Servicing

Thanks to a strong refinancing market, Countrywide Home Loans originated $40.4 billion of home mortgages in April, an 11% gain from its volume in the same month last year.However, its nonprime fundings plunged by 48% to just $1.68 billion. The company released its April results on May 9, a day after its stock ran up 7.2% on takeover rumors. Countrywide's policy is not to comment on takeover talk, but investment banking sources familiar with the company told MortgageWire that they do not think the firm is in play. In April, refinancings accounted for 61% of its production, compared with 54% for the same month last year. About 0.69% of all the loans Countrywide services ($1.4 trillion) are in some form of foreclosure. The company can be found online at http://www.countrywide.com.

Six classes of Fremont Home Loan Trust's residential mortgage-backed certificates, series 2006-B pool 2, have been downgraded by Fitch Ratings.The downgrades were as follows: class SL-M5, from A-plus to BBB-minus; class SL-M6, from A to BB-minus; class SL-M7, from A-minus to B; class SL-M8, from BBB-plus to C/DR6; class SL-M9, from BBB-plus to C/DR6; and class SL-B1, from BBB to C/DR6. Classes SL-M5, SL-M6, and SL-M7 were placed on Rating Watch Negative, as were classes SL-M3 and SL-M4 of pool 2, classes M-9, M-10, and M-11 of pool 1, and class M-6 of series 2003-B. Fitch also upgraded four classes from the Fremont deals and affirmed the ratings on 18 classes in the subprime transactions. The downgrades were attributed to deterioration in the relationship between credit enhancement and expected losses.

Thirteen classes of GS Mortgage Securities Corp. residential mortgage pass-through certificates from four GSAMP transactions have been downgraded by Fitch Ratings.Fitch also placed 11 classes on Rating Watch Negative, assigned Distressed Recovery ratings to five classes, and affirmed the ratings on 16 other classes in the transactions. The negative rating actions were attributed to faster-than-expected prepayments and earlier-than-expected collateral losses for series 2005-S1 and 2005-S2; losses that have exceeded excess spread for the past eight months for series 2006-S1; and losses that have exceeded excess spread for three of the past four months for series 2006-S2. The deals consist of closed-end fixed-rate mortgage loans secured by second liens on residential properties.

The long-term issuer default ratings of R&G Financial Corp., San Juan, Puerto Rico, and R&G Mortgage have been lowered from BB to BB-minus by Fitch Ratings.Fitch also downgraded R&G Financial's preferred stock from B to B-minus, lowered various ratings of other R&G subsidiaries such as R-G Premier Bank and R-G Crown Bank, and maintained its negative rating outlook on the companies. The rating agency said the actions stemmed from the longer-than-expected delay in releasing audited financial statements, regulatory and legal issues, R&G's deteriorating operational results in 2006, and the mix and level of its capitalization. "R&G is lagging its Puerto Rican peers in the resolution of its accounting issues," Fitch said. Fitch can be found online at http://www.fitchratings.com, and R&G Financial can be found at http://www.rgonline.com.

Prepayment rates for 30-year mortgages in Fannie Mae and Freddie Mac mortgage-backed securities were little changed in April, according to the Bear Stearns Prepayment Commentary."Improving seasonal factors supporting housing turnover and a 12-basis-point rally in mortgage rates were offset by the cooling housing market and a two-day decline in the business calendar (counting Good Friday as a holiday)," said Bear Stearns analysts Dale Westhoff and V.S. Srinivasan. The aggregate speed of 30-year Fannie Maes was a constant prepayment rate of 11.8 CPR, unchanged from that of the previous month, and 10.9 CPR for comparable Freddie Macs, up from 10.7 CPR in March. The analysts said premium coupon speeds "showed very little response to the recent rally in rates," as Fannie 6.0s rose only 1.4 CPR and Fannie 6.5s declined 0.1 CPR. Meanwhile, aggregate speeds for 30-year Ginnie Mae collateral were also "relatively unchanged" in April, the analysts said. Bear Stearns can be found online at http://www.bearstearns.com.

The Department of Housing and Urban Development has announced that it will speed disaster assistance to tornado-ravaged Kiowa County, Kan., and provide support to homeowners and low-income renters forced from their homes after the recent devastating storms.HUD said its Community Development Block Grant and HOME programs will give the state the flexibility to redirect millions of dollars to housing and services for tornado victims. HUD is in discussions with Kansas officials to waive certain requirements under both programs to expedite the repair and replacement of damaged housing. HUD said it is granting immediate foreclosure relief, including a 90-day moratorium on foreclosures and forbearance on foreclosures of homes insured by the Federal Housing Administration. It is providing temporary housing and shelter. HUD said it will work with the Federal Emergency Management Agency to identify vacant public housing and HUD-owned properties that can be used as temporary housing for those forced from their homes. It is also offering loan guarantee assistance and will offer state and local governments federally guaranteed loans for housing rehabilitation, economic development, and repair of public infrastructure.

Two tranches from Aames Mortgage Trust 2003-1 have been downgraded by Moody's Investors Service.Class B was downgraded from Ba1 to Caa3, and class M-6 was downgraded from Baa3 to B2. The downgrades were attributed to credit enhancement levels that "may be low" given the projected losses on the underlying pool. "Although the deal is performing within Moody's original loss expectations, credit enhancement has declined due to stepped-down enhancement levels combined with high back-ended losses," the rating agency said. The transaction consists of first- and second-lien, adjustable- and fixed-rate subprime mortgage loans.

Four certificates from Ace Securities Home Equity Loan Trust series 2004-HE1 have been downgraded by Moody's Investors Service.The downgrades were as follows: class M-4, from Baa1 to Baa3; class M-5, from Baa3 to B1; class M-6, from Ba2 to Caa2; and class B, from Caa2 to C. The certificates were downgraded because "credit enhancement levels are low given the current projected losses on the underlying pools," Moody's said. As of the April 25 reporting date, the transaction had zero overcollateralization and the class B tranche had taken approximately $3.4 million in writedowns, the rating agency said. The transaction consists of subprime first-lien adjustable- and fixed-rate loans.

FTSE Group, a global index provider, has announced the licensing of Barclays Global Investors to create five new iShares Exchange Traded Funds that track the FTSE NAREIT U.S. Real Estate Index Series.FTSE said the new iShares funds will be the first exchange-traded funds to track real estate market subsectors in the United States. FTSE and the National Association of Real Estate Investment Trusts partnered in March 2006 to collaborate on domestic U.S. real estate indexing. The iShares Funds will be linked to the FTSE NAREIT Residential, Industrial/Office, Retail, Mortgage REIT, and Real Estate 50 indices. "REITs provide a transparent window for investors into the real estate asset class, and the use of the FTSE NAREIT index sectors by BGI spotlights key property types of traditional interest to investors," said Steven A. Wechsler, NAREIT's president and chief executive officer.

Nearly all major mortgage companies and many smaller ones will be offshoring some business processes in three to five years, according to a new report from Deloitte Consulting LLP.Approximately half of the 40 largest mortgage lenders in the United States are now offshoring, and the industry is now poised at an "inflection point," Deloitte says. "The large firms already immersed in offshoring are looking past cost savings to other business drivers and benefits -- the challenge on the horizon will be the shift toward longer-term, strategic integration of offshoring into overall operations," the company said. "The many mortgage lenders who have yet to make any offshoring moves at all now have a window of opportunity to get ahead of the competition and begin to achieve cost considerations so they can then move on to enjoy the full range of offshore benefits." The report found that lenders expect savings of 35%-45% when moving processes offshore, and that data security, mortgage experience, and service quality were identified by 10 prominent vendors as the most important criteria on which they are judged by lenders. Deloitte can be found online at http://www.deloitte.com.