Servicing

Anworth Mortgage Asset Corp., a real estate investment trust based in Santa Monica, Calif., has reported an unaudited net loss to common stockholders of $4.3 million ($0.09 per share) for the fourth quarter, compared with a net loss to common stockholders of $986,000 ($0.02 per share) a year earlier.Despite the loss, Lloyd McAdams, Anworth's chairman, president, and chief executive officer, said the fourth quarter "was one of monthly improvement" that the company expects to continue through the first quarter and believes "will produce a break-even to a small profit." Anworth said its portfolio of agency mortgage-backed securities totaled approximately $4.7 billion as of Dec. 31, allocated as follows: adjustable-rate mortgages, 26%; hybrid ARMs, 58%; fixed-rate MBS, 16%; and floating-rate collateralized mortgage obligations, less than 1%. Anworth can be found on the Web at http://www.anworth.com.

Mortgage companies scaled back their payrolls by 5,900 full-time employees in January, as the decline in subprime originations and rising defaults took a toll on wholesalers and mortgage brokers.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banking/broker sector declined from 495,100 in December to 489,200 in January. Since October, employment in the mortgage industry has declined for three consecutive months, and 15,500 employees have lost their jobs. NMN's Quarterly Data Report shows that subprime originations declined by 18.2% during the fourth quarter, to $143.6 billion. Meanwhile, rising defaults have forced over 20 subprime lending shops to close their doors. The default rate on subprime mortgages rose to 10.12% during the fourth quarter, up from 7.07% in December 2005, according to a report by Friedman, Billings, Ramsey.

The residential primary servicer rating for subprime product of New Century Mortgage Corp., a subsidiary of the beleaguered New Century Financial, has been downgraded from RPS3-plus to RPS4 and placed on Rating Watch Negative by Fitch Ratings.The downgrade reflects "uncertainties" over New Century's "ability to maintain adequate funding and remain viable over the near term," the rating agency said. Fitch reported that New Century has said that, if the company is unable to get "satisfactory amendments" to, or waivers of, the covenants in its financing arrangements from enough of its lenders, or obtain new funding sources, its independent auditors "will include an explanatory paragraph indicating that substantial doubt exists as to the company's ability to continue as a going concern." Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating.

Zacks Equity Research, Chicago, has declared Denver-based Affordable Residential Communities its "Bear of the Day" -- a stock expected to underperform the markets over the next three to six months -- for March 7.The REIT, which specializes in manufactured home communities, "pays no dividend, has high debt levels, and is in an industry with little pricing power," Zacks said. Based on the ratio of price to funds from operations, ARC is "valued well above better-positioned peers," the research firm said. "We don't see much upside in the next few quarters, and ARC will continue to struggle throughout 2007." Zacks can be found online at http://www.zacks.com, and ARC can be found at http://www.aboutarc.com.

The residential primary servicer rating of Fremont Investment & Loan for subprime product has been lowered from RPS3-plus to RPS4 by Fitch Ratings.The rating was also placed on Rating Watch Negative. As recently reported in MortgageWire, Fremont General Corp., FIL's Santa Monica, Calif.-based parent company, is in discussions to sell its subprime division after agreeing to a cease-and-desist order with the Federal Deposit Insurance Corp. Fitch said the actions were based on the disclosure about the C&D order. 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.

Prepayment rates for 30-year mortgages in Fannie Mae and Freddie Mac mortgage-backed securities fell about 12% in February in response to a 10-basis-point rise in mortgage rates, slower seasonal housing activity, and fewer business days, according to Bear Stearns & Co."The big story, however, was in the 2006 production 30-year 6.0% and 6.5% coupons, where large declines of from 3 to 4 [constant prepayment rate] were visible," said Bear Stearns analyst Dale Westhoff. "The move higher in rates had its biggest impact on the 6.0% coupon, moving it marginally out of the refinancing window." As an example, the analyst cited the speeds of the 2006 Fannie Mae 6.0, which fell from 13.9 CPR in January to 10.0 CPR in February. The analyst said 30-year mortgage rates would have to fall by more than 50 bps, to 5.70%, to spur another "major surge" in refinancing. Bear Stearns can be found online at http://www.bearstearns.com.

TMSF Holdings, Los Angeles, has officially terminated its agreement to acquire certain wholesale assets of the now-defunct Central Pacific Mortgage, Folsom, Calif., due to what it calls "adverse market conditions."A nondepository, CPM closed its doors recently, as did its Florida affiliate, Ivanhoe Mortgage, a $2 billion-a-year funder. TMSF chief financial officer Daniel Rood told MortgageWire that CPM "went bust three days before the deal was supposed to close." Industry sources told MW that CPM, a mostly prime and alternative-A lender, had buyback requests it could not meet. "They were forced to close because of their warehouse lender," said one adviser, requesting anonymity. TMSF Holdings is a financial holding company that owns The Mortgage Store Financial, a nationwide mortgage banking firm. TMSF can be found online at http://www.tmsfholdings.com.

Amid the meltdown in the subprime sector, insiders at Countrywide Financial Corp. -- including chairman and chief executive Angelo Mozilo -- have sold 7.8 million shares over the past six months, according to figures compiled by Thomson Financial.Based on an average share price of $37, that means insiders -- officers and directors alike -- have unloaded $288 million worth of stock. Since March 1, Mr. Mozilo has exercised options, selling 186,000 shares at a market price of $6.77 million. According to the Quarterly Data Report, Countrywide is the nation's largest subprime servicer, and third-largest funder. Countrywide recently disclosed that $22 billion, or 19%, of its subprime receivables are in some form of delinquency. Its shares now trade at $4 above its 52-week low. Its high is $45.

The Second District Court of Appeals of Florida has ruled that MERS has the right to be a party in a foreclosure action.MERS, an electronic registry for tracking ownership of mortgage loans and servicing rights, said the latest ruling in its favor affirms the legal premise behind MERS and verifies established state law. "We undertook this lawsuit not just for MERS but for the industry as a whole," said R.K. Arnold, president and chief executive officer of MERS. "This victory is for the entire mortgage lending community because MERS is no different than a servicer when it comes to foreclosures, and this case was our opportunity to prove it in court."

Countrywide Financial Corp., Calabasas, Calif., has announced that it has received formal approval from the Office of Thrift Supervision to convert its national bank charter to a federal savings bank (or thrift) charter.The company said Countrywide Bank NA will begin operating as a thrift on March 12, and Countrywide Financial Corp. will become a savings-and-loan holding company, with the OTS as the regulator of both entities. "The conversion to a savings bank charter aligns the regulatory supervision of the company with our strategic objectives, and will help us better leverage our real-estate-finance-focused business model for competitive advantage in the current marketplace," said Angelo R. Mozilo, Countrywide's chairman and chief executive officer. The company can be found online at http://www.countrywide.com.