Servicing

American Home Mortgage, a real estate investment trust based in Melville, N.Y., saw its stock price continue to fall on Tuesday, sliding another 6%.At deadline time its shares were trading at $20.53, compared with a 52-week high of $36.96. On Friday afternoon the publicly traded mortgage REIT forecast lower earnings for the first quarter and full year, citing rising delinquencies on its alternative-A loans, among other things. "While nonperforming loans increased during the quarter, the company did experience a decline in early-stage delinquencies, with loans in early-stage delinquencies lower at the end of the first quarter than at year-end 2006," AHM said in a statement. On Monday, the lender's shares fell 15% to $21.92. The stock market was closed on Friday.

Fannie Mae is becoming more involved in higher-risk loan products, but it needs additional staffing and better information systems to deal with the risks, according to the Office of Federal Housing Enterprises 2006 annual report."Systems permit adequate service to clients for traditional loan products, but their deficiencies impact the enterprise's ability to quickly introduce new products or enhancements," OFHEO says. At the same time, Fannie has new initiatives to become more involved in interest-only, subprime, alternative-A, and negative amortization loans, which are "currently about 20% of the book of business," the regulator said. OFHEO reported that Fannie's issuance of single-family mortgage-backed securities declined by 4.9% to $476.1 billion in 2006, but its purchases of single-family private-label securities increased by 16.5% to $48.1 billion. Freddie Mac's issuance of single-family MBS fell 9.4% to $359.1 billion in 2006, and its purchases of single-family private-label securities fell by 37.1% to $106.3 billion.

Fannie Mae and Freddie Mac are making progress in correcting their systems, controls, and financial reporting, but "they still have much to do," according to the Office of Federal Housing Enterprise Oversight's 2006 report on its examinations of the two government-sponsored enterprises."A key indicator of successful remediation will be the timely filing of annual and quarterly financial statements by each company with a clean audit based on a controls-based audit," OFHEO Director James Lockhart said. OFHEO urges the boards of directors at Fannie Mae and Freddie Mac to continue monitoring management's efforts to remedy internal control weaknesses. The agency says Freddie appears further along in fixing its internal controls. And OFHEO indicates that successful remediation "should permit a return to controls-based auditing and ensure a sustainable control environment for financial reporting." OFHEO can be found online at http://www.ofheo.gov.

The loss mitigation tools available to Federal Housing Administration lender/servicers have helped 36,500 thousand families who were behind in their mortgage payment keep their homes during the first half of fiscal year 2007, according to the Department of Housing and Urban Development."FHA lending relief measures continue to help families around the nation work through difficult times, stay in their homes, and avoid foreclosure," HUD Secretary Alphonso Jackson said. HUD is urging Congress to pass an FHA reform bill that would allow the federal mortgage insurance program to finance more subprime borrowers. "Modernizing the FHA would provide more hard-working families with a strong alternative to risky mortgages," the secretary added. In fiscal 2006, the FHA loss mitigation program helped 75,000 delinquent borrowers keep their homes. However, FHA foreclosures totaled 51,600 in fiscal 2006. In addition, 4,900 defaults resulted in pre-foreclosure sales.

Fitch Ratings has assigned LoanCare Servicing Center Inc., Virginia Beach, Va., an RPS3-plus residential subservicer rating for prime loans.In addition, Fitch affirmed the company's RPS3 residential primary servicer rating for prime loans. "The subservicer rating is based on the company's client branding technology, interim servicing, and loan boarding and new loan set-up expertise," Fitch said. "Both the subservicer and primary servicer ratings reflect the company's effective loan administration procedures and established formal training programs as well as the financial strength of LoanCare's parent, LandAmerica Financial Group, which is rated BBB with a Stable Outlook by Fitch." Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating. The rating agency can be found online at http://www.fitchratings.com.

American Home Mortgage Investment Corp., Melville, N.Y., has announced that it expects lower income in the first quarter and in 2007 overall than previously forecast due to conditions in the secondary-mortgage and mortgage-backed securities markets.Conditions in those markets "changed sharply" in March, with "far few buyers offering materially lower prices," said Michael Strauss, American Home's chairman and chief executive officer. "These changes had a significant, adverse impact on our company's first-quarter results, reducing our gain-on-sale revenue and causing mark-to-market losses in our portfolio," he said. The company, a real estate investment trust, said its earnings will probably range from $0.40 per share to $0.60 per share in the first quarter and from $3.75 per share to $4.25 per share for the year. The mortgage REIT can be found online at http://www.americanhm.com.

Foreclosure sales jumped 27% in California last month and now represent 15% of home sales in the state, according to Foreclosure Radar, a foreclosure listings and software company based in Discovery Bay, Calif.The company reported that 5,316 California foreclosures were sold at auction in March, representing a 264% increase in foreclosure sales over the past six months. Of the $2 billion worth of properties sold in March, 4,796 ($1.82 billion) went back to the lender after receiving no bids, the company said. "Foreclosures sold at auction now account for 15% of all home sales in California and continue to rise," said Sean O'Toole, founder and chief executive officer of Foreclosure Radar. "This isn't just a story about failing subprime lenders and their customers. At the current pace, foreclosures will be a significant part of the real estate economy." The company can be found on the Web at http://www.foreclosureradar.com.

Mortgage companies added 3,000 full-time employees to their payrolls in February after laying off 16,400 workers over the previous three months.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banking/broker sector rose from 488,300 in January to 491,300 in February. Considering the meltdown in the subprime sector, the sudden hiring may be explained by increasing demands on servicers to deal with rising delinquencies and foreclosures. The subprime default rate hit 10.52% in January, up 40 basis points in one month, according to a recent report by the investment banking firm Friedman, Billings, Ramsey & Co. Defaults on alternative-A loans rose to 1.86% in January, up 20 bps in one month.

CitiMortgage has renewed its partnership with America's Community Bankers' for-profit subsidiary to continue providing ACB members with secondary-market execution and services."This agreement rewards our members for delivering high-quality loans, giving them a competitive edge in the marketplace," said William Kroll, ACB Business Partners president and chief executive. In other news, ACB has appointed Barbara L. Shyoff to be senior vice president/ legislative counsel and run the trade group's lobbying shop. She was previously special counsel in the Office of Thrift Supervision's regulation and legislation division.

RealtyTrac, an online marketplace for foreclosure properties, has announced a redesign of Yahoo! Real Estate Foreclosure Center that integrates three key functions: foreclosure searches, trend analysis, and education about buying properties in foreclosure.In the current slowing real estate environment, potential buyers can realize substantial discounts on homes that are in foreclosure while helping out homeowners in default and cutting costs for foreclosing lenders, RealtyTrac said. The redesign "incorporates some of the most advanced tools and analytical features from RealtyTrac, and is a major leap forward in providing millions of consumers who access Yahoo! Real Estate with data on foreclosures," said James J. Saccacio, chief executive officer of RealtyTrac. The company can be found online at http://www.realtytrac.com, and the Yahoo foreclosure center can be found at http://realestate.yahoo.com/foreclosures.