Servicing

The Bond Market Association has begun providing a report on mortgage-backed security dealers' consensus prepayment expectations.The association plans to release the free report on the business day closest to the first and the 15th of every month. The association can be found online at http://www.bondmarkets.com.

HomeBanc Corp., Atlanta, has announced the completion of a nearly $1 billion securitization of adjustable-rate mortgage loans, its first securitization since going public as a real estate investment trust on July 19.The approximately $989.2 million of notes were issued by HomeBanc Mortgage Trust, series 2004-1. The notes sold to the public included approximately $880.8 million of class A notes in two classes and $84.3 million of class M notes in four classes. HMB Acceptance Corp., a HomeBanc subsidiary, purchased $24.1 million of class B notes in two classes, together with the certificates representing the equity interest in the trust, HomeBanc said. The trust includes $992.7 million of ARMs originated by HomeBanc's subsidiary HomeBanc Mortgage Corp. The initial floating interest rates on the various classes of notes are based on the one-month London interbank offered rate. HomeBanc can be found online at http://www.homebanc.com.

IndyMac Bancorp Inc., Pasadena, Calif., has reported record pro forma net earnings of $54.6 million ($0.90 per share) for the second quarter, but the numbers exclude a one-time deferral of $31.6 million of net income in connection with a change in accounting for rate locks.The pro forma net earnings were up 34% from those of a year earlier. The accounting change was made in compliance with a Securities and Exchange Commission staff accounting bulletin that took effect April 1, IndyMac said. The company said there is "no economic or business impact" from the accounting change, which affects only the timing of revenue recognition. IndyMac's mortgage loan production totaled a record $9.4 billion of loans in the second quarter, up 18% from that of a year earlier, the company said. "Our mortgage market share was up 66% over the second quarter of 2003 in a period where many of our peers declined both in volumes and market share this quarter over the same quarter last year," said Michael W. Perry, IndyMac's chairman and chief executive officer. Mr. Perry said the company has revised its earnings forecast for the year from $3.10-3.30 per share to $3.35-3.55 per share. IndyMac, the holding company for IndyMac Bank, can be found online at http://www.indymacbank.com.

MortgageIT Holdings Inc., a New York-based real estate investment trust, has priced an initial public offering of 14.6 million shares of common stock at $12 per share.The company said the proceeds of the IPO (gross proceeds totaled $175.2 million) will be used to fund and retain in portfolio high-quality single-family and hybrid adjustable-rate mortgage loans, as well as for general corporate purposes. The offering was led by UBS Investment Bank and Merrill Lynch & Co., and the underwriters were granted an option to buy up to 2.19 million additional shares to cover any overallotments. The shares will trade on the New York Stock Exchange under the symbol MHL.

Ginnie Mae has introduced the first government-guaranteed stripped mortgage-backed securities with a $2.2 billion deal underwritten by a syndicate of 14 Wall Street securities dealers led by Goldman Sachs Group Inc.Stripped MBS are pass-through securities created by separating (stripping apart) the principal and interest payments from mortgages that back standard MBS and other mortgage-related assets, creating principal-only and interest-only classes (or combinations of the two), Ginnie Mae noted. Platinum securities, Ginnie Mae's MBS aggregation product, are the only type of asset currently allowed to be used as collateral for the new Strip transactions, the agency said. The new program "provides us greater access to the important institutional investor segment," said Ginnie Mae President Ronald A. Rosenfeld. "These new securities help satisfy investor demand for additional risk management and yield enhancement securities, and should increase the demand for Ginnie Mae mortgage-backed securities. This should ultimately lead to lower borrowing rates for FHA and VA homebuyers." Ginnie Mae can be found online at http://www.ginniemae.gov.

Fannie Mae has announced that it will begin disclosing additional information in August about its pools of mortgage-backed securities.The company said it will now disclose data for Mega pools and for MBS pools with initial interest-only periods. (The data will be available on Pool Data Direct and on PoolTalk.) Mega pools are single-class MBS consisting of pass-through certificates backed by previously pooled Fannie Mae MBS with similar characteristics, or by other pooled Megas with similar characteristics. For Mega pools issued on or after May 1, 1996, Fannie Mae said it will begin disclosing (in quartiles) the loan-to-value ratios and credit scores. Tabular information will be provided for loan purpose, occupancy type, and property type, and servicer names will be disclosed. For pools with initial IO periods, Fannie Mae said it will provide the weighted average months to scheduled principal amortization, the distribution of loans, and the percentage of pool unpaid principal balance. Fannie Mae can be found online at http://www.fanniemae.com.

Four classes of securities issued by Independence II CDO Ltd., a collateralized debt obligation, have been downgraded by Fitch Ratings.The downgrades were as follows: class A notes, from AAA to AA-plus; class B notes, from AA-minus to BBB-plus; class C notes, from BBB to BB; and $16.7 million of preference shares, from BB-minus to CCC. The class A notes were removed from Rating Watch Negative, while classes B and C remain there. Independence II is composed of approximately 48.4% residential mortgage-backed securities, 14.3% asset-backed securities, 32.1% commercial MBS, 0.4% real estate investment trusts, and 4.8% CDOs. Fitch attributed the downgrades to a deterioration of collateral quality. "Collateral in the manufactured housing sector that has been downgraded to or below CCC-plus since August 2003 equals $26.3 million (6.6%)," the rating agency said. "Assets rated BB-plus or lower represented approximately 17.72% as of June 30, 2003, and increased to 30.26% as of June 30, 2004."

Fives classes of Residential Accredit Loan Inc. mortgage asset-backed pass-through certificates from four RALI deals have been downgraded by Fitch Ratings.The downgrades were as follows: series 1997-QS5, class B-2, from CCC to C; series 1997-QS7, class B-2, from B to C and removed from Rating Watch Negative; series 1999-QS5, class B-1, from BB to BB-minus, and class B-2, from B-minus to CC; and series 1999-QS10, class B-1, from BB to B. In addition, Fitch upgraded eight classes and affirmed the ratings on 84 classes in 13 RALI securitizations. The rating agency attributed the downgrades to poor performance by the underlying collateral. Fitch can be found online at http://www.fitchratings.com.

The fire is about to go out in overheated housing markets on both coasts, according to a woman who helps investors locate property owners that can no longer afford their homes.Alexis McGee of Foreclosure.com, Sacramento, Calif., said borrowers who have dipped too deeply into their home equity or are unable to afford higher payments on adjustable-rate mortgages will have trouble keeping their properties if values falter. Speaking at the annual Real Estate Connect technology conference in San Francisco, Ms. McGee said foreclosure activity is already on the upswing. It "will increase further" as rates move upward and prices level out or decline, with the possible exception of the Chicago area, she said. "Inland's okay," Ms. McGee told MortgageWire. "It's the coasts that we're concerned about." Foreclosure.com has been keeping tabs on lender take-backs for a dozen years and publishes proprietary foreclosure lists for 18 California counties, the entire state of New Jersey, and the Phoenix, Las Vegas, Chicago, and New York metropolitan areas. Whether prices will drift to a soft landing or fall off the cliff remains to be seen, Ms. McGee said.

A severe shock to one of the housing government-sponsored enterprises could bring the mortgage market to a standstill, according to economists at the St. Louis Federal Reserve Bank.Risk-taking by Fannie Mae, Freddie Mac, and the Federal Home Loan Bank could "undermine the financial system because so many banks depend on them for liquidity," according to an article in the FRB's monthly publication, The Regional Economist. Commercial banks have one-half of their securities portfolios invested in GSE mortgage-backed securities and debt, the authors point out. And commercial banks are comfortable holding real estate loans because they can serve as collateral for FHLBank advances or be sold to Fannie or Freddie. "A severe shock to one or more of the housing GSEs could lead to a market lockup, in which investors become reluctant to hold GSEs' direct or indirect obligations," the article says. "This could, in turn, lead to a temporary suspension of mortgage purchasing, mortgage securitizing or mortgage 'advancing,' thereby forcing the Federal Reserve to intervene to re-liquefy the mortgage markets." The article, "The Housing Giants in Plain View," discusses ways to increase GSE competition and limit their borrowing and growth. The authors also warn that privatization would not eliminate the systemic risk posed by the GSEs. "That is, a fully privatized Fannie Mae still might be considered too big to fail by the Federal Reserve and by the Treasury," the authors say.