Servicing

The American Bankers Association and the Federal Agricultural Mortgage Corp. have announced an expansion of their alliance to include special pricing for Farmer Mac's Part-Time Farm program. The program involves loans secured by first liens on agricultural real estate in which a significant portion of the property's value comes from a rural residence where agricultural production is under way or planned, Farmer Mac said. The program is designed to enable rural homeowners on agricultural properties to obtain more flexible terms on their loans. "This program will give our members a real advantage because it provides an outlet for the sale of qualified mortgages on properties where the land exceeds the value of the improvements," said William Kroll, president of ABA Total Business Solutions. The organizations can be found online at http://www.aba.com and http://www.farmermac.com.

Issuance of mortgage-backed securities by Fannie Mae fell to $50.1 billion in March, down 28% from the previous month's volume, while MBS issuance by Freddie rose slightly to $43.5 billion, according to the secondary-market agencies. Their monthly activity reports show little growth in their $720 billion mortgage investment portfolios. However, delinquencies continued to creep up in February (March delinquency data are not yet available) in their guaranteed book of single-family loans. Fannie reported that 3.04% of its loans with private mortgage insurance or other credit enhancements were behind by three or more monthly payments in February, up from 1.84% in February 2007. Including loans with no credit enhancements, Fannie's serious delinquency rate stood at 1.10%, up from 0.66% in February 2007. Freddie reported a 1.78% serious delinquency rate for February on loans with private MI and other credit enhancements, up from 1.18% in March 2007. Its overall serious delinquency rate is 0.74%, up from 0.40% in March of last year.

Fannie Mae has reported that its total book of business grew at an annualized rate of 6.6% in March, fueled mostly by higher guarantee volume. That was the lowest business volume growth rate in more than a year. One month earlier, Fannie posted a 19.5% annualized rate of business growth. Refinancing has pushed the company's liquidation rate up to its highest level since September 2007, offsetting new mortgage-backed securities and guarantee volume (see item below). The government-sponsored enterprise can be found on the Web at http://www.fanniemae.com.

Fidelity National Financial Inc., Jacksonville, Fla., has announced that it will be investigating strategic options for its specialty insurance business, including flood insurance. FNF said it has retained Bank of America Securities as a financial adviser on the matter. "We are focused on evaluating our noncore assets and investments as potential vehicles for creating meaningful liquidity, and we believe our flood and at-risk insurance businesses are an attractive acquisition opportunity for strategic buyers," said FNF chairman William P. Foley. "Our intent is to use that liquidity to continue to support our dual efforts of maintaining our $1.20 annual cash dividend and repurchasing a significant amount of our outstanding stock." The company can be found on the Web at http://www.fnf.com.

Countrywide Financial Corp. and New Vista Asset Management have joined together to find qualified borrowers for Countrywide's real-estate-owned properties. The companies said New Vista's network of real estate agents, who have "deep roots in minority communities," are assigned to help ensure that prepared homebuyers, especially first-time buyers and minority buyers, have the opportunity to buy REO homes. New Vista and Countrywide will be hosting several community seminars to educate first-time homebuyers about purchasing REO units and obtaining the best available financing. The seminars will begin in Los Angeles and Dallas. "Countrywide and New Vista Asset Management share the common mission of helping to make sure that homeownership is achievable and sustainable, and that neighborhoods are stabilized during this difficult time in the housing market," said Steve Bailey, senior managing director for loan administration for the Calabasas, Calif.-based Countrywide. The companies can be found online at http://www.countrywide.com and http://www.newvistareo.com.

Nine tranches from EquiFirst Loan Securitization Trust 2007-1 have been downgraded by Moody's Investors Service. Three of the downgraded tranches remain on review for possible further downgrade. The ratings were downgraded, in general, based on higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels, Moody's said. The collateral consists primarily of first-lien subprime residential mortgage loans. Moody's can be found online at http://www.moodys.com.

Twenty-nine classes of subprime asset-backed pass-through certificates issued by Asset Backed Securities Corp. have been downgraded by Fitch Ratings as a result of changes to the rating agency's subprime loss forecasting assumptions. Fitch also affirmed the ratings on classes with outstanding balances of $1.4 billion. The rating actions were attributed to changes in Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness." Fitch can be found online at http://www.fitchratings.com.

The Federal Home Loan Bank of Chicago has announced that it will stop purchasing single-family loans after July 31 but will continue to provide operational support for mortgages it has already bought from members and other FHLBanks. Effective immediately, the Chicago FHLBank will "no longer enter into new master agreements or renew existing master commitments to purchase mortgage loans" under the Mortgage Partnership Finance program, the Chicago bank's acting president, Matthew Feldman, says in a letter. The FHLBank has a $34.6 billion mortgage loan portfolio that has become a serious drag on earnings. The Chicago bank, which is operating under a supervisory order, says it expects to report a loss in the first quarter. Mr. Feldman's letter indicates that the bank is looking for a way to restart deliveries of MPF loans by selling them to third-party investors. But they will have to get the Federal Housing Finance Board to approve this "off-balance-sheet funding alternative." The FHLBank launched the MPF program in 1997, and its regulator has blocked the securitization of the MPF loans for the past seven years.

Credit Suisse took a loss of 2.1 billion Swiss francs ($2.0 billion) in the first quarter and 5.3 billion Swiss francs ($5.1 billion) in net writedowns, about 3.6 billion Swiss francs ($3.5 billion) of which appear to be mortgage-related. The mortgage-related writedowns stem from collateralized debt obligations (2.7 billion Swiss francs, or $2.6 billion), commercial mortgage-backed securities (848 million Swiss francs, or $819 million), and residential MBS (96 million Swiss francs, or $93 million). The remaining writedowns reflect leveraged-finance concerns. While the writedowns remain sizable, the company said it has made progress reducing exposures in problem areas like commercial mortgage, which has been cut by 25%. Credit Suisse also said it has reduced leveraged-finance exposures by 41%. Credit Suisse can be found on the Web at http://www.creditsuisse.com.

In response to strong criticism from fair-lending groups, Fannie Mae has indicated that it is reconsidering recent moves to tighten underwriting standards on affordable housing mortgages and impose new fees. "We have met extensively with advocates, listened to their concerns, and are considering making some changes to our methodologies," Fannie spokesman Brian Faith said. Freddie Mac has also met with the fair-housing and civil rights organizations that have accused the two government-sponsored enterprises of abandoning their affordable housing mission. "While we disagree with their conclusions, we have had helpful discussions with the housing groups and take their concerns very seriously," a Freddie spokesman said. The GSEs can be found online at http://www.fanniemae.com and http://www.freddiemac.com.