Servicing

WMC Mortgage, Irvine, Calif., recently auctioned off $3 billion in subprime loans but offered few details on the sale.In a statement, the General Electric-owned company said only that the mortgages included a mix of performing and "seasoned" loans. It did not disclose price or the identity of the buyer(s). Like many subprime lenders, WMC has been forced to repurchase delinquent subprime mortgages from investors in the secondary market. The company, so far, has declined to quantify its buyback problems. After the auction, WMC now has $1.5 billion in loans on its balance sheet. According to the Quarterly Data Report, it ranked 10th among subprime lenders in the first quarter, originating $3.4 billion in loans, a 50% decline from the total for the same period a year earlier.

Class B-2 of Nomura Asset Securities Corp.'s commercial mortgage pass-through certificates, series 2006-HE1, has been placed on Rating Watch Negative by Fitch Ratings.In addition, the ratings on 29 classes in two Nomura transactions have been affirmed. Fitch said the negative rating action was due to a deterioration in the relationship between credit enhancement and loss expectations. The mortgage pools consist of first- and second-lien, adjustable- and fixed-rate residential mortgages. The rating agency can be found online at http://www.fitchratings.com.

The Securities and Exchange Commission has initiated a formal investigation of New Century Financial Corp., according to the subprime mortgage company, which is in bankruptcy.Previously known as one of the nation's largest subprime lenders, New Century disclosed the existence of the SEC investigation in a July 5 securities filing and said it is cooperating with the commission. An internal investigation by the Irvine, Calif.-based company earlier this year discovered accounting errors relating to its loan repurchase losses and residual interests in securitizations. New Century has warned that its financial statements for 2005 and 2006 should not be relied on. New Century also disclosed in the SEC filing that it completed the sale of its servicing assets and servicing platform to Carrington Capital LLC for $177.4 million, including $5 million that is being held in escrow to indemnify Carrington for any possible claims. The company can be found on the Web at http://www.ncen.com.

Mortgage companies shaved 4,900 full-time employees off their payrolls in May after cutting 9,200 in April, according to the latest government report.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banking/broker sector fell from 472,000 in April to 467,100 in May. The report indicates that 5,400 mortgage brokers exited the business in May -- the first significant decline since January. The employment numbers for other mortgage professionals stabilized in May after 17,400 job cuts since January. The BLS can be found online at http://stats.bls.gov.

Two classes of Harborview Mortgage Loan Trust Inc. series 2006-6 have been downgraded by Fitch Ratings and two have been placed on Rating Watch Negative.Class B-4 was downgraded from BB to BB-minus and placed on Rating Watch Negative, and class B-5 was downgraded from B to CCC/DR2. Class B3 was placed on Rating Watch Negative. In addition, Fitch affirmed the ratings on three other classes in the transaction. The rating agency attributed the negative rating actions to a deterioration in the relationship between credit enhancement and loss expectations. The deal is backed by hybrid and adjustable-rate mortgage loans secured by residential first liens.

Eight classes of New Century Home Equity Loan Trust series 2006-S1 have been downgraded by Fitch Ratings, four of which have also been placed on Rating Watch Negative.The downgrades were as follows: class M-1, from AA to A-minus; class M-2, from A-plus to BBB; class M-3, from A to BB; class M-4, from A-minus to B; class M-5, from BBB-plus to C/DR5; class M-6, from BBB to C/DR5; class M-7, from BB to C/DR6; and class M-8, from BB-minus to C/DR6. Fitch also placed classes M-1 through M-4, as well as classes A-1, A-2a, and A-2b, on Rating Watch Negative, and removed class M-6 from Rating Watch Negative. The negative rating actions were attributed to the fact that credit enhancement levels may be too low to maintain current rating levels in view of projected losses. The transaction is backed by subprime second-lien loans. Fitch can be found online at http://www.fitchratings.com.

New York Mortgage Trust Inc., a New York-based real estate investment trust, has reported that no dividend will be paid on its common stock for the second quarter.The decision of the REIT's board to omit a dividend "reflects the company's focus on eliminating operating losses through the sale of its mortgage lending business and conserving capital to build future earnings from its mortgage portfolio operations," the company said. NYMT, which invests in and manages residential adjustable-rate mortgages and mortgage-backed securities, can be found online at http://www.nymtrust.com.

As the housing swoon continues and foreclosures climb, more buyers are turning to real estate auctions to find good deals, according to Hudson & Marshall, a Dallas-based firm that will auction over 400 Northern California homes on July 17-22.Valued from $100,000 to more than $800,000, the homes come with guaranteed title insurance paid by the seller, ensuring that all properties are free of any back taxes or liens, the real estate auction firm said. Citing data from the National Auctioneers Association, H&M said the fastest growing sector of the $257.2 billion auction industry is residential real estate auctions, which jumped 12.5% in 2006. "It's not unusual for some properties to sell at auction for 70%-80% of their list price," said Dave Webb, an H&M principal. "This is truly a buying opportunity not to be missed." H&M can be found online at http://www.hudsonandmarshall.com.

Foreclosure filings in Massachusetts totaled 2,136 in May, the eighth consecutive month in which they have exceeded 2,000, according to ForeclosuresMass.com, a provider of foreclosure data based in Framingham, Mass.The company said lenders initiated foreclosure proceedings against 23,638 homeowners over the past 12 months, a 74% increase from the 12-month level recorded a year earlier. "May continues to be a record month for foreclosures affecting Massachusetts homeowners, and the trends suggest that we may continue experiencing these [historic] numbers throughout 2007," said Jeremy Shapiro, president and co-founder of ForeclosuresMass.com. The company can be found online at http://www.foreclosuresmass.com.

The delinquency rate on home equity loans held by commercial banks increased sharply in the first quarter, according to the American Bankers Association.The ABA's quarterly consumer credit delinquency survey showed that 2.15% of closed-end home equity loans were overdue at the end of the first quarter, up from 1.92% in the fourth quarter of 2006. Delinquencies also rose on home equity lines of credit, from 0.57% in the fourth quarter to 0.60% in the first quarter. The HELOC overdue rate remained the lowest delinquency rate for any consumer credit category tracked by the ABA. ABA chief economist James Chessen said slow job growth and falling home prices have weakened overall consumer credit. "There are still signs of consumer financial distress, which will continue throughout most of this year as the worst of the housing problem works its way through the economy," Mr. Chessen said. The ABA can be found on the Web at http://www.aba.com.