Servicing

The M-2 classes from OMI Trust 2000-A and OMI Trust 2000-C, two securitizations of manufactured housing contracts, have been lowered by Standard & Poor's Ratings Services.Class M-2 of OMI Trust 2000-A was downgraded from CCC-minus to CC, and class M-2 of OMI Trust 2000-C was downgraded from CC to D. The downgrades "reflect the unlikelihood that investors will receive timely interest and the ultimate repayment of their original principal investments," S&P said. The rating agency said it believes that interest shortfalls for the deals will continue, "given the adverse performance trends displayed by the underlying pools of manufactured housing retail installment contracts originated by Oakwood Homes Corp., and the location of M-2 writedown interest at the bottom of the transactions' payment priorities." Losses have reduced the overcollateralization ratios for both transactions to zero, resulting in the complete principal writedown of the B-2 and B-1 classes, and the partial principal writedown of the M-2 classes, S&P said. The rating agency can be found online at http://www.standardandpoors.com,

DebtX, a Boston-based loan sale adviser, has announced that former Freddie Mac chief executive officer Greg Parseghian has joined the company's advisory board.DebtX helps commercial banks, insurance companies, pension funds, investment banks, credit card companies, and consumer finance firms analyze, price, and market single loans or pools of loans -- including residential mortgages -- to more than 2,800 accredited buyers in the United States and abroad, according to the company. Mr. Parseghian said the company is bringing "much-needed liquidity to a broad range of loan portfolios across the entire financial services industry." Mr. Parseghian joined Freddie Mac in 1996 as senior vice president and chief investment officer, rose to CEO and president, and was forced to resign by regulators in the wake of the government-sponsored enterprise's accounting scandal. DebtX can be found online at http://www.debtx.com.

The chairman of the Western States Loan Servicing Conference says mortgage lenders and servicers expect to see growth in the market for reverse mortgage loans.In an interview with MortgageWire, Scott Lehrer, chairman of the California Mortgage Bankers Association servicing conference in Las Vegas, said senior citizens with untapped equity in their homes represent a significant growth opportunity. The mortgage industry's understanding of how to underwrite and administer the loans is increasing as well, said Mr. Lehrer, who is senior vice president at First Mortgage Corp., Diamond Bar, Calif. "I think reverse mortgages are going to become easier and easier to service," he said.

Radian Guaranty Inc., Philadelphia, has announced the completion of a structured transaction that it describes as "an innovative, new reinsurance solution" to manage its subprime mortgage risk.The transaction was completed on an $882 million portfolio of first-lien, subprime residential mortgage loans insured by Radian. "The company will reduce its exposure on this portfolio by transferring a significant portion of the risk to a Bermuda reinsurance company, Smart Home Reinsurance 2204-1 Ltd.," Radian said. Smart Home, which was formed solely to enter into the reinsurance arrangement, was funded in the global capital markets through the sale of credit-linked notes. The company said the transaction will help it boost capacity and take advantage of revenue growth opportunities. Radian can be found online at http://www.radianmi.com.

Prepayment rates for Fannie Mae and Freddie Mac mortgage-backed securities slowed across the board in the July reporting period, while Ginnie Mae MBS speeds also slowed but remained "significantly faster than comparable conventionals," according to Bear Stearns analyst Dale Westhoff.Among Fannie Maes, the 2003 vintage 30-year 5.0% and 5.5% coupons slowed by constant prepayment rates of 1.3 CPR and 3 CPR, respectively, while the 6.0% through 7.0% coupons slowed by 7-10 CPR, Mr. Westhoff said. "We expect minimal market reaction to these numbers given that they are generally in line with market consensus," he said. "Nevertheless, there may be a sigh of relief from higher-coupon pass-through and [interest-only] investors as a substantial slowdown finally takes hold in all of these issues." Among Ginnie Maes, Mr. Westhoff said Bear Stearns believes that "the erosion in the credit performance of FHA/VA loans is adding up to 4 CPR" to baseline Ginnie Mae prepayments, pushing them "well above" comparable Fannie Maes in most issues. "Contrary to many expectations, today's report has widened the prepayment differential" between Fannies and Ginnies, he said. Bear Stearns can be found online at http:///www.bearstearns.com.

Mortgage lenders added 3,000 full-time employees to their payrolls in June, according to the July employment report released Aug. 6 by the U.S. Bureau of Labor Statistics.The BLS report shows that jobs in the mortgage banking/broker sector rose from 454,300 in May to 457,300 in June. (There is a one-month lag in BLS reporting of mortgage sector employment data.) But after five consecutive months of employment gains, BLS economists estimate that the mortgage sector lost jobs in July. The credit intermediation industry shed 16,000 jobs in July, and mortgage banking makes up a large piece of that interest-rate-sensitive industry, according to BLS economist Michael Stropel. Although the actual mortgage banking numbers for July will not be released until next month, Mr. Stropel said the estimate is based on what "we have seen in the past versus what we are seeing right now," including a "stark" decline in refinancings. The BLS can be found online at http://stats.bls.gov.

The Washtenaw Group Inc., a holding company for Washtenaw Mortgage Co., Ann Arbor, Mich., that resulted from the wholesale mortgage company's spinoff from Pelican Financial Inc., has reported net income of approximately $117,000 ($0.03 per share) for the second quarter, down dramatically from $3.41 million ($0.76 per share) a year earlier.Mortgage origination volume totaled $384 million in the second quarter, down 70% from $1.3 billion in the second quarter of 2003. The company said the results for the quarter were aided by a valuation-adjustment charge of approximately $3.94 million to the mortgage servicing rights portfolio that was required under generally accepted accounting principles. Charles C. Huffman, chairman and chief executive officer of Washtenaw, said he was not happy with the results but that the company had performed well in view of the spinoff from Pelican and the industrywide downturn in residential mortgage activity. "We have quickly adapted to market conditions by downsizing, without compromising response time or service quality," he said. "We continue to increase our broker network, which exceeds 2,000 independent brokers across the U.S."

Accredited Home Lenders Holding Co., San Diego, has announced plans for a public offering of $50 million of preferred stock by an indirect subsidiary, Accredited Mortgage Loan REIT Trust.The real estate investment trust proposes to offer two million shares of series A perpetual cumulative preferred shares, bearing a liquidation preference of $25 per share. The managers of the offering are Bear, Stearns & Co. and Friedman, Billings, Ramsey & Co. Accredited can be found online at http://www.accredhome.com.

The Prestwick Group, Alexandria, Va., is brokering the sale of loan servicing rights on a $24 million portfolio of two commercial loans from a Federal Housing Administration private investor.Characteristics of the portfolio, which consists of two multifamily loans, include a weighted average note rate of 7.8% and weighted average seasoning of 67 months. Both loans are secured by property in Ohio. The seller of the servicing rights is an independent commercial mortgage company. The bid deadline is Aug. 17.

In the second quarter, 39% of the homeowners who refinanced their homes got a mortgage at least 5% larger than the original loan, down from a revised 42% in the previous quarter, according to Freddie Mac.However, the percentage was higher than the 33% level recorded a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "The very low interest rates that we saw in March, when 30-year fixed-rate mortgage rates averaged 5.4%, caused an increase in overall refinancing activity for the loans that closed in the second quarter," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "When we see regular rate-and-term refinancing increase, the share of cash-out refis drops. Most homeowners are happy to reduce their monthly payments and don't feel a need to withdraw equity; however, lower mortgage rates make home-equity conversion an affordable option for financing other investments such as home improvements or paying for college."