Servicing

Loan purchases by Freddie Mac hit a 17-month low in December, reflecting the slowdown in originations in the primary market.However, the news isn't all bad. Purchase commitments rose for the second month in a row. Moreover, Freddie bought a record $826 billion in mortgages for the year, a 29% increase from the purchase level in 2002. In December the mortgage giant bought $44.2 billion in loans, compared with $44.5 billion the month before. In December 2002 it purchased $91.2 billion. At year end, its retained portfolio totaled $644 billion. In December its portfolio decreased at an annualized rate of 4.1%, but for the full year the growth rate was 13.6%. Over the past few weeks, Freddie Mac's stock price has risen steadily and is now close to its 52-week high. The government-sponsored enterprise can be found online at http://www.freddiemac.com.

First Republic Bank and its Trainer Wortham & Co. subsidiary have completed a $275 million collateralized bond obligation, the net proceeds of which have been used to purchase a securities portfolio that consists primarily of mortgage-related debt.The portfolio purchased consists mostly of residential and commercial mortgage-backed securities that have received investment grade ratings, First Republic reported. First Republic can be found on the Web at http://www.firstrepublic.com.

Three classes of Structured Asset Securities Corp. mortgage pass-through securities have been placed on Rating Watch Negative by Fitch Ratings.The affected classes are as follows: SASCO series 2002-10H, class B5; SASCO series 2002-22H, group 1, class B5-I; and SASCO series 2002-22H, group 2, class B5-II. Fitch also affirmed the ratings on 22 other classes in those series and two others. The Rating Watch placements were attributed to loss expectations and high delinquencies relative to the applicable credit support.

The rating on the B-2 class of Bombardier Capital Mortgage Securitization Corp.'s pass-through certificates series has been lowered from CCC-minus to D (default) by Standard & Poor's Ratings Services.The downgrade "reflects the nonpayment of full and timely interest, as well as the increased likelihood that investors in the class B-2 notes will not receive ultimate repayment of their original principal investments," the rating agency said. Liquidation-loss interest shortfalls were reported for the B-2 class on the October 2003 payment date. S&P said it expects interest shortfalls for the transaction to continue "given the adverse performance trends displayed by the underlying pool of manufactured housing installment sales contracts and mortgage loans...and the location of the B-2 writedown interest at the bottom of the transaction payment priorities (after distributions of senior principal)." S&P can be found online at http://www.standardandpoors.com.

First Horizon Home Loan Corp., a subsidiary of the nationally chartered bank, First Tennessee National Corp., has offered to absorb loan payments and reimburse a Rensselaer County homeowner who alleges the bank illegally threatened to foreclose on his home.The move comes after Attorney General Eliot Spitzer filed a lawsuit earlier this week on behalf of the consumer, Richard Hall, of Greenbush, N.Y. The bank admits a discrepancy in amortization resulted in the customer continuing to make payments via automated debit after the 25-year loan should have been retired. The consumer overpaid by $9,461. "It's great, but I think it's unfortunate that it had to get to this point," said Donna Heinrichs, the consumer's attorney. "In my opinion, the bank was using foreclosure as a way to attain more money than was rightfully owed," she said. The lawsuit is a direct challenge by the attorney general to the Office of the Comptroller of the Currency, which maintains that it has the sole right to regulate nationally chartered banks. As of MortgageWire's deadline, the case was still pending with the attorney general's office and no settlement had been reached between the two parties.

The mortgage insurance and other insurance-related businesses that General Electric hopes to spin off this year saw their net earnings decline by 24% during the first nine months of last year, according to new documents filed with the Securities and Exchange Commission. The mortgage insurance division of GE saw its net income decline by 20% during the period even though its revenues rose by 2%. The 'S1' statement that GE filed on the unit shows that GE Mortgage Insurance of Raleigh is the second best performer among the five insurance businesses that comprise the unit, which is called Genworth Financial. During the first nine months of 2003 Genworth, which boasts assets of $103 billion, earned $749 million. Even though the MI division saw its earnings decline it had a record year in 2002. The S1 notes that if Fannie Mae and Freddie Mac adopt policies to only do business with AAA-rated insurers, "our competitive position may suffer." GEMI, which is the nation's fourth largest MI out of seven firms, is rated AA.

When Regions Financial, Birmingham, merges with Union Planters Corp., Memphis, it will create a Southeast-based regional mortgage giant that will rank 20th among all residential servicers nationwide. According to figures compiled by National Mortgage News and its affiliate, the Quarterly Data Report, the new bank will have at least $45 billion in residential servicing rights on its books and the capacity to fund $25 billion a year in home mortgages. (Both figures are based on third quarter numbers.) The merger is valued at $5.9 billion. The combined bank will be called Regions Financial Corp., and will have $80.5 billion of assets, and almost 1,400 offices in 15 states stretching from Florida to Iowa.

Ed Fuchs has been named executive vice president of finance and secondary marketing at Central Pacific Mortgage, a mortgage banking firm and net branch provider based in Folsom, Calif.Mr. Fuchs previously held the position of senior vice president of finance and secondary marketing. He has been employed by Central Pacific Mortgage since 1992.

Class M-2 of Soundview Home Equity Loan Trust series 2001-1 has been downgraded from A to BBB-minus by Fitch Ratings.Fitch also affirmed the ratings on three other classes in the transaction. The downgrade was attributed to loss levels and high delinquencies relative to applicable credit support.

Eight classes of certificates issued by four IMC Home Equity Loan Trusts have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are the M-2 and B classes of the following series: 1997-3, 1997-5, 1998-1, and 1998-5. Moody's said the securities are backed primarily by fixed-rate, first-lien subprime mortgage loans originated by the Industry Mortgage Co. All four transactions have taken significant losses, and the securities were placed under review because their credit enhancement levels may not be consistent with their current ratings, given the weak performance of the collateral, the rating agency said. "Specifically, the most subordinate class B certificates in the 1997-3 and 1997-5 series have already experienced substantial writedowns," Moody's said. Fairbanks Capital Corp is the primary servicer of the loans in all four transactions. Moody's can be found online at http://www.moodys.com.