Servicing

Class M-2 of Metropolitan Mortgage series 2000-A has been downgraded from B-minus to CCC by Fitch Ratings.In addition, Fitch affirmed the ratings on two other classes in the deal. The rating agency attributed the downgrade to poor collateral performance and the deterioration of asset quality beyond original expectations.

Class BV of IndyMac ABS Inc. home equity series SPMD 2000-B, group 2, has been downgraded from BB to CCC by Fitch Ratings.In addition, the rating agency affirmed three other classes in the transaction. The downgrade was attributed to poor collateral performance and the deterioration of asset quality beyond original expectations. Fitch said the portfolio performance is suffering, in part, from adverse selection, citing the increase in manufactured housing collateral from 6.7% of the pool at closing to 20.2% as of September. "To date, MH loans have exhibited very high historical loss severities, causing Fitch to have concerns regarding the adequacy of enhancement in this deal, especially with regard to class BV," the rating agency said. Manufactured housing collateral has been responsible for 42.8% of total losses to date in the transaction, Fitch reported. The rating agency can be found online at http://www.fitchratings.com.

Washington Mutual Inc., Seattle, has reported earnings of $674 million ($0.76 per share) for the third quarter, down from $999 million ($1.09 per share) a year earlier, a decline it attributed partly to reduced mortgage refinancings.Net income for WaMu's mortgage banking segment totaled $271 million in the third quarter, up from $117 million a year earlier and from a loss of $63 million in the second quarter, the company said. Originations of home loans totaled $40.49 billion for the quarter, down from $111.95 billion a year earlier. However, WaMu touted the improved performance of its mortgage servicing rights, which rose $601 million from that of the second quarter "due to lower medium-term interest rates and a widening of the spread between mortgage rates and the rates on certain financial instruments the company uses to hedge the MSR risk." Loans held in portfolio rose by $11.62 billion from the second-quarter level due chiefly to "strong growth" in WaMu's home equity loans and lines of credit and short-term adjustable-rate mortgages, the company reported. WaMu can be found online at http://www.wamu.com.

Washington Mutual, Seattle, has hired J.P. Morgan Chase veteran Taj Bindra as its new executive vice president for finance and servicing operations of mortgage banking.Mr. Bindra, 42, was formerly chief financial officer and executive vice president for Chase Home Finance. He will be responsible for managing WaMu's mortgage servicing rights management, capital market activities, and servicing operations. He will be located in Seattle and report to Craig Chapman, president of WaMu's commercial and mortgage banking businesses. In his capacity as chief financial officer for the mortgage banking business, Mr. Bindra will also report to WaMu CFO Tom Casey.

Capital Title Group Inc., a title insurance underwriter based in Scottsdale, Ariz., and Charter One Bank, Cleveland, have announced an agreement whereby a CTG subsidiary will acquire the assets of Real Estate Appraisal Services Inc., a wholly owned subsidiary of the bank.The terms of the deal were not disclosed. CTG's subsidiary CTG Real Estate Information Services will acquire REAS, a provider of appraisal and flood determination services for residential and commercial property in five states. "The vertical integration of REAS's current services with the technological support of Nationwide Appraisal Services, a CTG REIS subsidiary headquartered near Pittsburgh, will produce effective cost-saving synergies," CTG said. The companies can be found online at http://www.capitaltitlegroup.com and http://www.charterone.com.

Few investment banking firms have been as bullish on Countrywide's stock as Sandler O'Neill. But those days are over.After reviewing Countrywide's third-quarter earnings statements, Sandler O'Neill analyst Mike McMahon reduced his rating on the stock to "hold" from "buy." Among his concerns, Mr. McMahon cited a larger-than-expected servicing impairment charge booked by the company. Even though Countrywide earned $582 million, it represented a 45% decline in earnings. It also revealed a $796 million servicing impairment charge that was offset, in part, by a $591 million hedging gain. Late Wednesday, Smith Barney slapped Countrywide with a "sell" rating. Countrywide's shares sold off in trading Wednesday, falling 11.5% on the day to $33. Its 52-week high is $39.93, its low, $23.00.

Wells Fargo & Co., San Francisco, has reported net income of $1.75 billion ($1.02 per share) in the third quarter, up 12% from $1.56 billion ($0.92 per share) a year earlier, despite a 58% decline in mortgage originations.Mortgage originations totaled $68 billion in the third quarter, down $28 billion from the level recorded in the previous quarter and down $93 billion from $161 billion in the third quarter of 2003, the company said. However, Mark Oman, group executive vice president for home and consumer finance, put the best face on the results. "The advantage of Wells Fargo's multichannel, anytime, anywhere sales approach is reflected in the growth of the home equity portfolio, which is up 43% from the prior year to $46 billion," Mr. Oman said. Noting the "unusually volatile" markets in the third quarter, Wells chief financial officer Howard Atkins said the company sold approximately $4 billion of securities and adjustable-rate mortgages, resulting in $10 million of bond gains and $35 million of loan losses. The owned servicing portfolio (including commercial servicing) totaled $777 billion as of Sept. 30, up from $681 billion a year earlier. The company can be found online at http://www.wellsfargo.com.

Countrywide Financial Corp., Calabasas, Calif., has reported earnings of $582 million ($0.94 per share) for the third quarter, down 47% from $1.1 billion ($1.93 per share) in the record-setting third quarter of last year.Pretax earnings by the company's mortgage banking operations totaled $633 million in the third quarter, down from $1.41 billion a year earlier. "On a year-over-year basis, third-quarter earnings are difficult to compare given the record refinance volume and the convergence of other favorable events experienced during last year's third quarter, which generated by far the best financial results in the company's history," said Angelo R. Mozilo, Countrywide's chairman and chief executive officer. ".... In line with a reduction in volume and a loan production mix shift to lower-margin adjustable-rate product, overall production margins declined 43 basis points from last year and 12 basis points from the second quarter of 2004, to 82 basis points." Countrywide said its servicing portfolio rose to a record $786 billion, up $141 billion from the level at the start of the year. As of shortly before noon Wednesday, Countrywide's stock had fallen 13.7%, to $32.36 per share. The company can be found online at http://www.countrywide.com.

Downey Financial Corp., Newport Beach, Calif., says it will sell most of its third-party mortgage servicing rights after taking an $18.4 million impairment hit in the third quarter.In the firm's quarterly earnings report, CEO Daniel Rosenthal said that after the end of the third quarter, Downey entered into agreements to sell about 80% of its MSRs on loans serviced for others. "Virtually all of the underlying loans represent borrowers with whom we have no other business relationship," he said, adding that the sale of the third-party servicing should reduce earnings volatility in future quarters. Downey reported net income of $24.5 million in the third quarter, or $0.88 per share, down 16.2% from the third quarter of last year.

Fannie Mae estimates that half of subprime borrowers have only slightly blemished credit records, and the mortgage giant intends to be more aggressive in serving this market, according to Fannie Mae chairman and chief executive Franklin Raines."Fannie is moving ahead with a concerted effort to serve the subprime market," Mr. Raines told the America's Community Bankers annual convention. "And helping our ACB partners compete and succeed in this market is a vital part of the strategy." [It could not be immediately determined whether this would require a charter revision for the government-sponsored enterprise.] Mr. Raines noted that $323 billion of subprime loans were originated last year and the market is growing. "We estimate that about half of subprime borrowers have only slightly blemished credit and are just a notch away from qualifying for Fannie Mae's prime conventional financing," Mr. Raines said. He added that Fannie Mae could serve those subprime borrowers without lowering its credit standards. Fannie Mae can be found online at http://www.fanniemae.com, and ACB can be found at http://www.americascommunitybankers.com.