Servicing

Two classes of the BCF LLC 1997-R3 residential mortgage-backed securities deal have been downgraded by Fitch Ratings, and one of them has been removed from Rating Watch Negative.Class B2 was downgraded from A-minus to BBB and removed from Rating Watch Negative, and class B3 was downgraded from C to D (default). The ratings on two other classes in the deal were affirmed. Fitch said the actions were based on loss levels and high delinquencies relative to applicable credit support as of the November distribution.

The Bond Market Association says it will monitor the potential New York transit strike closely, but so far anticipates that mortgage-backed security traders and other members will be able to operate during normal trading hours even if it occurs.The association said it has determined by surveying its New York-based membership that they will most likely be able to operate "in a normal or nearly normal manner" in the event the strike becomes a reality. However, the association said it would "modify its trading recommendation accordingly" if the strike turned out to have more of an impact on the bond market than expected. The association can be found online at http://www.bondmarkets.com.

The B classes of ContiMortgage Home Equity Loan Trust's series 1999-1 and 1999-2 have been downgraded by Standard & Poor's Ratings Services, while the ratings on 101 other classes from 21 ContiMortgage deals were affirmed.Class B of series 1999-1 was downgraded from BBB-minus to B and class B of 1999-2 was downgraded from BBB-minus to BB. The downgrades reflect a decline in credit support for the subordinate classes due to an erosion of overcollateralization stemming from the fact that net losses have consistently exceeded excess interest, S&P said. The rating agency projected that overcollateralization will be depleted for the downgraded classes within 12 months. S&P can be found on the Web at http://www.standardandpoors.com.

Capstead Mortgage, a real estate investment trust that invests in adjustable-rate mortgages, has seen so much of its portfolio prepay that it is sending cash back to investors.Capstead has announced that it will pay a dividend of $8.35 per common share on Jan. 21 to stockholders of record as of Dec. 31. The dividend combines the regular fourth-quarter dividend of $1.16 per share with a special dividend of $7.19 per share, representing about $100 million of the company's common stockholders' equity. Because of the size of the distribution, the shares will not trade ex-dividend until Jan. 22, 2003. Common stockholders who sell their shares after the record date, and through the payment date, will also be selling their right to receive the dividend. Wesley Edens, Capstead's chairman and chief executive officer, said that because of the steady decline in the size of Capstead's portfolio of ARM securities as a result of prepayments, the company's capital is not optimally utilized. The special dividend "should serve to enhance future returns on remaining common equity, particularly under current market conditions, while maintaining adequate liquidity to take advantage of investment opportunities as they arise," Mr. Edens said. The company can be found online at http://www.capstead.com.

Fannie Mae acquired $129.13 billion in home mortgages in November, yet another record month for the company.National Mortgage News measures Fannie's acquisitions by adding together its portfolio purchases and a data point called "lender-originated" mortgage-backed securities. Fannie measures its purchases through a figure called "business volume." In November Fannie's business volume reached $95.59 billion, also a record. Although purchases were red hot, retained commitments (which measures future activity) slipped a bit. In November the company reported $52.76 billion in retained commitments, its third-best showing of the year, but a weaker number than in the spectacular months of September and October. If retained commitments continue to decline, it could be an indication that the refinancing boom is finally loosing some of its steam.

Standard & Poor's says ABN Amro Mortgage Group is an 'above average' servicer and benefits from strong management.S&P affirmed ABN Amro's above-average servicer rating while raising the organization and management rating for the company to "strong" due to its seasoned management team and experienced loan servicing staff. The rating agency can be found on the Web at http://www.standardandpoors.com.

Four classes of Deutsche Financial Capital manufactured housing transactions have been downgraded by Fitch Ratings, and 16 classes have been placed on Rating Watch Negative.The downgrades were as follows: class B-1, series 1997-I, from BBB to BBB-minus; class B-2, series 1997-I, from BB to CCC; class B-1, series 1998-I, from BBB to BB; and class B-2, series 1987-I, from BB to CCC. All four classes were placed on Rating Watch Negative, as were the following classes: classes A-3 to A-6 and class M, series 1997-I; and classes A-2 to A-7 and class M, series 1998-I. Fitch said DFC was a joint venture of Deutsche Financial Services Corp. and Oakwood Acceptance Corp. Contracts included in the deal are serviced by OAC, a wholly owned subsidiary of Oakwood Homes Corp., which filed for Chapter 11 bankruptcy protection Nov. 15. The classes will remain on Rating Watch Negative "until more information is available regarding the effects, if any, of the bankruptcy filing on the servicing operation," Fitch said.

Fannie Mae vice chairman Jamie Gorelick has been named to serve on an independent panel investigating the Sept. 11 terrorist attacks on the United States.Ms. Gorelick, a Democratic appointee to the panel, served as deputy attorney general in the Clinton administration. She joined Fannie Mae in 1997 as vice chair. The commission was established in the recently enacted law that created the Department of Homeland Security. A spokeswoman for Fannie Mae confirmed that Ms. Gorelick has been named to the panel, but had no other details by MortgageWire's deadline. All appointments to the panel must be named by Dec. 15.

Thornburg Mortgage Inc., Santa Fe, N.M., has priced a follow-on offering of 1.0 million shares of common stock at $19.35 per share.The estimated net proceeds of $18.4 million will be used chiefly to fund loans originated by the company and to purchase additional adjustable-rate mortgage securities, Thornburg said. A. G. Edwards, the sole managing underwriter for the offering, has been granted a 30-day option to buy up to an additional 150,000 shares of common stock to cover any overallotments. Thornburg can be found online at http://www.thornburg.com.

Countrywide Financial Corp., Calabasas, Calif., has reported that its average daily fundings grew 7% in November to a record $1.6 billion, while daily applications averaged a record $2.2 billion.In addition, the mortgage pipeline rose 6% to a record $55 billion. Stanford L. Kurland, Countrywide's chief operating officer, said the broker division achieved a new milestone in November as the company's business-to-business e-commerce site, Countrywide Wholesale Business Channel, topped $100 billion in fundings originated since its inception. Mr. Kurland also pointed to the $14 billion increase in Countrywide's servicing portfolio to $435 billion as testimony to the success of the company's macro-hedge business model. "The servicing portfolio grew by $104 billion over last year," he said. "It is notable that this portfolio growth was attained in the midst of one of the most challenging prepayment environments in the history of our industry." Countrywide can be found online at http://www.countrywide.com.