Servicing

New Century Financial Corp., Irvine, Calif., has repurchased its second million-share allocation under the company's stock repurchase program using corporate liquidity.In December, the company's board of directors approved a third million share allocation under the buy-back program. When the repurchase of all three million shares is complete, the repurchased shares will represent about 13% of the company's approximately 23 million total shares outstanding.

The three Federal Home Loan Banks participating in the Mortgage Purchase Program acquired $17.2 billion on single family loans from their member bank and thrifts in 2002."We believe our first full year of operation has demonstrated that the MPP is a successful part of our financial service offerings to our members," said Martin Heger, president of the FHLBank of Indianapolis. The Seattle, Cincinnati and Indianapolis FHLBanks created MPP independently of the Mortgage Partnership Finance program, which purchased $27.9 billion in single family loans last year. The MPF program was started five years ago. The Atlanta FHLBank offers the MPF program but it is also planning to offer MPP execution to its members later this year. During 2001, the three MPP banks purchased $2.6 billion in loans.

Impac Mortgage Holdings Inc., Newport Beach, Calif., has priced an offering of 3.0 million shares of its common stock at $11.60 per share that produced estimated net proceeds of $33 million.The offering was led by UBS Warburg. The company has granted the underwriters a 30-day option to buy up to 450,000 additional shares to cover any overallotments. Impac, a mortgage real estate investment trust, can be found online at http://www.impaccompanies.com.

The ratings on 11 classes from various Conseco Finance Corp.-related securitizations have been downgraded from CCC-minus to D (default) by Standard & Poor's Ratings Services.The downgrades were as follows: Home Improvement Loan Trust, series 1994-CI, 1994-D, 1995-A, and 1999-E; Home Improvement & Home Equity Loan Trust, series 1996-C HE, 1997-A HI, 1997-D HE, 1997-E HI, and 1998-B HE; Home Equity Loan Trust, series 1998-C; and Conseco Finance Home Loan Trust, series 1999-G. (The affected securities were the B-2 classes, except for class B of Home Improvement Loan Trust, series 1995-A.) Conseco Finance did not make any payments under a limited guarantee on the Feb. 18 distribution date, resulting in principal distribution shortfalls on three series of Home Improvement Loan Trust (1994-CI, 1994-D, and 1995-A) and interest shortfalls on the remaining eight classes, the rating agency said. S&P can be found online at http://www.standardandpoors.com.

Residential Funding Corp., Minneapolis, has reported a record $34.5 billion issuance of mortgage- and asset-backed securities in 2002, up 30.7% from its issuance the year before.The total included: $11.5 billion in residential subprime securities; $7.6 billion in jumbo A-quality first-mortgage loan securities; $2.9 billion in A-quality home equity loan securities; $5.9 billion of ABS; and $6.7 billion of alternative-A securities. GMAC-RFC said it ranked first among issuers of home equity ABS in 2002 and third among private issuers of MBS. The company can be found online at http://www.gmacrfc.com.

Loan purchases by Freddie Mac plunged by almost 40% in January from the total of the previous month, according to figures released Feb. 21.The decline comes amid reports that Wells Fargo Home Mortgage is unhappy with its “strategic alliance” agreement with the company. Moreover, Bank of America recently ended a strategic alliance with Freddie. But Robert Weiss, senior director of finance at Freddie Mac, said both lenders continue to be strong business partners of the secondary giant. He also said Freddie Mac's market share will not change over the long run, despite the purchase decline in January. During the month Freddie bought $55 billion in mortgages, compared with $91.2 billion in December. Compared with those of the same month a year ago, its purchases were up 5.6%. The company's retained portfolio was marginally positive in January. Mr. Weiss said the reason is that spreads were "not attractive." In January, Fannie Mae's purchase volume totaled $121 billion, a record.

Fannie Mae has made a $70 million "floor bid" on the servicing platform of Conseco Finance, a subprime/manufactured housing subsidiary of the bankrupt financial services giant.A company spokeswoman stressed that Fannie Mae does not want to become a servicer, but that didn't stop its critics from complaining about the move. "Hey, why don't they originate manufactured housing loans, too," quipped one West Coast mortgage banking executive. A research note put out by Federal Financial Analytics, Washington, says the bid "may be an effort to support the overall value of the Conseco paper." Fannie owns $10 billion in mortgage securities that are backed by manufactured housing loans, 70% of which are serviced by Conseco. Conseco is the largest player in the MH space. The West Coast mortgage executive, requesting anonymity, said that if Fannie is so concerned about the quality of the servicing, "I can recommend 10 good subservicers, including HomEq, Wilshire, and a few others." The official bidding for the platform begins next week. Fannie Mae can be found online at http://www.fanniemae.com.

Fitch Ratings has placed the debt of Countrywide Financial Corp. on Rating Watch Negative, citing the risk of impairment to the company's balance sheet.Fitch said mortgage companies in general face an increasing risk of impairment, because falling rates can substantially reduce the value of assets such as mortgage servicing rights. The rating agency said Countrywide's MSR portfolio is particularly large in relation to equity. Countrywide, responding to the move, said it has demonstrated its ability to produce record earnings in a falling rate environment while effectively hedging the value of its MSRs. The servicing hedge produced a gain of $1.8 million in 2002, the company said. "Countrywide's management believes that the company is in the strongest financial position in its history and is well positioned for the future," said Angelo Mozilo, the company's chairman and chief executive officer. Most forecasts call for interest rates to increase this year, which would bolster the value of servicing. Fitch can be found online at http://www.fitchratings.com, and Countrywide can be found at http://www.countrywide.com.

Two classes of Structured Asset Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings.Class 2B4 of SASCO 2000-3 Group 2 was downgraded from BB to CCC and remains on Rating Watch Negative, and class 2B5 of the deal was downgraded from C to D. The rating agency attributed the downgrades to loss levels and expected losses on "the current severely delinquent loans in the pipeline" relative to the applicable credit support. Fitch said 10.61% of the SASCO 2000-3 Group 2 pool is over 90 days delinquent, and cumulative losses total 0.54% of the initial pool.

Charles Schwab & Co. Inc., San Francisco, has announced the introduction of a mutual fund that invests primarily in Ginnie Mae mortgage-backed securities.The Schwab GNMA Fund will generally invest at least 80% of its assets in Ginnie Mae MBS, and the remainder will be invested in other fixed-income securities or held in cash, the company said. "Our decision to introduce this fund is in response to client demand for investments that provide strong income and credit safety," said Randy Merk, president of Charles Schwab Investment Management. The fund's subscription period will continue through Feb. 28, and its first day of operation will be March 3. During the subscription period, Schwab clients can invest in the fund at an offering price of $10 per share. The fund is offered in two classes. Investor Shares have an initial investment minimum of $2,500, with subsequent minimums of $500. Select Shares have an initial minimum of $50,000, with subsequent minimums of $1,000.