Servicing

Freddie Mac acquired $64.3 billion worth of mortgages in April, its second-best purchase month of the year, but its retained portfolio continued to suffer from the refinancing boom.At the end of April, Freddie Mac held $568.98 billion in mortgages and others assets, compared with $569.52 billion at the end of March. Compared with the same period a year ago, the company's portfolio is up 9%. But over the past 13 months Freddie Mac has suffered from four sequential declines in its portfolio balance. In April its purchase commitments were a moderately strong $25.2 billion, but down from March's $32.2 billion. Its loan purchases grew 44% in April compared with those of a year earlier, but its chief competitor, Fannie Mae, saw its purchases grow by 140%. The company is in the midst of restating its earnings and will release results for the first and second quarters in July. At noon May 22, its shares were trading down $1.72 to $59.02.

Classes G and H of Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates series 1997-XL1 have been placed on Rating Watch Negative by Fitch Ratings.The ratings on nine other classes in the deal were affirmed. The rating agency attributed the Rating Watch placement to the transfer to special servicing of the Westgate Mall loan, secured by a regional mall in Fairview Park, Ohio, and the deterioration in performance of the Grand Kempinski loan, secured by a luxury hotel in Dallas.

Class A-6 of Asset Securitization Corp.'s commercial mortgage pass-through certificates series 1996-MDVI has been placed on CreditWatch with negative implications by Standard & Poor's.S&P also affirmed the ratings on six other classes from the same deal. The action "reflects the refinancing risk associated with the Prime Retail II portfolio loan, which has an outstanding principal balance of $337.1 million (42% of the mortgage pool balance)," S&P said. The loan is collateralized by 13 factory outlet centers in 10 states, the rating agency said.

Fitch Ratings has removed the senior unsecured debt ratings of Countrywide Financial Corp. and Countrywide Home Loans Inc. from Rating Watch Negative.However, the rating outlook is negative, Fitch said. The rating agency placed Countrywide's debt, rated A, on review in February, saying that falling interest rates can substantially reduce the value of assets such as mortgage servicing rights. Fitch attributed the affirmation of the ratings to "the company's additional capital support, strong origination and servicing platforms, declining capitalization of mortgage servicing rights in relation to capital, and continued strength in operating results." On the other hand, the negative outlook "reflects CFC's relatively more aggressive MSR valuations compared to industry peers and the need for improvement in the processes and procedures to effectively manage the complex process of hedging the MSR asset," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Timothy Howard, Fannie Mae's chief financial officer, has been named vice chairman of the government-sponsored enterprise, replacing the departing Jamie Gorelick.Mr. Howard's appointment followed his election to Fannie Mae's board of directors at the company's annual meeting of shareholders, the GSE said. He will continue to serve as company CFO. Mr. Howard joined Fannie Mae in 1982 as vice president and chief economist. He later served as senior vice president for economics and planning, executive vice president of economics, strategic planning, and financial analysis, and EVP of asset management. Ms. Gorelick announced in January that she would leave Fannie Mae to become a member of the National Commission on Terrorist Attacks. She recently announced that she will become a partner in Wilmer, Cutler & Pickering, a Washington law firm, as of July 1.

Foreclosure activity is increasing in the New York City metropolitan area due to "dismal" economic conditions, according to Foreclosures.com, a property investment advisory firm based in Sacramento, Calif."New York City is one of the five most troubled housing markets in the nation," said Alexis McGee, president of Foreclosures.com. "The employment picture is getting worse." The city has lost 176,000 jobs in the past two years, and the number of people out of work more than six months is increasing, she said. The city's economic woes stem from weaknesses in tourism and the financial sector, and New York state Comptroller Alan Hevesi is predicting further shrinkage in the city's economic this year, Ms. McGee said. The firm can be found on the Web at http://www.foreclosures.com.

Thirty-one minority professionals have been awarded scholarships to the Mortgage Bankers Association of America's School of Mortgage Banking under a joint MBA/Freddie Mac diversity program.The program, Path to Diversity, was developed two years ago to increase cultural diversity in the real estate finance industry. In addition to providing scholarships, the program supports the internship programs of the 17 participating member firms by offering MBA distance-learning courses to interns free of charge, the sponsoring organizations said. The member firms are: American First FCU, Bank of America, Cenlar, Chase Manhattan Mortgage, CitiMortgage, CTX Mortgage, Countrywide, Ditech, GMAC, Irwin Mortgage, Magnet Portfolio Services, Peninsula Mortgage Bankers, Peoples Choice Mortgage, R-G Financial Republic Bank, SunTrust Mortgage, United Guaranty, and Wells Fargo Home Mortgage. The MBA can be found online at http://www.mbaa.org.

Two classes from two Conseco Finance Corp.-related securitizations by Home Improvement & Home Equity Loan Trust have been downgraded to default status by Standard & Poor's.The downgrades were as follows: class HI:B-2 of series 1996-F, from CCC-minus to D; and class HE:B-2 of series 1997-E, from CCC-minus to D. S&P said Conseco Finance did not make any payments under its limited guarantee of the deals on the May 15 distribution date, resulting in interest shortfalls on the two classes. Both classes have credit support from the limited guarantee and from monthly excess spread, the rating agency said.

The ratings on 27 classes of Oakwood Mortgage Investors Inc. and OMI Trust manufactured housing transactions have been lowered and removed from CreditWatch with negative implications by Standard & Poor's.The affected deals are: Oakwood Mortgage Investors series 1998-A and 1998-B; and OMI Trust series 1999-C, 1999-D, 1999-E, 2000-C, and 2001-E. In addition, S&P raised its ratings on 10 classes of Oakwood-related MH deals and removed them from CreditWatch, and affirmed its ratings on 24 other Oakwood-related MH classes and removed them from CreditWatch, the rating agency reported. "The lowered ratings reflect the continued poor performance of the underlying pools of manufactured housing contracts and the resulting deterioration of credit enhancement, with series issued in recent vintages displaying greater signs of stress relative to series issued in previous vintages," S&P said. Oakwood announced last November that it was filing for Chapter 11 bankruptcy protection.

The PMI Group Inc., Walnut Creek, Calif., has announced a consent solicitation regarding certain debentures that would exclude the beleaguered Fairbanks Capital Holding Corp. as a "designated subsidiary" of PMI.The company is seeking consents to a proposal to change the definition of a designated subsidiary in the indenture for its 2.50% senior convertible debentures due 2021 by excluding Fairbanks Capital Holding, its subsidiaries, and any of their successors. It would also increase from 15% to 25% the percentage of consolidated assets a subsidiary would have to represent in order to constitute a designated subsidiary. "As a result of the proposed amendment, any failure to pay indebtedness at maturity or default with respect to indebtedness for borrowed money by Fairbanks or any of its subsidiaries would not constitute events of default under the indenture," PMI said. Standard & Poor's recently revised its rating outlook for PMI from stable to negative after S&P lowered the residential subprime and special servicer rankings of the Salt Lake City-based Fairbanks Capital Corp., a subsidiary of Fairbanks Capital Holding. PMI owns 57% of the servicer, which has been the target of lawsuits regarding its servicing practices and of reviews by the Department of Housing and Urban Development and the Federal Trade Commission.