Servicing

Foreclosures soared by nearly two-thirds in the Northeast last year, while the Southeast recorded a smaller surge of 37%, according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm.The foreclosure spike of 64.6% in the Northeast was fueled by "a fourth-quarter filings scramble" in the New York and Boston metropolitan areas and across northern New Jersey, the company reported. Massachusetts led the way, as foreclosure filings skyrocketed 184.3%, from 8,489 in 2005 to 24,137 in 2006. The region recorded 96,101 filings in 2006, compared with 58,394 in 2005. In the Southeast, a similar "year-end scramble" helped boost foreclosure filings well over 200,000. The region ended the year with 220,189 filings, compared with 160,259 in 2005, according to ForeclosureS.com. Despite the jump, Florida yielded its distinction of leading the nation in foreclosures to California, finishing the year with 120,989 filings (a 26.8% rise), compared with 157,417 for California. The company can be found online at http://www.foreclosures.com.

The delinquency rate on home equity loans declined in the third quarter, while the overdue rate on home equity lines of credit increased slightly, according to the American Bankers Association.The ABA survey found that 1.79% of home equity loans at banks were delinquent in the third quarter of 2006, down 10 basis points from the level recorded in the second quarter. At the same time, the overdue rate on home equity lines of credit increased by 5 bps to 0.57% in the third quarter. HELOCs continued to have the lowest delinquency rate of any consumer credit category tracked in the ABA Consumer Credit Delinquency Bulletin. Overall, the ABA found that late payments for most types of consumer loans rose in the third quarter, with the credit card delinquency rate rising to 4.57% from 4.41% in the second quarter. The ABA can be found on the Web at http://www.aba.com.

The struggling Mortgage Lenders Network will auction off a bulk package of mortgage servicing rights believed to have a total value of just under $5 billion, investment banking sources have told MortgageWire.The auction is expected to occur this week. Meanwhile, a source inside the Middletown, Conn.-based company -- and others outside the firm -- say Lehman Brothers is talking to MLN about taking over some of its shuttered wholesale assets. Lehman had no comment. At MW's deadline, MLN had not responded to a telephone call and an e-mail message about the matter. In late December MLN, a nonprime lender, shuttered its entire wholesale operation -- which accounts for 90% of its production -- but said it will continue to fund through retail means. (For more details on the servicing sale, see the Jan. 8 issue of National Mortgage News.)

Class B-5 of Structured Asset Securities Corp. residential mortgage-backed certificates, series 2003-AL1, has been placed on Rating Watch Negative by Fitch Ratings.In addition, Fitch affirmed the ratings on 11 classes from two SASCO issues. The negative rating action was attributed to a deterioration in the relationship between credit enhancement and expected losses.

The nation's heartland also experienced a dramatic increase in foreclosures last year, according to ForeclosureS.com.The Midwest recorded 204,656 foreclosure filings in 2006, an increase of more than 70% from 120,298 in 2005, the company reported. Iowa and Kansas experienced increases of more than 100% in foreclosure filings, while Illinois, Michigan, Missouri, Nebraska, and North Dakota reported filing surges ranging from 80% to 96%, ForeclosureS.com said.

The Southwest led the nation in foreclosures in 2006, according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm.California, Colorado, and Texas were among the hardest-hit states in the region, with California topping the list at 157,417 foreclosure filings, up 94.3% from the previous year's level, the company reported. Colorado recorded 68,310 foreclosure filings last year, up 55.4%, while Texas recorded 106,845 filings, up 35.2%. Nationally, 970,948 filings were reported in 2006, up more than 50% from about 641,000 in 2005. Alexis McGee, president of the firm, said she believes the worst is over. "Home inventories are now dropping, and markets are improving," Ms. McGee said. "That means relief to overextended homeowners who bought homes they couldn't afford with the help of little money down and low-teaser-rate mortgages." The company can be found online at http://www.foreclosures.com.

Prepayment rates for 30-year mortgages in Fannie Mae mortgage-backed securities rose by 10% in December, driven by stronger-than-expected turnover, according to Bear Stearns & Co.The aggregate speed on 30-year Fannie Maes was a constant prepayment rate of 12.0 CPR, up from 10.9 CPR in November, said Bear Stearns analyst Dale Westhoff. The aggregate speed for Freddie Mac 30-year collateral rose from 10.3 CPR in November to 11.1 CPR in December. The speeds of discount coupons rose 5%-7% despite slowing seasonal factors, but these faster-than-expected speeds do not necessarily suggest a stronger housing market, according to Mr. Westhoff. He said sellers have become more flexible on asking prices since the summer of 2006. "As the housing market goes through this price discovery process, we are likely to see some rebound in home sales that counter seasonal effects," the analyst said. Meanwhile, aggregate speeds for 30-year Ginnie Mae collateral remained nearly unchanged in December. Bear Stearns can be found online at http://www.bearstearns.com.

A New York law firm says it has "commenced" a shareholder lawsuit against Countrywide Financial Corp., but so far there is no evidence a lawsuit has been filed.As previously reported, Stull, Stull & Brody alleges that certain Countrywide executives and directors backdated and "manipulated the prices of stock option grants." But Countrywide officials have not seen a complaint, and attorneys at the law firm have not responded to inquiries about the supposed filing. "The company has not seen a copy of any lawsuit brought by Stull, Stull and Brody, and we generally do not comment on pending litigation matters," Countrywide said in a statement. It added: "However, we believe the allegations laid out in the news release to be improper and lacking any merit and if the suit moves forward we will defend against it vigorously." The publicly traded company, based in Calabasas, Calif., can be found online at http://www.countrywide.com.

Freddie Mac expects to post a loss for the third and fourth quarters of 2006 despite strong results in the first half of the year, according to the company.Freddie Mac estimated that net income will total $2.5 billion for the first nine months of 2006, up from $1.4 billion for the first nine months of 2005. But the company estimated that it will report a loss of about $550 million for the third quarter of 2006. A 50-basis-point decline in long-term interest rates during the third quarter reversed previous mark-to-market gains in its derivative and credit guarantee portfolios, the government-sponsored enterprise said. Those conditions persisted in the fourth quarter, the company noted. In a conference call with investors and analysts, chief executive officer Richard Syron said Freddie Mac has previously warned investors that changes in accounting policy will add "volatility" to quarterly results. Freddie Mac estimated that its share of the GSE guarantee market slipped to 43% through November 2006, down from 45% in the same period of 2005. Mr. Syron struck a positive tone when talking about housing markets, saying he believes that conditions are starting to improve. The GSE can be found online at http://www.freddiemac.com.

Mortgage lenders cut 2,900 full-time employees from their payrolls in November, wiping out a 2,500 increase in October that established a new high for jobs in the mortgage industry.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banking/broker sector declined from 507,000 in October to 504,100 in November. Housing economists have been expecting a cutback, with single-family originations trending down during the second half of last year. Freddie Mac estimates that originations of conventional mortgages dropped from $715 billion in the second quarter to $597 billion in the fourth quarter. For the whole year, originations totaled $2.65 trillion, compared with $3.17 trillion in 2005, according to a December economic outlook report by the secondary-market agency. The Bureau of Labor Statistics can be found online at http://stats.bls.gov.