Servicing

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that new properties entering some stage of foreclosure reached the highest level of the year in October and were 42% higher than the level recorded a year earlier.The company's U.S. Foreclosure Market Report indicates that 115,568 new foreclosure properties were added to the rolls in October. "So far this year more than 1 million properties have entered some stage of foreclosure nationwide, up 27% from the same time last year," said James J. Saccacio, RealtyTrac's chief executive officer. "Monthly foreclosure filings hit their highest mark of the year so far in October, mirroring the trend from last year, when the most foreclosures of the year were also reported in October." The company said Colorado, Nevada, and Georgia recorded the highest foreclosure rates in October. RealtyTrac can be found online at http://www.realtytrac.com.

Thrift originations of single-family loans increased by 1% in the third quarter from those of the previous quarter, but loan production was down 8% from that of a year earlier.Thrifts originated $149.9 billion in one- to four-family loans in the third quarter, down from $181.3 billion in the third quarter of last year, according to the Office of Thrift Supervision. Despite the slight increase, the percentage of adjustable-rate mortgages and refinancing activity fell noticeably. An estimated 26% of thrift originations were adjustable-rate mortgages, compared with 37% in the previous quarter, the OTS reported. Refinancings accounted for 27% of originations, down from 33% in the second quarter. The 853 OTS-supervised thrifts posted $4.29 billion in earnings, despite a $195.6 million hit due to a decline in the value of servicing fees. Nevertheless, it was the seventh consecutive quarter in which thrift earnings topped $4 billion.

An annual study by First American Real Estate Solutions finds that markets with a high rate of foreclosure sales also have deeper sales discounts when foreclosed property is sold.The study compares the relationship between foreclosures as a percentage of total sales and the size of the discount buyers typically receive when purchasing foreclosed properties. In Orange County, Calif., foreclosure sales accounted for 0.5% of total sales, and the buyer typically paid a median discount of 3.8%. Whereas in Baltimore, foreclosures made up 8.9% of total sales and the median discount was 20%. First American said the study shows a strong tendency toward increased foreclosure prevalence and deeper discounting for properties in the lower home-price tiers. "Discounts tend to be deeper in markets where foreclosures comprise 8% or more of all sales, regardless of geographic location or market type," said Christopher Cagan, director of research and analytics at First American Real Estate Solutions.

Doral Financial Corp., a mortgage lender based in San Juan, Puerto Rico, has announced the selection of Bear Stearns and JPMorgan to assist the company in evaluating options for refinancing its $625 million floating-rate senior notes that mature in July 2007.In September, Doral announced an agreement with the Securities and Exchange Commission under which it will pay a $25 million civil penalty in connection with the SEC's probe of Doral's restatement of financial results for 2000-2004. Doral's restatement slashed $694.4 million from its retained earnings through the end of 2004 to correct the accounting for certain mortgage loan sales and the valuation of its interest-only strips. Doral can be found online at http://www.doralfinancial.com.

The Federal Home Loan Bank of Chicago purchased $303 million in loan participations from other FHLBanks in honoring outstanding commitments over the first nine months of this year. (MortgageWire reported Nov. 14 that the bank had stopped buying mortgage loans from other FHLBanks.)Earlier this year, the FHLBank said it would stop making new commitments under its Mortgage Partnership Finance program. A bank spokeswoman also pointed out that the Chicago bank purchased nearly $1 billion in mortgage loans from its members during the same period.

Three certificates from two deals issued by Ameriquest Mortgage Securities Inc. have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2002-3, class M-4, from B3 to Caa2; Quest Trust 2004-X3, class M-6, from Ba1 to Ba2; and Quest Trust 2004-X3, class M-7, from Ba2 to B1. The downgrades were prompted by declines in overcollateralization to below-target levels, the rating agency said.

Two tranches from GSAMP Trust 2004-SEA2 have been downgraded by Moody's Investors Service and two others have been placed on review for possible downgrade.The rating actions were as follows: class M-5, downgraded from B1 to Caa2; class B-1, downgraded from B3 to C; and classes M-3 and M-4, placed on review for possible downgrade. The actions were based on "rapid deterioration of overcollateralization and subordination caused by accelerating losses," the rating agency said. The losses were attributed to the number of defaulted loans and "substantial severity of loss" on liquidated collateral. The transaction consists of seasoned subprime mortgage loans, some of which had been delinquent before securitization. Moody's can be found online at http://www.moodys.com.

Fitch Ratings has lowered the residential primary servicer rating of Nationstar Mortgage LLC (formerly Centex Home Equity Corp.) from RPS2-plus to RPS2 for subprime loans.The rating agency said the downgrade was based on Nationstar's change in ownership from Centex Corp., which is rated BBB-plus, to a nonrated company, Fortress Investment Group. Nationstar is part of Fortress' private equity group. Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating.

The residential primary servicer ratings of PHH Mortgage Corp. for prime, alternative-A, and home equity products have been lowered from RPS1 to RPS1-minus by Fitch Ratings.Fitch said the actions were based on the downgrade of the underlying corporate rating of the parent company, PHH Corp., whose senior debt was recently downgraded from A-minus to BBB-plus. (PHH announced in July that its financial statements for 2005 would need to be restated.) 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.

Subprime lender ECC Capital Corp., Irvine, Calif., posted a stunning $54 million loss in the third quarter, citing loan buybacks and early payment defaults.Through the first nine months of the year, the publicly traded nondepository lost almost $80 million. In October, investment banker Bear Stearns & Co. agreed to purchase the money-losing subprime production arm of ECC Capital. In an interview with MortgageWire, a Bear Stearns spokeswoman denied that there were any buyback issues between the Wall Street firm and Encore Credit Corp., the mortgage unit of ECC. (Bear had been warehousing and purchasing loans from Encore.) In its earnings statement, ECC said it is continuing to "experience higher levels of repurchase claims generally relating to early payment defaults." Almost 6% of Encore's loans are in foreclosure. The company also has a 30-plus day delinquency rate of 3.3%. (For more details, see the Nov. 20 issue of National Mortgage News.