Servicing

Less than 3% of the 13,419 U.S. structured finance securities issued since 1993 have defaulted, according to a study by Moody's Investors Service.The structured finance default study included 167 asset-backed securitizations, 80 commercial mortgage-backed securitizations, and 143 residential mortgage-backed securitizations. While gross payment defaults are "the simplest measure of performance," according to Moody's analyst Jian Hu, defaults are often cured within a short time in the structured finance arena. Therefore, the rating agency also tracked securities that defaulted and were not subsequently cured, finding that only 94 of the 390 defaults during the study period were later cured. The study found that the average loss severity rate for the 84 securities that defaulted was approximately 42% of their original balances. In the CMBS arena, the study identifies interest shortfalls as the cause of all the defaults to date. Most recent defaults have been "precipitated by appraisal reductions and special servicing fees," Moody's said. Other causes of shortfalls include loan modifications, unanticipated terrorism insurance expenses, and legal expenses. However, losses on CMBS defaults so far have been "extremely low," the rating agency said. Moody's can be found online at http://www.moodys.com.

Thornburg Mortgage Inc., Santa Fe, N.M., has completed a $55 million add-on offering of 10-year senior notes.The original offering of $200 million of 8% senior notes was issued in May. The add-on notes have identical terms to those of the previously issued notes, but were sold at 104.5 to yield 7.33%, Thornburg said. Net proceeds from the transaction will be used mainly to fund mortgage loans originated by the company and to buy additional adjustable-rate mortgage securities, the company said. Thornburg can be found online at http://www.thornburg.com.

Senior managing director Eric Sieracki of Countrywide Financial Corp. told investors Dec. 2 that his company may consider buying loan servicing portfolios and loan production platforms as the refinancing boom slows down.Speaking at a Friedman Billings Ramsey conference, Mr. Sieracki said Countrywide -- which has long heralded "organic growth" while shunning mergers and acquisitions -- may now be ready to be a buyer in the M&A market. As refinancing activity slows next year, Mr. Sieracki said "there probably will be some disadvantaged servicers out there looking to unload servicing." As long as there is not a price war, Countrywide may be a player in that market, he said. In addition, he said Countrywide's growing sales force, currently consisting of some 6,800 commission-paid personnel, makes it feasible for Countrywide to consider buying loan production platforms as well. The company, based in Calabasas, Calif., can be found online at http://www.countrywide.com.

The Pacific Exchange has announced the initiation of trading in options on General Growth Properties Inc., a Chicago-based real estate investment trust.The options will trade on the January expiration cycle, with limits set at 22,500 contracts. The issue will be traded by lead market makers Steven D. Juno and Ethan Dorr of Cutler Group. The exchange can be found on the Web at http://www.pacificex.com.

Standard & Poor's Ratings Services has announced that it will rate structured finance transactions that include New Mexico loans governed by the state's predatory lending law (the Home Loan Protection Act), which takes effect Jan. 1.S&P said the law bars certain practices in connection with what it defines as Home Loans, High-Cost Home Loans, Home Improvement Loans, and Manufactured Housing Loans. "Violations of the act can result in monetary liability for the originator and for purchasers and assignees," S&P said. "Although the liability of purchasers and assignees for a loan that violates the act may exceed the unpaid principal balance of the loan, this liability is capped." For deals that include New Mexico loans, S&P will require the issuer to warrant that the loans comply with all applicable laws, and that its compliance procedures can effectively identify Home Loans, High-Cost Home Loans, Home Improvement Loans, and Manufactured Housing Loans and determine that they don't violate the aforementioned act. S&P can be found online at http://www.standardandpoors.com.

Citing clarifications by the state of New Jersey, Standard & Poor's Ratings Services has announced that it will permit the inclusion of additional New Jersey mortgage loans in structured finance deals rated by S&P.S&P said loans that may now be included in such deals are those defined as Home Loans, Covered Home Loans, Home Improvement Loans, and Manufactured Housing Loans under the New Jersey Home Ownership Security Act of 2002, which is to take effect Nov. 27. However, it will continue to exclude loans defined as High-Cost Home Loans because of "the potential for uncapped statutory and punitive damages," the rating agency said. S&P had announced previously that certain Covered Home Loans, Home Improvement Loans, and Manufactured Housing Loans would be excluded from S&P-rated deals. To qualify for an S&P rating, deals including such loans must carry a representation and warranty that the loans were originated in compliance with all applicable laws, and issuers will be required to show that their compliance procedures can effectively identify such loans and determine that they don't violate the aforementioned act. The rating agency can be found online at http://www.standardandpoors.com.

The Pacific Exchange has announced the initiation of trading in options on Accredited Home Lenders Holding Co., a San Diego-based subprime lender and servicer.The options will trade on the March expiration cycle, with limits set at 31,500 contracts. The exchange can be found on the Web at http://www.pacificex.com.

Countrywide Financial Corp., Calabasas, Calif., will hold a special meeting of stockholders on Jan. 9 to seek approval of a proposal to more than double the number of shares of common stock the company has the authority to issue.The company plans to increase the authorized number of shares from 240 million to 500 million. The company recently announced a 4-for-3 stock split, effected as a stock dividend, to be payable Dec. 17 to shareholders of record on Dec. 2. Countrywide's management said the proposed amendment is in the best interest of stockholders, primarily because it will allow for additional stock splits in the future, as well as facilitate the potential issuance of shares to support future company growth and maintain the company's stock-based employee compensation programs. Countrywide's stock closed down 1.50% (at $99.75) on Nov. 20, the day the share proposal was announced.

Fannie Mae has announced the promotion of six company officers, including five vice presidents.Emmanuel Bailey, previously director of human resources, has been named vice president for human resources. Joy Cianci, formerly a principal in Fannie Mae's electronic business division, has been named managing director for lender management and operations in e-business. Amy Edwards, previously a director in the controller's office, has been named vice president for e-business financial and business services. Ann Eiler, formerly a director of accounting and audit, has been named vice president for audit. Thomas King, previously regional counsel for the Chicago office, has been named vice president and deputy general counsel for strategic business initiatives. And Charles Rumfola, formerly director of marketing, has been named vice president for manufactured housing. Fannie Mae can be found online at http://www.fanniemae.com.

Carlton Advisory Services, a New York-based loan sale adviser, has been selected by an undisclosed institutional seller to market $141 million of performing residential mortgages.The loans are backed by properties in the United States and are primarily jumbo fixed-rate first mortgages. Preliminary bids are due Dec. 2 and final bids are due Dec. 18. Carlton can be found online at http://www.carltongroup.com.