Servicing

The delinquency rate for single-family mortgage loans rose to 4.67% in the third quarter, up 28 basis points from the second quarter and 23 basis points from one year earlier, according to the Mortgage Bankers Association.The increase was spread across all major loan types, most notably for subprime credit quality and Federal Housing Administration loans, the MBA said. The percentage of loans in foreclosure and entering the foreclosure process also rose. The MBA said 1.05 of all loans outstanding were in foreclosure at the end of the third quarter, six basis points higher than at the end of the second quarter. MBA chief economist Doug Duncan said the increase was anticipated, given the slowdown in home price appreciation. "It is important to remember that delinquency and foreclosure rates have been quite low the last two years," he said.

The preferred stock of Thornburg Mortgage Inc., Santa Fe, N.M., has been downgraded from BB-minus to B-plus by Fitch Ratings, and its rating outlook has been revised from Positive to Negative.Fitch also affirmed Thornburg's BB issuer default and senior unsecured notes ratings and assigned a BB-minus rating to its unsecured subordinate notes. The downgrade was attributed to "the priority position of the subordinate debt in relation to the preferred stock in the event of default and the widening gap between the first dollar of rated senior unsecured debt and the last dollar of preferred stock resulting from the recent $100 million offering of series D preferred stock." The Negative outlook resulted from several factors, including management's "aggressive use of leverage," declining "coverage metrics," and spread compression, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Class B-2 of RAAC series 2004-SP2 Trust has been downgraded from B2 to Ca by Moody's Investors Service and classes M-3 and B-1 from the same transaction have been placed on review for possible downgrade.The actions were attributed to a higher-than-expected loss on a single loan that led to a writedown of a portion of the class B-2 balance. The underlying collateral consists of seasoned fixed-rate first-lien mortgage loans. Moody's can be found on the Web at http://www.moodys.com.

Irwin Financial Corp., Columbus, Ind., has reported the completion of a private placement of $30 million of 30-year trust preferred securities issued in two series by IFC Capital Trust X and IFC Capital Trust XI.The Capital Trust X securities bear interest at a fixed rate of 6.532% (175 basis points over the five-year swap rate) for the first five years and then convert to a floating rate of 175 bps over the three-month London interbank offered rate, Irwin said. The Capital Trust XI securities bear interest at a floating rate of 174 bps over three-month LIBOR. The company said it used the proceeds to redeem the entire $30 million of Irwin's 9.95% Capital Trust V securities. Irwin can be found online at http://www.irwinfinancial.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 fourth quarter, up from $0.47 per share in the third quarter.The board also declared the following preferred stock dividends per share: $0.59 on its 1996 and 1998 variable-rate stock; $0.7675 on its 6.14% 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; $0.64528 on its March 2001 variable-rate stock; $0.48125 on its May 2001 variable-rate stock; $0.75 on its 6% stock; $0.7125 on its 5.7% stock; $0.75 on its 2006 variable-rate stock; and $0.8025 on its 6.42% stock; and $0.303 on its 5.9% stock. The dividends will be payable on Dec. 29 to stockholders of record as of Dec. 18. Freddie Mac can be found online at http://www.freddiemac.com.

GMAC Mortgage, the nation's second-largest subservicer, has realigned subservicing responsibilities within its business development division.As part of the new leadership, Ray Morris has been appointed vice president of sales and marketing. Ty Miller will serve as vice president for client relationship management. For the past year, Mr. Morris served as director of strategic partnerships at GMAC, where he was responsible for establishing key subservicing accounts. In his new position, Mr. Morris will lead the team that is developing all third-party subservicing arrangements. Mr. Miller will lead GMAC Mortgage's CRM team, managing daily interaction with subservicing clients. Mr. Miller has been with GMAC Mortgage for seven years, serving most recently as vice president for sales and prior to that as site director for default administration. GMAC's subservicing portfolio exceeded $54.2 billion at the end of the third quarter.

The AA-minus risk-to-the-government, subordinated debt, and preferred stock ratings on Fannie Mae have been affirmed by Standard & Poor's Ratings Services and removed from CreditWatch.The outlook is negative. "The rating action reflects Fannie Mae's progress in its accounting restatement process and the build-up of a stronger capital position," S&P said. The rating agency said Fannie has maintained a mandated 30% capital surplus above its regulatory minimum capital for four consecutive quarters, chiefly through management of balance sheet growth and lower returns to shareholders. S&P noted that Fannie Mae has now filed its 2004 annual report, including restatements, with the Securities and Exchange Commission and has made "extensive changes" in its senior management and board over the past two years. Fannie Mae's recent SEC filing is a "significant milestone," S&P said, but added that "we continue to view the pervasiveness of the deficiencies discovered in its internal controls over financial reporting as a concern" and noted that Fannie's 2005 and 2006 quarterly financial statements remain outstanding. S&P can be found online at http://www.standardandpoors.com.

Class M-2 of Structured Asset Securities Corp. mortgage-backed securities, series 2003-25XS, has been downgraded from A2 to Baa2 by Moody's Investors Services.Moody's also confirmed the rating on one other class in the transaction. The downgrade was attributed to realized losses (including loss severities) and projected losses. The underlying collateral consists of conventional fixed-rate, fully amortizing and balloon, residential mortgage loans.

Class B-1 of Metropolitan Mortgage & Securities Co.'s series 1999-A securitization has been downgraded from B to CCC by Fitch Ratings and assigned a Distressed Recovery rating of DR2.In addition, two classes in Metro Mortgage's series 1998-B deal have been downgraded as follows: class B-1, from DR1 to DR2, and class B-2, from DR2 to DR6. Fitch also upgraded eight classes and affirmed the ratings on 18 other classes in nine Metro Mortgage deals. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations. The majority of the mortgage loans were originated or acquired by Metropolitan Mortgage, which filed for Chapter 11 bankruptcy in February 2004. The collateral consists primarily of fixed- and adjustable-rate mortgage loans secured by first liens on residential properties or commercial real estate.

The residential primary servicer rating for subprime product and the special servicer rating of AMC Mortgage Services Inc. have been placed on Rating Watch Evolving by Fitch Ratings.The company's primary servicer rating is RPS2-plus, and its special servicer rating is RSS2-plus. (Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating.) Fitch said AMC is "experiencing financial pressure," pointing to the situation of its parent company, ACC Capital Holdings. "Fitch believes that ACH's financial flexibility is constrained by significant settlement and restructuring charges taken in recent quarters as well as the increasingly challenging operating environment in the subprime mortgage market," the rating agency said. "While other originators and servicers face these challenges as well, AMC's sharp decline in origination volume has caused considerable seasoning of the servicing portfolio, which is resulting in increasing delinquency levels and contributing to a cost of servicing that is significantly higher than the industry average." Fitch can be found online at http://www.fitchratings.com.