Servicing

Several hot California housing markets are finally cooling down as price appreciation slows and defaults rise, according to an online seller of foreclosed property.Foreclosures.com says Sacramento, which led the nation in home price appreciation early in the year, recorded price appreciation of only 1.4% in May, while prices fell 3.2% in San Francisco. "We're coming to the end of the seller's market cycle in the housing markets," said Alexis McGee, president of Foreclosures.com. "The price peak in this cycle was pushed up by record low interest rates, and I believe we're seeing the end of that cycle as well." New notices of default and trustee sales in Sacramento edged up to 21.3 per day in May and June, she said. The Fair Oaks, Calif.-based company also said New York City is "an isolated pocket of recession," noting its 8.1% unemployment rate vis-a-vis the national average of 6.4% and the average rate of less than 4% in contiguous counties. The company can be found online at http://www.foreclosures.com.

Class B-2 of Nomura Asset Securities Corp.'s commercial mortgage pass-through certificates, series 1994-MD1, has been downgraded from C to D by Fitch Ratings.The ratings on two other classes in the deal, A-3 and A-3X (interest-only), have been affirmed and removed from Rating Watch Negative. Fitch said the downgrade was due to realized losses that had been passed through to class B-2. The rating agency said two loans remain in the pool, one of which -- Canton Centre, a $17.7 million loan secured by a regional mall in Canton, Ohio -- is real estate owned, on which a loss is expected. Fitch can be found online at http://www.fitchratings.com.

Twenty-four senior and subordinate certificates from seven manufactured housing securitizations of United Companies Financial Corp. are being reviewed for possible downgrade by Moody's Investors Service.The affected classes of UCFC Funding Corp. manufactured housing contract pass-through certificates are as follows: series 1996-1, classes M and B-1; series 1997-1, classes M and B-1; series 1997-2, classes M and B-1; series 1997-3, classes A-3, A-4, M, and B-1; series 1997-4, classes A-3, A-4, M, and B-1; series 1998-1, classes A-2, A-3, M, and B-1; and series 1998-2, classes A-2 , A-3, A-4 , M-1, M-2, and B-1. Moody's said the review is prompted by continued deterioration in the performance of the pools, which have experienced rising delinquencies and repossessions and declining recovery rates. UCFC Funding was a wholly owned subsidiary of UCFC and was primarily responsible for originating and servicing UCFC's manufactured housing loans, the rating agency noted. UCFC filed for Chapter 11 bankruptcy protection in 1999, and the servicing of the loans was transferred to EMC in December 2000. Moody's can be found online at http://www.moodys.com.

Morgan Stanley has hired Frank Pallotta to run its institutional mortgage-banking desk.Mr. Pallotta previously was a managing director at Credit Suisse First Boston. In his new position, Mr. Pallotta will also co-head the Wall Street firm's loan conduit origination business.

ICT Group Inc., Newtown, Pa., has announced the signing of a three-year contract to provide customer care services to GMAC Mortgage, Horsham, Pa.Customers who call will receive assistance from a trained ICT professional on questions involving monthly mortgage statements, payment by phone, and taxes and insurance, ICT said. The company can be found on the Web at http://www.ictgroup.com.

Washington Mutual Inc., Seattle, has reported record earnings of $1.02 billion ($1.10 per share) for the second quarter, up from $990 million ($1.01 per share) a year earlier.Originations of single-family residential loans totaled $108.16 billion for the quarter, up from $50.17 billion a year earlier. The volume of home equity loans, home equity lines of credit, and multifamily loans totaled $9.46 billion, up 80% from $5.27 billion a year earlier, WaMu said. The company said it is on schedule to open approximately 250 retail banking stores and 70 home loan stores this year. WaMu also reported that its board of directors has declared a dividend of $0.40 per share of common stock, up 33% from $0.30 per share in the previous quarter. WaMu can be found online at http://www.wamu.com.

Twenty-five classes from six Bombardier Capital Manufactured Housing Contracts deals have been downgraded by Fitch Ratings.The affected deals are series 1998-A, series 1998-B, series 1998-C, series 1999-B, series 2000-A, and series 2001-A. Fitch also affirmed the ratings on 11 classes. The rating agency noted that Bombardier exited the manufactured housing lending business in September 2001 but continues to service its MH loan portfolio. "The departure from the lending business has had an adverse impact on already deteriorating performance," Fitch said. "As a result of exiting the MH lending business, Bombardier is now heavily reliant upon wholesale liquidations of repossessed homes. Recovery rates on wholesale liquidations are generally substantially lower than retail liquidation recoveries."

More than 100 classes in 57 securitizations of manufactured housing contracts by Conseco Finance Corp. and its predecessor, Green Tree Financial Corp., have been downgraded by Fitch Ratings.In addition, the ratings on over 100 classes in the 57 MH deals were affirmed. The downgrades reflect the "continued high level" of delinquencies and losses, Fitch said. CFC filed for Chapter 11 bankruptcy protection in December and announced that it would no longer originate MH loans. "Since the liquidation of repossessed units through the retail channel relies on providing financing for the new purchaser, CFC has relied exclusively on the wholesale channel to liquidate repossessions since the bankruptcy," Fitch said. "This has caused an increase in loss severities due to the lower recoveries available through the wholesale channel." Fitch said the recent finalization of CFC's sale of its MH platform to CFN Investment Holdings LLC is "a positive development that will provide continuity in the servicing of the loans," but added that there is still uncertainty regarding the servicing platform. The rating agency can be found online at http://www.fitchratings.com.

The issuance of U.S. private-label residential mortgage-backed securities will likely set a record this year despite the fact that the origination market that fuels it shows signs of slowing, according to Standard & Poor's.S&P projects that RMBS issuance will surge to $500 billion in 2003, up from $373 billion in 2002. S&P can be found online at http://www.standardandpoors.com.

Loan production under the Mortgage Partnership Finance program jumped nearly 36% in the second quarter, and the Chicago Federal Home Loan Bank purchased its second MPF "Shared Funding" transaction.The Chicago FHLBank reported that single-family MPF loan originations climbed from $16.2 billion in the first quarter to $22.1 billion in the second quarter. (MPF originations in the second quarter of 2002 totaled $4.5 billion.) Over 40 new FHLBank members signed up to participate in the MPF in the second quarter, bringing the total of MPF customers to 530, the Chicago FHLBank said. Nearly 80% are community banks. To appeal to its largest MPF members, the Chicago FHLBank created the Shared Funding program where it purchases highly rate mortgage securities from member institutions. In June, the Chicago bank purchased the senior tranches of a $524 million collateralized mortgage obligation -- backed by MPF loans originated by National City Mortgage and Wells Fargo. The first Shared Funding transaction also involved MPF loans originated by National City and Wells Fargo Home Mortgage. The MPF program can be found online at http://www.fhlbmpf.com.