Servicing

Fannie Mae is increasing its "adverse market" delivery fee from 25 basis points to 50 bps starting Oct. 1. "This upfront charge primarily addresses continuing market deterioration and applies to all loans," whether under standard or negotiated terms, the mortgage giant said. The secondary-market agency is also adjusting its loan pricing, and it appears to favor loans with private mortgage insurance and loan-to-value ratios above 85%. "We are increasing loan-level prices on certain mortgages with loan-to-value ratios of 75.01%-85%," Fannie says. The government-sponsored enterprise can be found on the Web at http://www.fanniemae.com.

Ginnie Mae's rapid growth has prompted its new president, Joseph Murin, to establish a risk committee and take other steps to ensure that the agency continues to guarantee high-quality mortgage-backed securities. "This is a very turbulent time for the mortgage industry," the Ginnie Mae president said. "We have to take a long, hard look at our strategy to ensure we continue on the right path." Mr. Murin has appointed Ginnie veteran Stephen Ledbetter to be the agency's chief risk officer. He is also reconstituting the Ginnie Mae issuer review board. Mr. Ledbetter will continue to serve as acting vice president for MBS. The secondary-market agency guaranteed $39.1 billion in MBS in the first quarter and $67.7 in the second quarter, including $1.1 billion in jumbo MBS in June. Ginnie can be found on the Web at http://www.ginniemae.gov.

Forty-five classes of notes issued by six collateralized debt obligations linked to subprime residential mortgage-backed securities have been downgraded by Fitch Ratings. The affected securities include 13 classes from Delphinus CDO 2007-1 LLC/Ltd., a hybrid structured finance CDO; eight classes of notes from Duke Funding XIII Ltd. and Duke Funding XIII Corp., both hybrid structured finance CDOs; seven classes from Glacier Funding CDO V LLC/Ltd., a cash flow CDO; seven classes from Volans Funding 2007-1 Ltd., a hybrid structured finance CDO; six classes from West Trade Funding CDO I LLC/Ltd., a cash flow CDO; and four classes from Solstice ABS CDO III Ltd., a cash flow structured finance CDO. The downgrades were attributed in most cases to "significant collateral deterioration" in the portfolios' subprime RMBS and structured finance CDOs with underlying exposure to subprime RMBS. Fitch can be found online at http://www.fitchratings.com.

First Financial Network Inc., an Oklahoma City-based loan sale adviser, has announced the offering of a $145 million portfolio of loans being marketed on behalf of the Federal Deposit Insurance Corp. The portfolio includes loans from the recently failed ANB Bank, Bentonville, Ark., for which the FDIC is acting as receiver. It consists of 2,384 commercial real estate, commercial and industrial, residential, and consumer loans stratified into pools based on loan type, performance, collateral, and geographic location, First Financial said. The loans are collateralized by properties located chiefly in Arkansas. First Financial said it will conduct a "highly targeted marketing campaign aimed at procuring sophisticated purchasers." Bids will be taken on Sept. 9.

Triad Guaranty Inc., Winston-Salem, N.C., has reported a net loss of $198.2 million ($13.36 per share) for the second quarter, compared with net income of $12.0 million ($0.80 per share) a year earlier. Two weeks after the quarter ended, on July 15, the company's subsidiary Triad Guaranty Insurance Corp. stopped issuing commitments for new mortgage insurance coverage and entered into runoff. That decision followed an unsuccessful attempt by management to capitalize a new mortgage insurance company. "The size of our second-quarter loss reflects the depth and breadth of the collapse of the housing and mortgage markets," said William Ratliff, chairman of Triad, who is also taking on the interim chief executive job in the wake of the retirement of Mark Tonnesen. "The continued growth in the number of defaults and foreclosures during the quarter required a significant increase in reserves. The distressed markets of California, Florida, Arizona, and Nevada continue to be adversely impacted by declining home prices, and reserves for defaults in these states comprised approximately 68% of the increase in our reserves for the quarter." After entering runoff, Triad reduced its work force by 45%, Mr. Ratliff said.

ModCo LLC, Aliso Viejo, Calif., has announced the launch of a new division aimed at helping mortgage servicers cope with rising foreclosures and changes in mortgage servicing laws. ModCo Solutions puts servicers and lenders in direct contact with borrowers, using loss mitigation strategies and field services with a pre-emptive approach to default servicing, the company said. "As foreclosures reach record levels, the firm seeks to provide the infrastructure for servicers to meet existing and new servicing regulations and reach out to more troubled borrowers before foreclosure is the only option," ModCo said. ModCo Solutions provides property and occupancy inspections along with valuation and tax certification data, with campaigns tailored to meet the needs of each servicer. The new division can be found online at http://www.modcosolutions.com.

Fannie Mae and Freddie Mac had a combined "loans-purchased" market share of 65.21% in the first half, buying $687 billion in mortgages from their seller/servicers, according to figures compiled by National Mortgage News. For all of 2007, the two government-sponsored enterprises had a purchased market share of 49.96%. The market share figure is calculated by taking all their mortgage loan purchases and dividing the figure by total residential originations. In 2005, at the height of the subprime boom, the GSEs had a loans-purchased market share of just 36.25%, according to NMN and the new Mortgage Industry Directory. For more analysis and details, see the Aug. 11 issue of NMN.

Seller-funded downpayment assistance on Federal Housing Administration loans could get a second life under a bill introduced by Rep. Al Green, D-Texas, that also authorizes the FHA to charge risk-based premiums. The Green bill would repeal sections of the recently passed housing bill that bans seller-funded downpayment assistance and institutes a 12-month moratorium on risk-based pricing starting Oct 1. The bill (H.R. 6694) would require the FHA to charge higher mortgage insurance premiums for homebuyers with credit scores below 680 that receive seller-funded downpayment assistance from nonprofit groups, such as Nehemiah Corporation of America and AmeriDream. Borrowers with credit scores below 620 would be charged risk-based premiums. "I have introduced this bipartisan bill to revive this critical program under new standards that will effectively balance the risk of potential foreclosures with the goal of increasing homeownership," Rep. Green said. The Texas congressman introduced the bill on July 30 just before the House adjourned for the August recess.

The sole class of notes issued by Brit Alliance ABSpoke 2005-X, a collateralized debt obligation referencing residential mortgage-backed securities and other assets, has been downgraded from BB to CC by Fitch Ratings and removed from Rating Watch Negative. The downgrade of the class A notes resulted from "significant collateral deterioration" in the reference portfolio, specifically subprime and alternative-A RMBS, the rating agency said. The transaction is an unfunded managed synthetic CDO.

Five classes of variable-rate notes issued by Magnolia Finance II PLC, a collateralized debt obligation that references chiefly mortgage-backed security assets, have been downgraded and removed from Rating Watch Negative by Fitch Ratings. The affected notes were from the following asset-backed securities portfolios: series 2006-5A, series 2006-5B, series 2006-5CU, series 2006-5CE, and series 2006-5CG. Fitch said the downgrades reflect "significant collateral deterioration" in the reference portfolio, especially subprime residential MBS, alternative-A RMBS, and structured finance CDOs with underlying exposure to subprime RMBS. Magnolia II is a static, synthetic, structured finance CDO.