Servicing

Countrywide Financial Corp. funded $26 billion of mortgages in February, up 17% from the level recorded in January, but the company said foreclosures in its servicing portfolio continued to rise. The company's pipeline totaled $48 billion at the end of February, down from $51 billion in January. The company serviced $1.48 trillion of home loans as of Feb. 29. The delinquency rate on the servicing portfolio was 7.44% by dollar volume, down 3 basis points from the rate in January. However, foreclosures stood at 1.64% at the end of February, double the rate of a year earlier and up 16 bps from that of January. Countrywide also announced that it will no longer report monthly operational results and will report data quarterly, "consistent with industry practice." The company can be found online at http://www.countrywide.com.

The long-term Issuer Default Ratings of Countrywide Financial Corp., Calabasas, Calif., and its related subsidiaries have been downgraded from BBB-plus to BBB-minus by Fitch Ratings as a result of deteriorating home equity portfolios. Fitch said the move "in no way reflects doubts" about the prospects for completion of Countrywide's acquisition by Bank of America, and the ratings remain on Rating Watch Positive. Various other IDR, debt, and deposit ratings of Countrywide and its affiliates were also downgraded. "Although CFC had expected credit quality to continue to deteriorate, as observed in significantly higher provisions and chargeoffs taken, indications from rated banks in the past few weeks suggest that home equity delinquency rates are rising at a far more rapid pace than many had anticipated," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that new foreclosure filings fell 4% in February but were still nearly 60% higher than the level recorded a year earlier. The company's U.S. Foreclosure Market Report indicates that 223,651 new foreclosure properties were added to the rolls in February. "The 4% monthly decrease this February was similar to the 6% monthly decrease we saw in February 2007," said James J. Saccacio, RealtyTrac's chief executive officer. "However, the year-over-year increase of 60% this February was significantly higher than the 19% year-over-year increase in February 2007, indicating that we have still not reached the peak of foreclosure activity in this cycle." The company said Nevada, California, and Florida once again recorded the highest foreclosure rates. RealtyTrac can be found online at http://www.realtytrac.com.

New York Mortgage Trust Inc., a New York-based real estate investment trust, has announced the sale of approximately $211 million of Fannie Mae mortgage-backed securities in an effort to reduce the leverage in its agency MBS portfolio. As a result of the sales and the termination of associated interest rate hedges, the company said it had realized losses of approximately $6 million. "We believe that reducing our overall portfolio leverage is a prudent decision given the recent unprecedented volatility in the agency MBS markets," said Steven Mumma, co-chief executive officer, president, and chief financial officer of the REIT.

The floating-rate notes of Thornburg Mortgage Capital Resources LLC have been downgraded from F1-plus to C by Fitch Ratings. Fitch said all the outstanding floating-rate notes in the program have extended for 30 business days, with a final maturity of April 14. The downgrade was attributed to concerns regarding further declines in the market value of the collateral supporting the program, continued deterioration in the liquidity of the mortgage-backed securities market, the reduced availability of repo financing, and the potential for additional liquidations of similar collateral by other market participants. Fitch can be found on the Web at http://www.fitchratings.com.

The impairment charge being taken by Thornburg Mortgage in its 2007 restatement has increased by $248.8 million from original estimates to a total of $676.6 million, according to the company's amended annual report filed with the Securities and Exchange Commission. The company said it has restated its earnings because margin calls that could be "material" might jeopardize its ability to hold certain of its securitized adjustable-rate mortgages to maturity. Thornburg can be found online at http://www.thornburgmortgage.com.

Five classes of subprime certificates issued by Structured Asset Investment Loan Trust in 2003 have been downgraded by Moody's Investors Service. The downgrades were as follows: series 2003-BC4, class M1, from Aaa to A1, class M2, from Aa2 to Baa1, and class M3, from Aa3 to Baa3; series 2003-BC5, class M1, from Aa1 to A1; and series 2003-BC9, class M1, from Aa2 to A1. "The stepping down has left the deals with thin credit enhancement levels and made them more vulnerable to pool deterioration in the tail end of the deals' lives," Moody's said. The rating agency said all three deals had pool factors below 10% as of February. The transactions are backed by first- and second-lien subprime mortgage loans.

Franklin Credit Management Corp., Jersey City, N.J., has reported the receipt of a notice from the NASDAQ Stock Market indicating that Franklin's stock will not be delisted if the company files its Form 10-Q for the third quarter of 2007 by March 31 and meets two other criteria. The notice said the publicly held shares of Franklin's stock must also show evidence of a $5 million market value by April 1 and maintain that value for at least 10 consecutive trading days, according to Franklin. The company said it expects to file its third-quarter 10-Q by March 31, but that if it doesn't, it plans to apply to transfer its listing from the NASDAQ Global Market to the NASDAQ Capital Market, which has a lower market value requirement. Franklin can be found online at http://www.franklincredit.com.

Nearly two-thirds of over 200 cities surveyed report that foreclosures have risen in the past year, and one-third say city revenues have fallen as a result, according to an online/e-mail poll conducted by the National League of Cities. "Mortgage foreclosures are causing havoc in many of our communities," said league president Cynthia McCollum. "Cities are already seeing reductions in their revenues at the same time that more services are needed to address the many related problems caused by the foreclosures." The organization said the ripple effects of the housing crisis on city finances were reflected in the fact that one-third of the surveyed cities reported a funding decline for various programs and projects in the past year. The poll also found that lenders in more than half the cities have not "reached out to local officials" to offer help in dealing with foreclosures and related housing finance problems.

MFA Mortgage Investments Inc., New York, has announced the sale of approximately $1 billion of mortgage-backed securities in connection with a change in its leverage strategy. The securities, consisting of approximately $950 million of agency MBS and $50 million of triple-A rated nonagency MBS, were sold at a realized loss of about $15 million, MFA said. The company said it has also terminated repurchase agreements at no cost and approximately $525 million of associated interest rate swap agreements at a cash cost of about $31 million. MFA said the strategy, to reduce its target debt-to-equity leverage to 7-9 times, stems from its view that "credit conditions are tightening, rapidly and indiscriminately." Despite the fact that other leveraged companies investing in high-quality MBS that have faced credit problems used "substantially higher" leverage than MFA, "our interpretation of their public disclosure and other information available to us increases the probability of increased margin requirements in the future for all repurchase agreement borrowers, including MFA," the company said. MFA can be found online at http://www.mfa-reit.com.