Servicing

Freddie Mac is speeding up the delivery of new subprime products that might offer more stable refinancing alternatives to subprime borrowers by midsummer."These products will include 30-year and possibly 40-year fixed-rate mortgages and adjustable-rate mortgages with reduced margins and longer fixed-rate periods," Freddie Mac chairman and chief executive Richard Syron told a House Financial Services subcommittee. "We expect to offer ARMs of five years or more with margins at adjustment that are as much as 200 basis points below the current step-up." Originally, Freddie Mac was not expected to introduce the subprime products until September. Mr. Syron also said modifications to Freddie's "Home Possible" products are in the works to provide subprime borrowers with additional refinancing options. Some underwriting characteristics of the HomePossible products overlap with those in the subprime market, "providing viable upstreaming opportunities for some segment of subprime borrowers," he said.

Fannie Mae is relaxing its underwriting standards to help refinance homeowners who are facing imminent payment shock due to adjustable-rate subprime mortgages.For borrowers current on their existing ARM, Fannie will overlook unpaid bills on their credit reports to get them into a safer and more affordable mortgage with a 40-year amortization period, if necessary. In congressional testimony, Fannie president and chief executive Daniel Mudd says 1.5 million borrowers could potentially be eligible for this refinancing option over the next two years. Fannie Mae calls this its "HomeStay" initiative. "Our message to lenders with borrowers facing resetting ARMs is this: If your homeowner has managed his credit over the past 12 months, there's a chance Fannie Mae can help," Mr. Mudd told a House Financial Services subcommittee that is looking for possible solutions to rising foreclosures. Fannie Mae can be found online at http://www.fanniemae.com.

Credit-Based Asset Servicing and Securitization LLC, a specialty servicer controlled by mortgage insurance giants MGIC and Radian, agreed in March to acquire Fieldstone Investment Corp., Columbia, Md., for $4 a share under an amended purchase agreement. A recent item referred to the fact that Fieldstone had put itself on the auction block late last year, leaving the erroneous impression that it was still for sale.

The issuance of subprime mortgage-backed securities rose in February and March, but was off 15.8% for the whole quarter compared with that of the first quarter of last year, according to a Friedman Billings Ramsey report.The Arlington, Va.-based investment banking firm reported that the issuance of non-agency subprime MBS fell to $122.5 billion in the first quarter, compared with $145.5 billion in the same period in 2006. However, monthly issuance increased from $37.2 billion in January to $41.9 billion in February and $43.5 billion in March. The monthly issuance of subprime MBS averaged $43.1 billion in 2006, according to the April 13 FBR Investment Management report. FBR can be found on the Web at http://www.fbr.com.

More than a quarter of a million pre-foreclosures and notices of pending foreclosure auctions were filed nationwide in the first quarter, a rise of 22.5% from the level recorded in the fourth quarter of 2006, according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm.The 253,803 filings, up from 207,128 in the fourth quarter, don't include more than 110,000 now-vacant properties that were lost to foreclosure during the same period, the company said. Noting the recent turmoil in the subprime market, the company said the result is that "financially strapped homeowners now have even fewer bailout options." Alexis McGee, president of the firm, said the foreclosure numbers "cast a dark cloud over the American dream of homeownership" that "isn't likely to lift anytime soon." The company can be found online at http://www.foreclosures.com.

LandAmerica Financial Group Inc., a provider of real estate transaction services based in Richmond, Va., has announced a noncash writedown of approximately $21 million ($13 million after taxes) of its customer-relationship intangible asset in the lender services segment.LandAmerica said the reason for the writedown is that Fremont General Corp., one of its tax and flood processing customers, had received a cease-and-desist order from the Federal Deposit Insurance Corp. involving lending practices in its mortgage origination business. LandAmerica said it had determined that the "probable loss of business" from Fremont would result in an impairment of the customer-relationship intangible asset at LandAmerica Tax and Flood Services Inc., which it acquired in 2003. The company added, however, that it has "initially concluded" that the development would not impair the goodwill balance of its lender services segment. LandAmerica can be found online at http://www.landam.com.

Fremont General Corp., Santa Monica, Calif., will sell $2.9 billion in subprime loans to an unidentified buyer, booking a $100 million pretax loss on the deal.According to a new public filing, the same buyer is in "exclusive" talks to buy Fremont's $27 billion subprime servicing portfolio as well as the platform. The buyer will also buy a "portion" of Fremont's subprime production operation even though the unit stopped funding loans several weeks ago. News of the sale and talks sent Fremont's shares soaring 26% to $8.85 in the early afternoon of April 16. Fremont, the holding company for a federally insured depository, can be found online at http://www.fremontgeneral.com.

Fieldstone Investment Corp., Columbia, Md., has announced the securitization by an affiliate, Fieldstone Mortgage Investment Corp., of approximately $358 million of notes.The assets of the trust -- Fieldstone Mortgage Investment Trust, series 2007-1 -- consist of two groups of conventional, adjustable- and fixed-rate mortgage loans secured by first and second liens on residential properties that were originated by Fieldstone Mortgage Co., the origination subsidiary of Fieldstone Investment. Credit Suisse Securities (USA) LLC is the lead underwriter for the transaction. Fieldstone can be found online at http://www.fieldstoneinvestment.com.

Irwin Financial Corp., Columbus, Ohio, expects to take a loss for the first quarter, blaming conditions in the consumer mortgage market and one impaired commercial credit in Michigan."We have had two disappointments during the first quarter," said Will Miller, chairman and CEO of Irwin Financial. "While this is not a pleasant way to start the year, we believe both issues are essentially one-time events." Irwin said that while the credit quality of the company's portfolio of loans has "held up well," turmoil in the secondary market for consumer mortgages during February and March will lead Irwin to report a loss for its home equity operations. Because of the difficulty in selling some mortgage and home equity products, the company said it plans to shift approximately $170 million of loans from its held-for-sale account into its portfolio. That will result in higher credit and loss provision costs for the first quarter. The company can be found online at http://www.irwinfinancial.com.

Classes A-1 and A-2 of Diversified Asset Securitization Holdings I LP have been downgraded from BB to B/DR1 by Fitch Ratings.The downgrades stem from continued deterioration in the quality of DASH I's collateral portfolio, the rating agency said. DASH I is a collateralized debt obligation that was originated and managed by Asset Allocation & Management LLC, which closed Dec. 18, 1999, Fitch said. The portfolio backing the CDO consists of residential and commercial mortgage-backed securities, asset-backed securities, and other CDOs.