Servicing

Prepayment rates for Fannie Mae and Freddie Mac mortgage-backed securities slowed significantly among 5.5%-6.5% coupons during the June reporting period, while Ginnie Mae MBS speeds held steady or slowed only "modestly," according to the Bear Stearns Prepayment Commentary."In contrast to conventional speeds that were down 20%-25% in the largest issues, [Ginnie Mae] prepayments for the June reporting period were flat to very modestly slower across the entire coupon stack -- well above most expectations," Bear Stearns analysts Dale Westhoff and Bruce Kramer reported. They attributed the disparities between Fannie/Freddie speeds and Ginnie speeds -- which "have almost become the norm in recent years," the analysts said -- to several factors. The factors include the ability of many Ginnie borrowers to qualify for conventional financing, "more aggressive pricing and competition" for subprime loans, expansion by the government-sponsored enterprises into the alternative-A sector, and servicer buyouts, Mr. Westhoff and Mr. Kramer said. Bear Stearns can be found online at http://www.bearstearns.com.

Cendant Corp., New York, has announced that it will consider strategic options that include the sale of its mortgage origination platform and its mortgage servicing business.However, the company said any transaction would be aimed at preserving "the cross-selling benefits of a 'value circle' that exists between the mortgage business and the company's residential real estate brands and relocation and resettlement services businesses." Henry R. Silverman, chairman, chief executive officer, and president of Cendant, said the company's mortgage business, which is expected to represent "only a fraction" of the company's income this year, "continues to perform in line with our expectations. However, our mortgage banking activities can produce volatility in Cendant's earnings inconsistent with our business model and the remainder of our portfolio." Cendant also announced that it now expects to exceed the high end of its recently announced earnings projection of $0.42-$0.44 per share from continuing operations by $0.02 to $0.03. Cendant can be found online at http://www.cendant.com.

Standard & Poor's Ratings Services has announced that it is eliminating its previously published criteria for New Jersey "covered home loans" for loans originated on or after July 6.The criteria applied to home loans defined by New Jersey state law as covered home loans and that were included in S&P-rated securitizations. S&P said the reason for the move is a recently enacted amendment to the New Jersey Home Ownership Security Act of 2002 that eliminates the category of covered home loans. Because the amended act is not retroactive, the rating agency said it will continue to apply the previously published criteria for covered home loans originated on or after Nov. 27, 2003, and before July 6, 2004. The rating agency can be found online at http://www.standardandpoors.com.

The inventory of foreclosed residential properties declined in June for the first time this year, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.There were 22,132 new foreclosed residential properties listed in the United States in June, and such properties totaled 72,962 overall, the company reported. In May, the overall figure stood at 82,991, according to Foreclosure.com. "A number of factors contribute to the short-term drop in foreclosure activity," said Greg Sullivan, vice president and co-founder of Foreclosure.com. "Pricing remains stable due to a vibrant market, low interest rates, and limited housing inventory, and the economy has now begun to recover rapidly. This means that sellers in financial difficulty are able to 'sell out' of their ownership position and avoid foreclosure." Mr. Sullivan added, however, that rising rates will eventually affect demand and borrowers with adjustable-rate mortgages will be unable to liquidate, causing a rise in foreclosures nationwide. The company can be found online at http://www.foreclosure.com.

Sunset Financial Resources Inc., a real estate investment trust based in Jacksonville, Fla., has reported the securitization of $219.4 million of residential mortgage loans.Sunset contributed the loans to J.P. Morgan Trust 2004-A3 and received a like amount of investment securities. "This securitization represents a significant milestone in the execution of our business plan," said Byron Boston, Sunset's chief investment officer. "To successfully convert our whole-loan purchases to mortgage-backed securities in the first full quarter of our operating history is a solid accomplishment." Sunset also reported the execution of an amendment to its $250 million senior secured credit agreement with J.P. Morgan that creates an $18.75 million sub-limit relating to commercial mortgage bridge loans that meet certain criteria. The REIT can be found on the Web at http://www.sunsetfinancial.net.

Thornburg Mortgage Inc., Santa Fe, N.M., has reported the establishment of a new, $5 billion asset-backed commercial paper facility.The company said the facility provides it with another way to finance its adjustable-rate mortgage securities portfolio. Thornburg Mortgage Capital Resources LLC, a special-purpose bankruptcy-remote entity created especially for the transaction, will act as the financing vehicle by issuing commercial paper in the form of secured liquidity notes, Thornburg said. Lehman Brothers Inc. is the structuring agent and lead dealer for the transaction. Thornburg can be found online at http://www.thornburg.com.

Fidelity National Financial Inc., Jacksonville, Fla., has acquired Geotrac Inc., a provider of flood determination and life-of-loan monitoring services, for an undisclosed price."Geotrac provides additional critical mass and improved scale to our flood information business, and its strength in the Midwest provides additional geographic coverage that augments our current market penetration," said William P. Foley II, FNF's chairman and chief executive officer. Mr. Foley said the addition of Geotrac's digitized flood plain maps will enable FNF to increase the percentage of automatic determinations and reduce manual exception processing. FNF can be found online at http://www.fnf.com.

Class B of Residential Asset Mortgage Products Inc. series 2001-RZ2, a deal secured by mortgage loans with high loan-to-value ratios, has been placed under review for possible downgrade by Moody's Investors Service.The rating agency also upgraded 12 certificates from four high-LTV RAMP deals issued in 2001. The series 2001-RZ2 transaction is backed by first-lien fixed-rate loans originated under the company's Home Solution Program, Moody's said. The class B certificate was placed on review for possible downgrade because credit enhancement levels "may be low given the current projected losses on the underlying pools," Moody's said. "The transaction has taken significant losses, and the B tranche has begun taking writedowns." Moody's can be found online at http://www.moodys.com.

Class B of a static-cash-flow collateralized debt obligation issued by REAB II Ltd. has been downgraded from AA-minus to A-minus and removed from Rating Watch Negative by Fitch Ratings, which cited the CDO's exposure to manufactured housing contracts issued by Conseco Finance Securitization Corp.The class was placed on Rating Watch Negative June 4 after an obligation in its portfolio, class A-4 of Conseco's manufactured housing contract senior/subordinate pass-through certificates, series 2000-6, was downgraded to A-minus, the rating agency said. Fitch said the Conseco MH has a short expected life and, "to the extent it matures," the rating on the class B notes will be "positively" affected.

The nation's fifth-largest servicer of subprime home loans, Fairbanks Capital Corp., Salt Lake City, has changed its name to Select Portfolio Servicing.Over the past 12 months, the company has overhauled its operations to implement industry-leading practices that set a new standard for customer responsiveness and managing risk, the company said in a statement about the new name. At the end of the first quarter, Fairbanks managed a $40.9 billion portfolio of home loans, according to the Quarterly Data Report, a MortgageWire affiliate. The company said it currently services approximately 350,000 nonprime residential mortgage loans.