Servicing

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.

Fitch Ratings has assigned an "Acceptable" construction loan servicer rating to Wachovia Securities, Charlotte, N.C.Construction loan servicing at Wachovia is handled by the construction loan administration and construction management groups. "The rating considers Wachovia's extensive history of construction loan administration and servicing, its experienced and tenured management and staff, and the strong financial resources provided by its parent, Wachovia Corp.," the rating agency said. Fitch rates construction loan servicers "Acceptable" or "Unacceptable." It can be found online at http://www.fitchratings.com.

Colonial Savings, Fort Worth, Texas, has purchased the servicing rights on 18,431 home loans with a combined principal balance of approximately $1.7 billion from a Midwestern bank.Colonial Savings said the acquisition increases its servicing portfolio by 15% on a dollar-volume basis to $12.7 billion. The effective date of the transfer will be June 1. James DuBose, president and chief executive officer of Colonial Savings, said the company estimates that the addition of the new loans will reduce its per-loan average cost of servicing by 16%.

Of the $43 billion in mortgage loans originated in March by Countrywide Financial Corp., Calabasas, Calif., $26 billion were for refinancings, a $3.4 billion increase from the refi level recorded the previous March, according to the company.This contributed to an overall increase of 5% in volume, Countrywide reported. Purchase loans fell from $19 billion in March 2006 to $17 billion last month. Home equity fundings were down 5%, nonprime fundings were down 29%, and originations of option adjustable-rate mortgages totaled $3.5 billion, down from $8.8 billion a year ago. Countrywide's pipeline at the end of March totaled $69 billion, up $5 billion from that of March 2006. The servicing portfolio totaled $1.4 trillion, compared with $1.2 trillion a year earlier, and delinquencies on the portfolio stood at 4.29% for March, compared with 5.02% for December 2006 and 3.68% for March 2006. "Historically, delinquencies have trended downward from the fourth quarter to the first quarter due to seasonality," said David Sambol, Countrywide's president and chief operating officer. "While current market conditions are creating short-term volatility in our residential mortgage business, management believes the company is well-positioned to capitalize upon the longer-term opportunities that are being created as the marketplace rationalizes." The company can be found online at http://www.countrywide.com.

Consumer advocates are urging Congress to amend the bankruptcy code so that homeowners can restructure high-cost loans and avoid foreclosure.The current code protects mortgage lenders, according to the National Association of Consumer Bankruptcy Attorneys, and does not allow the bankruptcy judges to reduce the interest rate or principal amount so that homeowners can successfully emerge from bankruptcy with affordable payments. As a result, more homeowners with subprime loans are forced to walk away from the homes, according to NACBA president Henry Sommer. "Help is urgently needed for hundreds of thousands of American families at risk of losing their home due to abusive home loans," he said. An NACBA survey shows that bankruptcy attorneys are finding that more of their clients have problems involving subprime loans. Half of the respondents said 50% of their clients with homes have mortgage-related problems, while 20% of the attorneys said 75% of their clients with homes have mortgage-related problems. The Consumer Federation of America and the Center for Responsible Lending joined the NACBA in calling for bankruptcy reforms.

With the possibility of accelerating foreclosures this year and next, Congress might consider creating a rescue fund that would allow the Federal Housing Administration to purchase and cure defaulted mortgages, according to a congressional report."While this policy option would include upfront costs," lenders would likely sell those loans at a discount "given the prospect of mass delinquency and foreclosure," the Joint Economic Committee report says. The report notes that former FHA commissioner William Apgar authored the proposal to fund and revamp the FHA to oversee a rescue fund. John Robbins, chairman of the Mortgage Bankers Association, said such a proposal could have a "detrimental effect" on the FHA mortgage insurance fund. The MBA chairman also said the magnitude of the foreclosure problem is being overblown, but that industry is working on solutions to refinance delinquent borrowers. The quickest and most cost-effective way to provide help for troubled homeowners, the JEC report says, is to step up funding for community-based foreclosure prevention programs.

Freddie Mac has announced the pricing of $500 million of fixed-rate noncumulative perpetual preferred stock at $25 per share, with a dividend rate of 5.66%.Freddie Mac will have the option to redeem all or part of the 20 million shares of preferred stock (CUSIP: 313400665) on or after March 31, 2012, at $25 per share plus accrued dividends, the government-sponsored enterprise said. The stock is being offered via a syndicate of dealers headed by Banc of America Securities LLC and Morgan Stanley. Freddie Mac can be found online at http://www.freddiemac.com.