Servicing

Deutsche Bank has hired two managing directors to posts in its mortgage-backed securities unit.Neil Ahuja has been named managing director and head of the MBS group, and Jon Roach has been named managing director and head of mortgage derivative trading. Mr. Ahuja had previously been responsible for trading, origination, and risk management for the agency, collateralized mortgage obligation, residential conduit, and mortgage derivative desks at RBS Greenwich Capital. Mr. Roach was previously head of mortgage derivative trading at RBS Greenwich Capital. A Deutsche Bank spokeswoman could not be reached for comment by MortgageWire's deadline on whether the hiring was done to expand the company's staff or to fill vacancies.

Employment in the mortgage sector hit a new high in August as lenders resumed hiring and added 4,000 full-time employees to their payrolls, according to the September employment report by the U.S. Bureau of Labor Statistics.The August increase erased a loss of 1,600 jobs in July. Total employment in the mortgage sector has increased by 27,200 since January. Friday's BLS report shows that jobs in the mortgage banking/broker sector rose from 455,700 in July to 459,900 in August. In 2003, jobs in the mortgage sector peaked at 457,300. (There is a one-month lag in BLS reporting of mortgage sector employment data. The September data will be released Nov. 5.) Meanwhile, the BLS reported that the economy generated 96,000 new jobs in September, and the unemployment rate was unchanged at 5.4%. The BLS can be found online at http://stats.bls.gov.

The high number of structured finance deals done by unrated issuers, particularly in the residential mortgage-backed and asset-backed securities markets, has prompted Moody's Investors Service to begin formally assessing the "governance" of selected RMBS and ABS deals.Nicolas Weill, asset finance chief credit officer at Moody's, said the rating agency is specifically looking at the governance of the aforementioned deals because, "in the few instances where transactions have performed significantly below original expectations, transaction governance has often been the core issue." In assessing transaction governance, Moody's said it plans to look at "the level of oversight, controls and procedures in place in a deal that could mitigate the risk of loss to investors in a securitization." The rating agency can be found on the Web at http://www.moodys.com.

Prepayment rates for Fannie Mae and Freddie Mac mortgage-backed securities recorded "modest gains" in coupons below 6.5% and "modest declines" in higher coupons, according to Bear Stearns.Analyst Dale Westhoff said speeds of new Fannie Mae 6.0% coupons increased by a constant prepayment rate of nearly 4 CPR, but that speed-ups in other coupons fell short of expectations. Mr. Westhoff attributed this to "the significant flattening of the yield curve from April to August" and to limited news coverage of the recent decline in mortgage rates. "The biggest surprise in today's numbers was the decline in prepayments in higher coupons in the face of a significant rally in mortgage rates," Mr. Westhoff said. "Over the last two reporting periods we have seen almost a 35 bp rally in 30-year mortgage rates with very little prepayment response. Across the entire coupon spectrum, speeds today are lower than they were in June 2004, while mortgage rates are at least 20 bps lower than for the June reporting period." Bear Stearns can be found online at http://www.bearstearns.com.

Twelve classes from five BankAmerica Manufactured Housing Contract Trusts have been downgraded by Moody's Investors Service.The downgrades were as follows: Trust I, series 1996-1, class B-1, from B2 to Ca, and class B-2, from Ca to C; Trust II, series 1997-1, class B-1, from B2 to Ca, and class b-2, from Caa2 to C; Trust III, series 1997-2, class B-1, from Caa2 to C, and class B-2, from Ca to C; Trust IV, series 1998-1, class M, from Aa3 to Baa1, class B-1, from Baa2 to Caa2, and class B-2, from Ba2 to C; and Trust V, series 1998-2, class M, from Aa3 to Baa2, class B-1, from Baa2 to Ca, and class B-2, from Ba2 to C. Moody's also confirmed the ratings on eight classes. Moody's said the review was prompted by the continued deterioration in the performance of BankAmerica's manufactured housing pools, in which repossessions have remained high, leading to high cumulative losses.

Freddie Mac has announced the addition of a Tier One Gold designation to its Tier One Premium Awards to recognize high-performing small and midsize servicers with small default portfolios.Noting that nearly 40% of Freddie's servicers are small to medium-sized institutions, Janet Eakes, Freddie Mac's vice president of sourcing operations, said the new program "means that these servicers, like larger institutions, can now achieve best-in-class recognition for servicing excellence and top scores in investor reporting and default management on our Servicer Performance Profiles." Freddie Mac also announced that its existing Tier One Performance awards for larger servicers are being renamed Tier One Platinum awards. Freddie Mac can be found online at http://www.freddiemac.com.

As regulatory scrutiny has intensified, servicers of U.S. residential mortgage-backed securities have implemented mostly positive operational changes, according to a recent survey by Fitch Ratings.The predominant changes took place in customer service, borrower communications, dispute resolution, fees charged, payoff practices, collections, and default management, the rating agency reported. "Developments such as online call scripting, enhanced monthly billing statements and payoff quotes, and the advent of the one-call resolution indicate that while servicers have different approaches to customer service, all of them take the quality of borrower interaction very seriously," said Thomas Crowe, a Fitch director. Most of the changes are positive, but the use of extended or multiple repayment plans and modifications, and incentives to collectors to keep loans out of foreclosure, may lead to higher losses on some mortgage pools in the long run, the rating agency said.

Temple Inland Corp., Austin, Texas, will take a $13 million after-tax hit on its mortgage business in the third quarter as it prepares reserves related to key asset sales and layoffs.Temple, the parent of Guaranty Residential Lending, is in the process of selling its 100-branch nonbank mortgage network, as well as $8 billion in servicing rights. Temple, a paper products company, said some 1,500 employees will be "affected" by the sale of the branches and the servicing. However, it would not comment on any layoffs. A Temple spokesman said the company hopes employees working in the branches being sold will have an opportunity to retain their jobs. The company expects to complete the servicing and branch sale by the end of the fourth quarter. As recently reported by National Mortgage News, at least 30 firms have expressed interest in the network or regional pieces of it. First Horizon Home Loans, Irving, Texas, is believed to be the winning bidder on the West Coast operation. Aegis Mortgage of Houston has expressed interest in the network.

Select Portfolio Servicing Inc. (formerly Fairbanks Capital Corp.) has renewed several credit facilities to fund its subprime servicing activities, according to the Salt Lake City company.JPMorgan Chase led a $250 million syndicated facility that finances servicing advances, mortgage servicing rights, and working capital. Credit Suisse First Boston extended a $200 million credit facility for servicing advances and purchases of MSRs. RBS Greenwich Capital executed a $120 million structured financing for servicing advances on loans originated by ContiFinancial, a defunct subprime lender. "These credit facilities solidity the company's financial position, and allow us to pursue our business plan of acquiring new servicing rights and growing the portfolio," said SPS chief executive Matt Hollingsworth.

Freddie Mac has restructured certain mortgage securities operations, chiefly by ending the market-making activities of its Securities Sales & Trading Group unit and transferring the unit's mortgage sourcing and investment operations to other business units, according to the government-sponsored enterprise.Freddie said the restructuring, aimed at focusing on its core mission, also includes the discontinuation of its Money Manager program, through which it designated eight investment advisers to manage part of its capital under prescribed guidelines. The GSE said it will continue "active support" for the liquidity of its mortgage securities through its securitization and investment business activities. A Freddie Mac spokesman said he couldn't comment on whether the 100 people employed by the unit might be redeployed or laid off. Redeployment of the unit's functions appears to be both viable and a smart move in the context of Freddie's mission and its business strategies, according to Linda Lowell, a mortgage-backed securities researcher who is familiar with the unit's role in the market. Freddie Mac can be found online at http://www.freddiemac.com.