Servicing

Accredited Home Lenders, the nation's 12th largest subprime funder, said it has been hit with millions of dollars in margin calls and is now exploring "various strategic options."As MortgageWire went to press, its stock had been decimated on the news, plummeting 54% to a new 52-week low: $5.19. Its 52-week high is $60. In a statement, the San Diego-based non-depository said it has paid $190 million in margin calls since January to satisfy its warehouse lenders. Meanwhile, the company also is seeking waivers on its warehouse covenants. "There can be no assurance that the company will be successful in receiving any of the acquired waivers," says an Accredited statement. The lender is now in the process of cutting costs and laying off workers. Among subprime servicers, it ranks 23rd, according to the Quarterly Data Report.

At the end of 2006, the percentage of home loans that were at least 30 days overdue rose to 4.95%, up from 4.67% at the end of the third quarter, according to the Mortgage Bankers Association's quarterly delinquency survey.The foreclosure rate also rose by 14 basis points, with 1.19% of all loans outstanding being at some point in the foreclosure process. The number of loans entering the foreclosure process rose to a record high of 0.54%, up eight basis points from the third quarter. Delinquencies rose across the board, but the steepest rise in late payments was seen in the subprime and FHA loan categories. The FHA delinquency rate reached a record high in the fourth quarter of 13.46%, up from 12.80% in the third quarter, and 13.33% of subprime loans were overdue, up from 12.56%. In addition, the MBA said that the delinquency rate on subprime adjustable-rate mortgages jumped by 122 basis points to 14.44%. MBA chief economist Doug Duncan said that given the MBA's forecast of "below-trend economic growth and a slowly recovering housing market," the MBA expects delinquency and foreclosure rates to level off toward the end of 2007.

A trio of real estate investment trusts were profiled in the Zacks Growth and Income Profit Track release for March 9.This strategy of Zacks Investment Research Inc., Chicago, looks for stocks with unusually high dividend yields. American Home Mortgage Investment Corp., Melville, N.Y., and the only residential mortgage lender of the three, has a current dividend yield of 16.60%. Crystal River Capital Inc., New York, has a dividend yield of 10.56%, and Deerfield Triarc Capital Corp., Chicago, has a dividend yield of 11.25%.

Moody's Investors Service has placed on review for possible downgrade two classes of certificates from two subprime/home equity Aegis mortgage securitizations, one from a deal issued in 2003 and another from a deal issued in 2004.Specifically, the tranches being reviewed are class B of Aegis Asset Backed Securities Trust 2003-2, which currently has a Baa2 rating; and class B3 of Aegis Asset Backed Securities Trust 2004-1, which currently has a Baa3 rating. "Credit enhancement available to the two Aegis deals has declined due to losses and stepdown, and is expected to decline further due to continued losses," Moody's said. Both deals are backed by subprime credit fixed and adjustable rate collateral, as well as small percentages of second lien mortgages, according to the rating agency.

Ocwen Financial Corp. has gotten commitments from investors to form and capitalize a new unit to invest in the lower tranches and residuals of residential mortgage-backed securities, related mortgage servicing rights, ABX Index protection and other similar assets.Affiliates of Angelo, Gordon & Co., a private investment management firm; Metalmark Capital LLC, a private equity firm established by the principals of Morgan Stanley Capital Partners; and others have committed to forming and capitalizing the new business, Ocwen Structured Investments LLC. The investors will put up to $250 million into the unit, which is expected to raise a total of $300 million in capital. The commitments are subject to being called by the new unit's board in the next 18 months. "Metalmark is excited about partnering with the leading independent servicer in the mortgage industry to create OSI, particularly during this period of industry dislocation and capital scarcity," said Howard Hoffen, Metalmark Capital's chairman and chief executive officer.

Morgan Stanley has pulled a $265 million line of credit from ailing subprime giant New Century Financial Corp., a decision that likely will force the company to file for bankruptcy protection.The LOC was made just last week. According to documents filed with the Securities and Exchange Commission Monday morning, the Irvine-based NCFC also revealed that several of its financiers -- Bank of America, Citigroup, Credit Suisse, Deutsche Bank -- had declared the non-depository in default on warehouse lines or other financial obligations. Documents show that NCFC owes Credit Suisse almost $1 billion due to a repurchase obligation. Meanwhile, some Wall Street firms are terminating NCFC's servicing rights, which could reduce cashflow at the company's servicing unit. According to the just-released Quarterly Data Report, NCFC has $40 billion in servicing rights on its books, ranking 14th nationwide. Among subprime funders it ranks second. Its stock had been halted in trading as MortgageWirewent to press. A spokeswoman did not return telephone calls.

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.