Servicing

The Homeownership Preservation Foundation, Minneapolis, has received $200,000 in support from Ocwen Loan Servicing LLC, West Palm Beach, Fla.The foundation said the funding will be used in its effort to prevent foreclosures in the United States through its national consumer hotline, 888-995-HOPE (4673), and its website. "The foundation is making a real difference in helping thousands of people stay in their homes, many of those Ocwen customers," said Bill Rinehart, vice president and chief risk officer for Ocwen Loan Servicing. Colleen Hernandez, president and executive director of the foundation, said calls to its hotline are up 30% in the first quarter and "we are receiving more than 300 calls a day from homeowners in trouble." The foundation can be found online at http://www.995hope.org.

The Neighborhood Assistance Corporation of America is planning to conduct protests and mock foreclosures at the homes of Wall Street and mortgage company executives -- demanding loan modifications for subprime borrowers who are facing foreclosure.Subprime adjustable-rate mortgages were "structured to fail," and "we are going to go into their neighborhoods" if they don't stop the foreclosures, NACA chief Bruce Marks said at a Washington news conference. The Boston-based community advocacy group wants the investment banking firms and subprime lenders to restructure the loans so that troubled borrowers get a fixed-rate mortgage at the initial qualifying rate (e.g., a 2/28 ARM with an initial interest rate of 6% would be restructured as a 6% fixed-rate mortgage). NACA plans to start the protest campaign on April 21 by inviting subprime borrowers to its offices in 33 cities to educate them about subprime "scams" that were used to exploit them with loans they could not afford, Mr. Marks said. The group is also pledging $1 billion to refinance victims of predatory lending into affordable mortgages through a commitment by Bank of America and Citigroup. NACA has run a mortgage lending operation for subprime homebuyers since the mid-1990s that offers no-downpayment fixed-rate mortgages at 1 percentage point below the market rate. Now it is refinancing mortgages to prevent foreclosures.

Zacks Equity Research, Chicago, has declared Affordable Residential Communities Inc., Englewood, Colo., its "Bear of the Day" -- a stock expected to underperform the markets over the next three to six months -- for April 10.Zacks said ARC "is valued well above better-positioned peers," though its results improved "slightly" in the fourth quarter as a result of cost-cutting and the sale of underperforming assets. The company's portfolio occupancy "continues to drop, as it appears that ARC's cost-cutting efforts have negatively affected resident retention," the research firm said. Zacks added, however, that fallout from the turmoil in the subprime market "could help ARC and the entire manufactured housing industry in the next year." Zacks can be found online at http://www.zacks.com.

Prepayments on 30-year fixed-rate mortgages in agency mortgage-backed securities climbed 16% in March, in part because of a three-day increase in the business calendar and a seasonal rise in housing turnover activity, according to the Bear Stearns Prepayment Commentary.Fannie Mae 30-year collateral recorded a constant prepayment rate of 11.8 CPR overall for the month, up 1.7 CPR from their speed in February, compared with 10.7 CPR for 30-year Freddie Mac collateral, up 1.4 CPR from that of the previous month. "The cooling housing market is starting to take its toll on discount speeds," said Bear Stearns analysts Dale Westhoff and V.S. Srinivasan. "Adjusted for seasoning, relative coupon and seasonal factors, speeds on discount coupons have slowed 15%-20% from a year ago." Meanwhile, overall speeds for 30-year Ginnie Mae collateral increased by just 6%, although premium Ginnie Mae coupons continued to prepay faster than conventionals "mostly because of servicer buy-out activity, which adds about 5-6 CPR," the Bear Stearns analysts said. Bear Stearns can be found online at http://www.bearstearns.com.

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.