Servicing

Neighborhood Assistance Corporation of America is calling for a nationwide boycott against Countrywide Financial Corp., contending that the nation's largest mortgage lender and servicer is refusing to restructure loans so that homeowners can afford the payments and avoid foreclosure."Countrywide is the number one example of the abuses in the subprime industry," NACA chief executive Bruce Marks said. NACA plans to conduct demonstrations at Countrywide offices and discourage people from getting mortgages or certificates of deposit from the Calabasas, Calif.-based company. Countrywide had not commented by deadline time. NACA launched a campaign against Countrywide in August to draw regulators' attention to the company's lending and servicing practices. The Boston-based activist group has waged campaigns about other subprime lenders and has a mortgage broker operation that provides low-cost, fixed-rate mortgages to low- and moderate-income people.

The North Carolina state treasurer has asked the Securities and Exchange Commission to investigate stock sales by Countrywide Financial Corp. founder, chairman, and chief executive Angelo Mozilo.The letter to SEC Chairman Christopher Cox from North Carolina Treasurer Richard H. Moore says, "I was shocked to learn that CEO Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide's fortunes were cooling off." According to the letter, Mr. Mozilo accelerated his stock selling as the publicly traded lender's fortunes continued to wane. (Over the past few years, Mr. Mozilo has exercised options and sold more than $300 million worth of stock.) North Carolina pension funds own at least 500,000 shares of Countrywide stock. The request to investigate comes as Mr. Mozilo continues to exercise options and sell shares in the ailing lender. (On Oct. 10, Mr. Mozilo exercised options at $9.94 and sold $2.6 million worth of stock.) In about two weeks, Countrywide will release its third-quarter earnings. Morgan Stanley recently said Countrywide could lose at least $2.4 billion in the quarter. At deadline time, Countrywide's spokesman Rick Simon had not returned a telephone call about the North Carolina request.

Two classes of notes issued by Silver Marlin CDO I Ltd., a structured finance collateralized debt obligation consisting predominantly of residential mortgage-backed securities, have been placed on Rating Watch Negative by Fitch Ratings.The affected notes were classes D and E. The negative rating actions were based on a deterioration in collateral quality, the rating agency said. Fitch said 18.6% of the portfolio consists of 2006 vintage subprime RMBS collateral and 10.9% consists of prime RMBS collateral, and its exposure to 2007 vintage RMBS totals 8.5% subprime RMBS and 20.5% prime RMBS. The rating agency can be found on the Web at http://www.fitchratings.com.

The Mortgage Bankers Association has announced the addition of the Foreclosure Prevention Resource Center to its consumer education site, HomeLoanLearningCenter.com.The center is part of the MBA's effort to advise those who face trouble making their loan payment to contact their loan servicer as soon as possible to determine whether an alternative to foreclosure may be possible based on the borrower's financial and employment status. The bilingual site includes a listing of major loan servicers and their contact information as well as a guide to "Things to Know When You Contact Your Lender" so distressed borrowers can have an informed discussion with their servicer. "The sooner a borrower who is having trouble contacts his or her servicer, the more options they may have to make alternate arrangements," said MBA president and CEO Jonathan L. Kempner. The MBA's consumer education site can be found online at http://www.homeloanlearningcenter.com.

The American Securitization Forum, mortgage servicers, and counseling organizations have formed an alliance called "Hope Now" to create a plan to help as many homeowners as possible avoid foreclosure."Finding solutions for consumers should not and cannot be a one-size-fits-all approach" Michael Heid, co-president of Wells Fargo Home Mortgage, said at a Treasury Department news conference. "But it can become a much more coordinated process between servicer and counselor." The ASF announced a new servicing recommendation that would allow counseling fees to be expensed against the cash flows of mortgage-backed securities. "We believe that it will facilitate the valuable work of mortgage counseling to help servicers and borrowers evaluate all the available options to prevent unnecessary loan defaults and foreclosures," said ASF associate director Tom Deutsch. Treasury Secretary Henry Paulson welcomed the formation of the new alliance, noting that its members service 60% of all mortgages. "The coalition has a lot of work to do," the secretary said. The ASF can be found on the Web at http://www.americansecuritization.com.

Mortgage bankers lost an average of $50 on every loan they produced in 2006, compared with profits of $258 per loan in 2005, according to the Mortgage Bankers Association's annual cost study."Production profits began to slip in 2004, and we see a continuation of this trend in 2006," said Marina Walsh, a senior director in MBA's research and economics department. "Despite some companies' best efforts to boost production revenues through the origination of higher-yielding mortgage products, several factors worked against the industry as a whole -- the negative yield curve which increased the cost of funds, lower sales productivity and higher per-loan sales and fulfillment costs, particularly personnel-related costs. Servicing profits in 2006 partially offset production losses, but even these profits declined from 2005 levels due to mortgage servicing hedge losses." Production revenues increased, but so did production operating expenses, which were up 17%. The net cost to originate increased to $2,476 per loan in 2006, compared with $2,049 per loan in 2005. On the servicing side, per-loan financial profits averaged $58 in 2006, down from $104 in 2005.

Over 50 additional classes of net interest margin notes from five issuers have been downgraded by Fitch Ratings as a result of the performance of the NIM securities and changes to the rating agency's subprime loss forecasting assumptions.Fitch also affirmed the ratings on more than 20 NIM classes, and placed 11 classes on Rating Watch Negative. Among the NIM securities affected by the latest downgrades are 27 classes from 10 Greenwich Capital Soundview deals and 19 classes from eight First Franklin deals. The rating actions were attributed to the pay-down performance of the NIM securities compared with initial projections, as well as 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."

New York Mortgage Trust Inc., New York, has reported that a previously announced 1-for-5 reverse split of its common stock has prompted a change in its stock symbol from NMTG to NMTR on the OTC Bulletin Board.The company said its transfer agent is sending shareholders instructions on how to exchange their current common shares for new shares. New York Mortgage Trust is a real estate investment trust that invests in and manages residential adjustable-rate mortgage loans and mortgage-backed securities.

R&G Financial Corp., San Juan, Puerto Rico, has announced that its status as an approved lender for the Department of Housing and Urban Development has been reinstated.R&G also reported the execution of an agreement with the investors from the company's 2006 financing transaction that will permit it to repurchase certain outstanding warrants for a nominal consideration upon the sale of R-G Crown Bank, R&G's wholly owned Florida thrift subsidiary. Regarding R&G's approved-lender status, the company said HUD's chief administrative law judge had recently ordered the department to reinstate R&G pending the outcome of an appeal, citing HUD's failure to follow its regulations in withdrawing R&G Mortgage Corp.'s approved-lender status. R&G can be found on the Web at http://www.rgonline.com.

First American LoanPerformance, a San Francisco-based provider of residential mortgage data and analytics, has announced major enhancements to TrueStandings Securities, a Web-based business intelligence platform that provides loan-level access to the company's mortgage securities database.The company said the enhancements include a new in-progress period reporting function offering the earliest view of performance and prepayment information on 80% of active pools up to 12 business days earlier than previously possible. Improvements also include a bulk export capability enabling faster and more detailed analysis of up to two gigabytes of loan-level data, and a lookup tool for finding securities that match a specific CUSIP number. First American LoanPerformance said its database contains over $2 trillion worth of mortgage transactions representing 85% of active nonagency securitized mortgages. The company can be found online at http://www.loanperformance.com.