Servicing

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.

General Motors may need to contribute up to $945 million to cover delinquent mortgages made by the lending affiliates of General Motors Acceptance Corp., according to a new report by Lehman Brothers.Late last year, GM sold a controlling stake (51%) in GMAC to Cerberus Capital Management for $14.4 billion. A new Lehman report penned by analyst Brian Johnson says GM may need to make a cash contribution of $900 million to $945 million to cover loan losses at GMAC. Originally, Lehman had forecast that GM would take an additional $400 million hit on GMAC. GM and GMAC have yet to release fourth-quarter results. According to estimates made by the Quarterly Data Report, GMAC-RFC -- a correspondent buyer of mortgages -- acquired $21.7 billion in subprime loans in 2006, while its wholesale arm, Homecomings, table-funded $1.9 billion. GMAC-RFC is also the nation's second-largest warehouse provider, with lines of credit extended to several subprime funders.

Foreclosure filings declined in February for the second straight month, indicating that the worst may be over in "America's home foreclosure crisis," according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm.Nationally, 106,074 filings were reported in February, down 3.4% from 109,851 in January, the company said. However, the numbers were still up nearly 65% from the 64,375 filings in February 2006. "The foreclosure numbers finally are beginning to reflect the stabilization in housing markets that we've been talking about for the last few months," said Alexis McGee, president of the firm. The company can be found online at http://www.foreclosures.com.

Freddie Mac's board of directors has announced a dividend of $0.50 per share on the corporation's voting common stock for the first quarter.The board also declared the following preferred stock dividends per share: $0.58 on its 1996 and 1998 variable-rate stock; $0.72625 on its 1997, 2001, and 2002 5.81% stock; $0.625 on its 5% stock; $0.6375 on its 1998 and 1999 5.1% stock; $0.6625 on its 5.3% stock; $0.72375 on its 5.79% stock; $0.4475 on its 1999 variable-rate stock; $0.49125 on its January 2001 variable-rate stock; $0.63125 on its March 2001 variable-rate stock; $0.48125 on its May 2001 variable-rate stock; $0.73 on its 2006 variable-rate stock; $0.75 on its 6% stock; $0.7125 on its 5.7% stock; $0.8025 on its 6.42% stock; $0.36875 on its 5.9% stock; and $0.28642 on its 5.57% stock. The dividends will be payable on March 30 to stockholders of record as of March 12. Freddie Mac can be found online at http://www.freddiemac.com.

Zacks Equity Research, Chicago, announced March 2 that Liberty Property Trust, Malvern, Pa., had been designated its "Bear of the Day," a stock expected to underperform the markets over the next three to six months.Zacks said the commercial real estate investment trust is focusing on development that "could prove beneficial down the road" but that won't add to near-term earnings. "We expect continued earnings dilution," with "little to zero" growth in funds from operations in 2007, Zacks said. "We find this troubling, as office and industrial real estate fundamentals continue to improve across the country," the research firm said. Zacks can be found online at http://www.zacks.com, and Liberty Property Trust can be found at http://www.libertyproperty.com.