Servicing

Mortgage giant Washington Mutual, Seattle -- citing the current subprime crisis -- says in a new public filing that its liquidity may be affected by its "inability to access the capital markets or by unforeseen demands on cash."As of MortgageWire's deadline, WaMu's stock was trading down $1 a share at $36. In a filing with the Securities and Exchange Commission, WaMu noted that liquidity "is essential to the company's business," adding, "liquidity in the secondary market for nonconforming residential mortgage loans and securities backed by such loans has diminished significantly." According to the Quarterly Data Report, WaMu is the nation's sixth-largest residential funder. It also ranks sixth among subprime firms.

In a new filing with the Securities and Exchange Commission, Countrywide Financial Corp. -- the nation's largest mortgage banking firm -- revealed that it had $190 billion in short-term liquidity, but that just one-quarter of it ($46 billion) "is highly reliable and available."In early trading Friday morning, its stock was down 13%, or $4 a share. Countrywide filed its 10-Q with the agency late Thursday night, a day in which world stock markets cratered amid concerns that America's subprime crisis has spread overseas, causing large losses at foreign banks that bought risky nonprime bonds and residuals. In its filing, Countrywide notes that "the secondary market and funding liquidity situation is rapidly evolving and the potential impact on Countrywide is unknown." Countrywide adds that market conditions are forcing it to hold more loans on its balance sheet. The company can be found online at http://www.countrywide.com.

Class M-II-3 of Residential Asset Mortgage Products Inc. Trust's series 2003-RS7 asset-backed securitization deal has been downgraded from Baa2 to B3 by Moody's Investors Service.The downgrade was based on credit enhancement levels that are deemed to be low in view of projected losses on the underlying pools, Moody's said. The transaction consists of a fixed-rate and an adjustable-rate pool containing mortgages that are not eligible for inclusion in Residential Funding Co. loan program securitization because they do not satisfy the program guidelines. The mortgage loans were originated by affiliates of RFC and serviced by HomeComings Financial Network Inc., a wholly owned subsidiary of RFC. Moody's can be found online at http://www.moodys.com.

Nearly 50 classes of subprime residential mortgage-backed securities with outstanding balances totaling more than $1 billion were downgraded by Fitch Ratings on Aug. 8.Fitch also affirmed the ratings on classes with outstanding balances of more than $8.5 billion. Among the downgrades were 42 classes from five issues of Long Beach Mortgage Loan Trust asset-backed certificates. Fitch reported that as of the end of the day on Aug. 8, it had downgraded 546 classes (with an outstanding balance of $10 billion) from subprime RMBS deals placed Under Analysis on July 12 and affirmed the ratings on 1,009 classes with an outstanding balance of $86 billion.

Citing capital markets turbulence, Hanover Capital Mortgage Holdings Inc., a real estate investment trust based in Edison, N.J., has announced a postponement of its earnings report for the second quarter and an investor conference call previously scheduled for Aug. 9."Recent turmoil in the capital markets and certain demands on our liquidity have necessitated the company to re-examine its position regarding declines in the fair value of its available-for-sale portfolio of subordinate mortgage-backed securities collateralized by prime mortgage loans," said John A. Burchett, Hanover Capital's president and chief executive officer. The mortgage REIT said it has until Aug. 14 to file its quarterly report and "plans to file by that deadline." Hanover can be found online at http://www.hanovercapitalholdings.com.

Freddie Mac has announced that it will release its second-quarter 2007 financial results before the market opening of the New York Stock Exchange on Aug. 30.The government-sponsored enterprise said it will hold a conference call at 10 a.m. EDT on that date to discuss the company's results. Freddie Mac resumed quarterly reporting in June for the first time since 2002, citing a net loss of $211 million ($0.46 per share) that it attributed primarily to mark-to-market losses on its derivatives portfolio and to credit spread widening.

The Federal Home Loan Banks of Chicago and Dallas have announced discussions aimed at evaluating the feasibility and benefits of combining the business operations of the two institutions.Terry Smith, president and chief executive officer of the Dallas FHLBank, and Mike Thomas, president and CEO of the Chicago FHLBank, issued a joint statement on the talks. "Our focus is on identifying whether and how a combination would produce advantageous results and improved value for members of both organizations and the affordable-housing needs of their communities, while also supporting the ongoing strength of the Federal Home Loan Bank System," the statement said. The Dallas FHLBank reported that it had total assets of $53.3 billion as of March 31, with over 900 member institutions in Arkansas, Louisiana, Mississippi, New Mexico, and Texas. The Chicago FHLBank reported total assets of approximately $87 billion as of March 31 and over 850 member institutions in Illinois and Wisconsin. The Chicago bank can be found online at http://www.fhlbc.com, and the Dallas bank can be found at http://www.fhlb.com.

President Bush, at a news conference Wednesday afternoon, ruled out any type of taxpayer bailout for lenders threatened by the subprime crisis.According to news reports on the president's remarks, he also dismissed proposals to grant Fannie Mae and Freddie Mac greater leeway in increasing their balance sheets. Fannie has asked its regulator for permission to increase the cap on its on-balance-sheet portfolio, a move that could increase liquidity in the secondary market.

Eight classes of subprime residential mortgage pass-through certificates from four transactions issued by Residential Asset Securities Corp. have been downgraded by Fitch Ratings.The downgraded classes, which had outstanding balances totaling $68.5 million, were among the subprime residential mortgage-backed securities placed Under Analysis by Fitch on July 12. Fitch also affirmed the ratings on 33 classes from the RASC transactions. Fitch reported that as of the end of the day on Aug. 7, it had downgraded 499 classes (with an outstanding balance of $9 billion) from subprime RMBS deals placed Under Analysis on July 12, and affirmed the ratings on 896 classes with an outstanding balance of $76 billion. Fitch can be found online at http://www.fitchratings.com.

American Home Mortgage Servicing Inc.'s residential servicer ratings have been downgraded from RPS3-minus to RPS4 by Fitch Ratings and remain on Rating Watch Negative.Affected were American Home's residential primary servicer ratings for prime product, for alt-A product, and for home equity/home equity lines of credit. The actions reflect the announcement on Aug. 6 by American Home Mortgage Investment Corp., a real estate investment trust, that it had filed a petition for protection under Chapter 11 of the U.S. Bankruptcy Code. The company had announced closing its mortgage origination operations on Aug. 1, but said it would maintain both the thrift and servicing businesses. Fitch does not publicly rate AHMS's parent, but the company's financial condition is "an important component" of AHMS's servicer rating, Fitch said. The rating agency added that an RPS4 rated servicer "may not be acceptable for new residential mortgage-backed security transactions unless additional support or structural features are incorporated."