Servicing

The HedgeStreet exchange has announced the expansion of its housing price contracts to 10 major metropolitan areas.The binary option contracts, in $100 denominations, are benchmarked against the median sales prices of existing single-family homes reported by the National Association of Realtors, the San Mateo, Calif.-based exchange said. The expansion adds the Las Vegas, Denver, and Washington markets to those of Chicago, Los Angeles, Miami, New York, San Diego, San Francisco, and Boston. "The markets, which HedgeStreet pioneered two years ago and have since been copied by other exchanges, now have a track record of accurately forecasting the median value of residential housing, which is useful to home buyers, sellers, and real estate industry participants," the company said. HedgeStreet can be found online at http://www.hedgestreet.com.

The settlement of shareholder litigation by Fieldstone Investment Corp., Columbia, Md., will ease the way for its acquisition by C-BASS.The former shareholders had filed suit over the price paid by Fieldstone to redeem their shares following the close of its Rule 144A equity offering in 2003. It will pay the former shareholders $10.6 million in total. The settlement removed a potential $0.20 reduction in the per-share price C-BASS could have demanded relating to this litigation. Thus C-BASS, which is currently majority-owned by MGIC and Radian (whose own merger will force them to reduce their equity stake in the company), will pay the agreed-to price of $5.53 per share for Fieldstone.

Servicers are focusing more on valuations in this challenging market, according to speakers at the MBA's National Mortgage Servicing Conference & Expo.Employees in loss mitigation are contacting those in the real-estate owned department to see if they can predict how much a property will sell for if it goes into REO. The end list price at REO is typically very different from early valuation, depending on what happens in local markets, the speakers said. Some companies have their own appraisers or another third-party appraiser who can reconcile values. Panel members said the industry can expect to see the deployment of artificial intelligence to report values, create offers and automated counter offers. "The rules of the game have changed," said Scott Freeze, loss mitigation manager, strategic initiatives, Option One Mortgage. "A lot of times, the [property value is] wrong, which is why loss mitigation teams are working together with foreclosure teams to keep borrowers in their home."

Fidelity National Information Services launched FIS Desktop -- an enterprise workflow, document and expense management offering -- at the Mortgage Bankers Association's National Mortgage Servicing Conference & Expo.FIS Desktop provides mortgage lenders, servicers and investors with technology to manage the post-origination loan cycle from loan acquisition and boarding through loss mitigation and real estate-owned property disposition. "Like many industries, mortgage servicing operations struggle to integrate multiple, function-specific technology solutions across the enterprise," said Greg Whitworth, president of the FIS recently formed Loan Portfolio Solutions division. "A lack of integration among workflow, imaging and expense management applications typically created silos in an organization, making it virtually impossible to respond to market trends," he said. Mortgage Corp., one of the first mortgage servicers to use the integrated components of FIS Desktop, indicated it is experiencing increased efficiency and significantly reduced operating costs as a result of the platform's document and electronic invoice management capabilities.

Freddie Mac executives said at the MBA National Mortgage Servicing Conference in San Diego that they are revising servicing incentives to encourage lenders to implement repayment plans earlier in the default process."Early intervention is key to foreclosure prevention," Freddie Mac vice president for servicing and asset management Ingrid Beckles told MortgageWire. "We find that repayment plans that start at the 30- to 60-day mark have a much better chance of success than if they start at 90 days." As a result, Freddie Mac plans to increase its incentives for servicers that start successful repayment plans after 60 days of delinquency rather than waiting until a later stage of default. Freddie Mac also plans to increase the weighting assigned to successful repayment plans used to cure affordable housing loan products that have gone into default. Freddie Mac also plans to increase the incentive payment to servicers for successful repayment plans from $200 to $250.

One class of SACO I Trust second-lien mortgage-backed securities has been downgraded by Fitch Ratings and one class has been placed on Rating Watch Negative.Class B-4 of series 2005-7 was downgraded from BB to B and class B-4 of series 2005-8 was placed on Rating Watch Negative. The downgrade and watchlist placement reflect a decline in overcollateralization stemming from losses and reduced excess spread, which resulted from rising interest rates and prepayments that have been much faster than expected, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

The performance of subprime adjustable-rate securities issued in 2006 continues to deteriorate rapidly, and the default rate hit 4.62% in January, up 21% in just one month, according to a report by Friedman Billings Ramsey.The default rate of the 2006 origination year exceeds that of 2005 by 51.6% and that of 2004 by a "whopping" 137% at the same age, the FBR report says. The early defaults on 2006 originations have sparked massive loan buybacks and forced a dozen subprime firms into bankruptcy. In a previous report, FBR researchers warned that this book of business is rapidly deteriorating and that "higher default and loss rates may ensue." FBR can be found online at http://www.fbr.com.

Fannie Mae's board of directors has approved the redemption of all eight million outstanding shares of series K variable-rate noncumulative preferred stock.The government-sponsored enterprise said the shares, which have an aggregate stated value of $400 million, will be redeemed in accordance with the series K stock's certificate of designation of terms. The stock will be redeemed on April 2 at a redemption price of $50 per share plus a dividend, which will accrue at the swap rate (as defined in the certificate of designation) plus 1.33% for the period from March 31 to April 2, 2007, Fannie said. Robert Blakely, Fannie's chief financial officer, said redeeming the costly variable-rate stock in the current rising rate environment "will result in millions of dollars in annual after-tax savings." The GSE can be found online at http://www.fanniemae.com.

The American Securitization Forum has released a draft template report that issuers, especially mortgage securitizers, may find helpful in complying with item 1122 of the Securities and Exchange Commission's new Regulation AB.An ASF working group created the draft to aid issuers using a new interpretation of the item to avoid compiling audit attestation reports from what can be a large number of nondiscretionary servicing vendors by having their primary servicer take responsibility for those vendors' compliance. The forum will be open to feedback on the draft and plans to have the final version available by the end of February.

The Federal Agricultural Mortgage Corp., commonly known as Farmer Mac, has announced the purchase of mortgage-backed securities representing beneficial ownership interests in $365 million of distribution cooperative mortgage loans sold by the National Rural Utilities Cooperative Finance Corp.The asset sale should improve loan pricing to the cooperative members of National Rural Utilities Cooperative Finance Corp. and it "advances Farmer Mac's role in financing rural America," said Farmer Mac, a government-sponsored enterprise that provides a secondary market for agricultural real estate and rural housing mortgage loans. The organizations can be found on the Web at http://www.farmermac.com and http://www.nrucfc.coop.