the formation of an institutional mortgage-backed securities trading business based on a team of MBS professionals from Freddie Mac.The team will be led by Michael Swell, formerly vice president and head of Freddie Mac's Securities Sales and Trading Group, and its trading operation will be led by Robert Cole, formerly head trader at Freddie's SS&TG. The new MBS team will be combined with FBR's asset-backed securities trading unit. "Having a meaningful ABS and MBS sales and trading effort is one of our key growth initiatives as a company and directly supports our increasing commitment to the mortgage- and asset-backed sectors of the capital markets," said Richard J. Hendrix, FBR's president and chief operating officer. FBR can be found online at http://www.fbr.com.

Mortgage-backed securities researchers and traders in New York have suggested that Ginnie Mae beef up its disclosures, loan products, and bond structures and give borrowers who warrant it a break on some mortgage insurance premium requirements, according to The Bond Market Association.Nadine Cancell, the association's vice president and assistant general counsel, told MortgageWire that these were the four areas that market participants agreed in recent discussions would both be cost-effective for Ginnie Mae and "have a big impact on the market." The association is among those that recently submitted suggestions to Ginnie in response to a recent request for comments that was aimed at determining "whether any existing requirements and procedures represent unnecessary hindrances to Ginnie Mae's business partners."

Fitch Ratings has assigned primary and special servicer ratings to Bayview Loan Servicing LLC for its servicing of small loans for commercial mortgage-backed securities.The ratings were as follows: primary servicer, CPS3-plus Small Loans; and special servicer, CSS3-plus Small Loans. Fitch said the primary servicer rating reflects Bayview's "experienced servicing management and staff, including asset managers, and its experience as a small-balance commercial mortgage loan servicer." The special servicer rating, the first assigned in Fitch's CMBS small-loan servicer rating program, is based on the company's ability to "work out, resolve, and dispose small-balance commercial mortgage loans and real-estate-owned properties," the rating agency said. Fitch rates commercial mortgage servicers on a scale of 1 to 4, with 1 being the highest rating.

Fitch Ratings has assigned CitiMortgage Inc., St. Louis, a residential primary servicer rating of RPS1 for alternative-A product.In addition, Fitch affirmed CitiMortgage's RPS1 rating for residential primary servicing and its RMS1-minus rating for residential master servicing. The primary servicer ratings are based on the company's "seasoned and tenured management team, superior technology platform, strong default management experience, and tightened risk management policies and procedures," Fitch said. The master servicer rating is based on CitiMortgage's "continued effective performance in managing its $8.8 billion master servicing portfolio as well as the numerous efficiencies and enhanced reporting capabilities completed over the last year," the rating agency said. The ratings also reflect the financial strength of CitiMortgage's parent, Citigroup, which is rated AA-plus by Fitch.

The residential servicer ratings of Ocwen Financial Corp. have been affirmed and removed from Rating Watch Negative by Fitch Ratings.The affected ratings are Ocwen's RPS2 residential primary servicer rating for subprime mortgages and its RSS2 residential special servicer rating. Fitch said the rating actions resulted from its determination that Ocwen has made changes to its servicing practices that were recommended in an April 2004 supervisory agreement with the Office of Thrift Supervision. The changes included the establishment of best practices, the creation of a consumer ombudsman, and the enhancement of consumer disclosures, Fitch reported. The rating agency noted that many class action lawsuits have been filed against Ocwen over the past 18 months alleging predatory and deceptive business practices, which Ocwen has denied. "Fitch takes these charges very seriously and is concerned about the types of issues that have been alleged by consumers and, as a result, will continue to closely monitor the company's legal situation in order to evaluate any potential impact on Ocwen's loan servicing and operational capabilities," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Fannie Mae has priced two private offerings of noncumulative preferred stock totaling $5 billion as part of a plan to rebuild its capital base.The securities sale to institutional investors should make up for a capital shortfall so that the company can meet its minimum regulatory capital requirement. The Office of Federal Housing Enterprise Oversight recently classified the giant mortgage company as "significantly" undercapitalized. "This placement of preferred stock is a key component of Fannie Mae's capital restoration plan," said Donald Marron, a member of Fannie's board who is working with OFHEO on the plan. "We will be finalizing the details of the capital plan shortly." Besides meeting its minimum capital requirement, Fannie also has to build a capital surplus of 30% above its minimum requirement. Lehman Brothers Inc. served as the sole placement agent for the stock placements, which involved a $2.5 billion, 5.375% convertible preferred stock series and a $2.5 billion nonconvertible floating-rate preferred stock series with an original coupon of 7%. The conversion price to Fannie Mae common stock is $94.31 per share. Fannie Mae can be found on the Web at http://www.fanniemae.com.

Fitch Ratings has upgraded CitiFinancial Mortgage Co.'s residential primary servicer rating for subprime product from RPS2 to RPS2-plus.The upgrade is based on CFMC's "experienced" management team, "reliable" loan administration processes, "effective" default management strategies, and success in managing and resolving delinquent loans, Fitch said. The rating also reflects the financial strength of CFMC's parent, Citigroup, which is rated AA-plus by Fitch. Headquartered in Irving, Texas, CFMC has approximately 1,530 servicing employees and is a national provider of home equity loans and first lien mortgages, Fitch reported.

Fitch Ratings has upgraded Ameriquest Mortgage Co.'s residential primary servicer rating for subprime product from RPS2 to RPS2-plus and its special servicer rating from RSS2-minus to RSS2-plus.The subprime servicer rating reflects the Orange, Calif-based AMC's "demonstrated effectiveness in managing and resolving subprime, nonperforming, and subperforming residential mortgages during a period of rapid servicing portfolio growth," Fitch said. The rating also reflects AMC's expanded call center capacity, effective loan administration, "seasoned" servicing management team, "robust" training programs, "progressive" technology, and "proficient" default management practices, the rating agency said. The special servicer rating takes into account AMC's "successful record of resolving delinquent loans prior to foreclosure," Fitch said. Fitch rates primary, master, and special servicers of residential mortgages on a scale of 1 to 5, with 1 being the highest rating. The rating agency can be found online at http://www.fitchratings.com.

Camco Financial Corp., Cambridge, Ohio, has announced that its subsidiary Advantage Bank has prepaid and restructured $144.1 million in convertible fixed-rate borrowings from the Federal Home Loan Bank of Cincinnati.The early repayment will result in a pretax penalty charge of $18.88 million. The convertible advances had a weighted average interest rate of 6.25% and an average term to maturity of approximately 5.6 years, Camco said. The bank replaced the advances plus the penalty with a structure of maturities ranging up to five years. "The transaction positions itself well in our balance sheet as a result of our recent and continuing efforts to manage towards shorter-duration assets generated from commercial/commercial real estate and consumer loans," said Richard C. Baylor, Camco's president and chief executive officer. The bank can be found online at http://www.advantagebank.com.

Class B-1 of Ryland Mortgage Securities Corp.'s series 1994-5 mortgage securitization has been placed under review for possible downgrade by Moody's Investors Service.In addition, 10 certificates from three transactions have placed under review for possible upgrade. The transactions are backed by first-lien adjustable-rate mortgage loans. The negative rating action was attributed to weak performance by the underlying loans. "The class B-2 and B-3 certificates are fully written down, and the B-1 class has already taken significant writedowns," Moody's said. The rating agency can be found online at http://www.moodys.com.