Servicing

Standard & Poor's has launched a new biannual "servicer evaluation spotlight report" that will include aggregated servicer performance data. The report will encompass prime, subprime, and alternative-A loan servicing data. Data covering escrow administration, loss mitigation, default management, ARM resets and loan modifications will be included in the analysis, S&P said. "It offers valuable transparency into the mortgage servicing industry for investors, servicers, and anyone interested in knowing what is happening on the industry's front lines," said Michael Gutierrez, managing director and head of S&P's servicer evaluations group. The rating agency can be found on the Web at http://www.standardandpoors.com.

Middleburg Financial Corp., Middleburg, Va., saw its fourth- quarter 2007 earnings drop by nearly two-thirds in a year-over-year comparison, due mostly to an impairment charge related to the company's investment in Southern Trust Mortgage LCC. Middleburg recorded a noncash impairment charge of $5 million related to its investment in STM. The lender reported net income of $3.1 million ($0.67 per share) for 2007, which represents a 61.8% decrease from $8 million ($1.90 per share) in 2006. Earnings from mortgage banking have been hurt by decreased production levels and narrowed margins resulting from shifts in the mix of retail and wholesale loan volume, Middleburg reported. Additionally, along with the higher expense associated with adjusting STM's allowance for loan losses, other expenses increased with the hiring of several loan producers and support staff with the objective of increasing future loan production levels.

Ellie Mae, a Dublin, Calif.-based provider of software for the mortgage industry, has announced the release of Encompass Banker Edition 3.0 and Encompass Custom Edition 3.0. Custom Edition offers "extensive configurability" in a loan origination system, and Banker Edition is "a complete end-to-end business solution" designed for small to midsize correspondent mortgage lenders, mortgage bankers, community bankers, credit unions, and brokers interested in becoming bankers, Ellie Mae said. Most of the system enhancements will benefit both editions of Encompass. "Now, mortgage bankers can service loans prior to selling loans on the secondary market, track their profitability on trades, and configure notifications that alert them of key servicing activities, such as when statements must be sent out, when accounts go past due, and when they're scheduled to make upcoming disbursements," said Jonathan Corr, chief strategy officer for Ellie Mae. The company can be found online at http://www.elliemae.com.

New York Attorney General Andrew Cuomo has granted Clayton Holdings immunity in exchange for providing information on its due diligence work for Wall Street firms that securitized subprime mortgages. The publicly traded company says it has provided due diligence reports to the New York AG since it was first subpoenaed in June. "Now, at the request of the New York attorney general, we have entered into a cooperative agreement with his office," said Frank Filipps, Clayton's chairman and chief executive. The New York Times first reported the immunity agreement. The New York attorney general's office has not replied to requests for confirmation. Clayton performs due diligence on loans purchased by conduits, and identifies "exceptions" to the issuers' loan guidelines. The Shelton, Conn.-based company also evaluates the performance of loans once they are securitized. A company executive said the percentage of loans securitized in 2006 that had exceptions was about 30%.

Seventeen classes of Chase Mortgage Finance Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings. Fitch also affirmed the ratings on 16 classes from five Chase transactions. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and expected losses. The collateral consists of fixed- and adjustable-rate, first-lien prime mortgage loans.

Nineteen classes of CitiMortgage Alternative Loan Trust mortgage pass-through certificates have been downgraded by Fitch Ratings. Fitch also placed four classes of pass-throughs on Rating Watch Negative and affirmed the ratings on seven classes from five CMALT transactions. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and expected losses. The collateral consists of fixed-rate, first-lien alternative-A mortgage loans.

Thirty-eight classes of Citigroup Mortgage Loan Trust mortgage pass-through certificates have been downgraded by Fitch Ratings. Fitch also placed 10 classes on Rating Watch Negative, upgraded five classes, and affirmed the ratings on 41 classes from 16 CMLT transactions. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and expected losses. The collateral consists of fixed- and adjustable-rate, first-lien prime and alternative-A mortgage loans.

The long- and short-term issuer default ratings of IndyMac Bancorp Inc. and IndyMac Bank FSB have been downgraded by Fitch Ratings. The long-term IDRs of the Pasadena, Calif.-based companies were downgraded from BBB-minus to BB, and the short-term IDRs were downgraded from F3 to B. The rating outlook is negative. The downgrades reflect "the expectation that [IndyMac Bancorp's] near-term return to profitability will be challenging as changes in mortgage industry dynamics, once viewed as temporary, become more permanent," the rating agency said. Fitch can be found online at http://www.fitchratings.com, and IndyMac can be found at http://www.indymacbank.com.

Fannie Mae issued $629.5 billion in mortgage-backed securities in 2007, up 30% from the level recorded in the previous year, as the government-sponsored enterprise benefited from the meltdown in the private-label MBS market. In December, Fannie issued $64.0 billion in guaranteed MBS -- its best month since April 2003, when MBS issuance totaled $78.7 billion and lenders could barely keep up with the refinancing boom. November 2007 issuance totaled $62.6 billion. The monthly report shows that Fannie's mortgage investment portfolio ended the year at $723.9 billion, up slightly from $721.4 billion at the beginning of 2007. Fannie's regulator has a cap on the growth of the GSE's portfolio growth, which might be removed this year. Fannie can be found online at http://www.fanniemae.com.

BankUnited Financial Corp., Coral Gables, Fla., has reported a mortgage-related net loss of $25.5 million ($0.73 per share) for the fourth quarter and announced the closure of four of its nine wholesale residential mortgage sales offices. Alfred R. Camner, the company's chairman and chief executive officer, said BankUnited has made "a strategic decision to significantly reduce our wholesale residential mortgage business." The four wholesale offices closed by the company were located in Arizona, California, Colorado, and Oregon. The company also consolidated nine operations centers into three. "In total, we have reduced our wholesale residential staff by more than 45% and significantly cut our annualized run rate of expenses," Mr. Camner said. "We have also changed our product mix, producing a higher proportion of saleable product, mainly conforming agency and other conduits." BankUnited's fourth-quarter loss was partly attributable to a $65 million provision that increased its allowance for loan losses to $118 million. BankUnited had recorded earnings of $27.4 million ($0.71 per share) a year earlier. The company can be found online at http://www.bankunited.com.