Servicing

Texas Pacific Group, an investment fund managed by a former director of Washington Mutual, is talking to the Seattle thrift about injecting money into the troubled institution, industry sources have told MortgageWire. "We're trying to get it done quickly," said one source, requesting anonymity, "but there's no deal yet." It's expected that WaMu chief Kerry Killinger will stay with the organization, but there could be a wholesale restructuring of the savings-and-loan institution, the nation's largest. Other investors are involved as well, said one banker. In trading on Monday, WaMu's share price skyrocketed 25% to $12.76. News of Texas Pacific's interest in WaMu was first reported by The Wall Street Journal. David Bonderman, founding partner of Texas Pacific, served on WaMu's board but left in 2002. Mr. Bonderman used to work for the Bass Brothers, which at one point owned American Savings, a large California S&L that WaMu eventually purchased.

Forty-six tranches in seven subprime transactions issued by First Franklin Mortgage Loan Trust have been downgraded by Moody's Investors Service. The downgrades were attributed to a growing proportion of severely delinquent loans. "Timing of losses and in some cases, pending stepdown, will cause the protection available to the subordinated bonds to be diminished," Moody's said. The collateral consists primarily of first-lien subprime mortgage loans.

Ninety-six tranches from 16 alternative-A transactions issued by J.P. Morgan have been downgraded by Moody's Investors Service. Forty downgraded tranches remain on review for possible further downgrade, and eight other tranches were placed on review for possible downgrade. The negative rating actions, in general, were 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, alt-A mortgage loans.

Moody's has placed 23 tranches from 11 residential mortgage-backed securitizations under review for possible downgrade following a review of jumbo prime residential MBS deals issued in 2006 and 2007. The actions were based on higher-than-expected rates of delinquency in the collateral relative to credit enhancement levels, Moody's said. Noting that downgrades in the jumbo sector have been rare in the past, the rating agency said the actions affect 5% of the total number of 2006 and 2007 jumbo transactions rated by Moody's. Despite weaker delinquency trends for the 2006-2007 vintages, Moody's said projected cumulative losses based on pipeline delinquencies in jumbo mortgage pools remain within original expectations. "Jumbo mortgages originated in 2006 and 2007 have demonstrated weaker performance than any vintage since 2001, primarily because they did not benefit from home price appreciation and the resulting build-up of homeowner equity," Moody's said. The rating agency can be found online at http://www.moodys.com.

Huntington Bancshares, Columbus, Ohio, has been designated the "Bear of the Day" for April 4 by Zacks Equity Research, Chicago. The Bear of the Day is a stock expected to underperform the markets over the next three to six months. "The merger with Sky Financial has weighed on the share price in the current quarter, with the potential for negative implications over the next several quarters," Zacks said. "The relationship with Franklin, inherited with the aforementioned acquisition, contributed significantly to this loss." The research firm noted the weaknesses in the housing and credit environment and said they "are expected to overhang the market in 2008." Zacks can be found online at http://www.zacks.com, and Huntington can be found at http://www.huntington.com.

Radian Guaranty, a Philadelphia-based mortgage insurer, has announced the introduction of Radian FastAdvance, a program aimed at helping servicers assist distressed homeowners via loan modifications and customized repayment plans. "Since there is no single solution that will help every borrower, Radian is advancing funds to servicers so they can take the specific action required to keep borrowers in their homes rather than proceeding with a stressful and costly foreclosure process," the company said. Radian also announced a partnership with Consumer Credit Counseling Service of Delaware Valley that will provide education, customized assistance, and a method of direct communication between borrowers and servicers using the Radian FastAdvance program. Radian can be found online at http://www.radian.biz.

Consumer groups are contending that the Senate's housing bill provides "very little" relief for homeowners at risk of foreclosure now that Sen. Richard Durbin, D-Ill., has withdrawn an amendment that would have allowed bankruptcy judges to modify mortgages. "We are left with a bill loaded with special considerations for mortgage companies and homebuilders that does very little for homeowners who were sold predatory loans by mortgage lenders," says a coalition of consumer and civil rights groups. The Senate bill includes a net operating loss carry-back provision that would allow homebuilders and other companies to deduct losses in 2008 and 2009 from their profits in prior years. The Senate is expected to complete action soon on the housing bill, and Sen. Arlen Specter, R-Pa., may offer a bankruptcy amendment targeting adjustable-rate mortgages. The Specter bill would allow judges to roll back increases in the mortgage interest rate, but the lender would have to consent to a reduction in the principal amount of the mortgage. The Specter bill would "not be acceptable to the Bankruptcy Coalition," said Bill Himpler, the American Financial Services Association's top lobbyist. Republicans blocked a vote on Sen. Durbin's amendment, which would allow judges to unilaterally reduce the interest rate and principal of a mortgage. The mortgage industry strongly opposes any bankruptcy code change affecting the treatment of a debtor's primary residence.

Employment in the mortgage industry appears to be stabilizing, with a loss of only 700 jobs in February, as refinancing activity and loan workouts keep the current work force busy. The U.S. Bureau of Labor Statistics reported Friday that employment in the mortgage banker/broker sector fell from 364,800 in January to 364,100 in February. The industry has lost 28% of its work force since February 2006, and it is back to the level last seen in July 2002, according to the Mortgage Bankers Association's senior director of economic forecasting, Orawin Velz. "Job losses seem to be stabilizing," Ms. Velz said. "That is good news for us." However, the forecaster sees industry employment continuing to decline at a moderate rate for the rest of the year as the economy pulls out of a mild recession. "Originations will be quite strong in the first half" due to refinancings, she predicted. But refis will slow considerably in the second half as the economic stimulus package takes effect and the Federal Reserve stops easing, the MBA economist said. The BLS can be found online at http://stats.bls.gov.

More than 30 additional classes of subprime mortgage pass-through certificates were downgraded by Fitch Ratings on April 2 as a result of changes to its subprime loss forecasting assumptions. Fitch also placed three classes of subprime pass-throughs on Rating Watch Negative and affirmed the ratings on classes with outstanding balances of over $570 million. The securities affected by the latest downgrades were 33 classes from four issues of IndyMac mortgage pass-throughs. The rating actions were attributed to changes to 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.

Frost Mortgage Banking Group has entered into an arrangement to operate as a division of Primary Residential Mortgage Inc., Salt Lake City, allowing Frost to focus on borrower relationships while PRMI provides a platform of financial and operational support. Under the agreement, Frost Mortgage will have access to PRMI's support services (including accounting, compliance/licensing, information technology, marketing, and quality control) and retail operation services (including secondary marketing and underwriting/risk management), the companies said. Frost Mortgage operates offices in New Mexico, Arizona, and Utah. "By allowing [PRMI] to handle our back office needs, we can continue doing what we do best -- originating mortgages," said Greg Frost, who manages Frost Mortgage and has been named vice president of national training at PRMI. Mr. Frost started in the mortgage industry in 1985, and founded Frost Mortgage Banking Group in 1991.