Servicing

Class B-2 of CDC Mortgage Capital Trust mortgage pass-through certificates, series 2003-HE1, has been downgraded from BB-minus to B-plus by Fitch Ratings.In addition, Fitch affirmed the ratings on four other classes from the CDC deal. The rating agency attributed the downgrade to a deterioration in the relationship between credit enhancement and expected losses. The pool consists of fixed- and adjustable-rate subprime mortgages, primarily for one- to four-family residential properties. The rating agency can be found online at http://www.fitchratings.com.

Fieldstone Investment Corp., Columbia, Md., has reported a loss of $45.0 million ($0.97 per share) for the third quarter, compared with net income of $23.0 million ($0.47 per share) a year earlier.The company, structured as a real estate investment trust, is the parent of nonconforming lender Fieldstone Mortgage Co. Michael J. Sonnenfeld, president and chief executive, said the loss resulted from increased reserves needed to cover delinquencies of the newer loans in its portfolio and continued market pressures on sale margins. Servicing initiatives include accelerated intervention on delinquent loans, engagement of a delinquency- and loss-mitigation monitor for 2006 production, and elimination of high-delinquency products. It is reducing yield-spread premiums and consolidating operations centers. "Our origination initiatives include introduction of new [alternative-A] products, a simplified rate sheet that reflects the actual rates at which we lend, and a new commission plan based on a loan's net value to the company," Mr. Sonnenfeld said. "We have not reduced our credit quality nor changed our pricing discipline to increase originations, and we have eliminated the lowest-credit, highest-risk loans from our guidelines."

The Federal Agricultural Mortgage Corp., Washington, has reported a net loss of $6.3 million ($0.58 per share) for the third quarter and announced the completion of its restatement of financial results for 2003-2005 and the first two quarters of this year.Farmer Mac attributed the loss, which compared with net income of $19.3 million ($1.70 per share) for the third quarter of 2005, to accounting losses on financial derivatives used for hedging. The government-sponsored enterprise said this was in contrast to its restated results for the first two quarters, in which gains on financial derivatives brought net income to $15.1 million and $13.4 million, respectively. "The restatement of our financial results corrected our accounting under [Statement of Financial Accounting Standards No. 133] and so eliminated the use of hedge accounting for financial derivatives used to hedge interest rate risk," said Henry D. Edelman, Farmer Mac's president and chief executive officer. "... [T]he accounting corrections under SFAS 133 had no effect on core earnings or cash flows, and an insignificant impact on Farmer Mac's financial position." The GSE can be found online at http://www.farmermac.com.

Countrywide Financial Corp., Calabasas, Calif., has announced that it intends to convert its national bank charter to a federal savings bank (or thrift) charter.The company said it has notified the Federal Reserve Board of San Francisco, the Office of Thrift Supervision, and the Office of the Comptroller of the Currency of the decision, which came after "several months of strategic analysis." Upon the approval of the application, Countrywide Bank NA would be converted to a thrift and Countrywide Financial Corp. would become a savings-and-loan holding company, with the OTS as the regulator of both entities. "In our continuous efforts to maximize efficiencies, the company has determined that Countrywide is better positioned for future growth as a savings institution with a single primary regulator, as opposed to the current dual-regulator structure," said Angelo R. Mozilo, Countrywide's chairman and chief executive officer. "Based on our analysis, we believe that the OTS's focus on the housing market and its unitary supervisory approach aligns more closely with Countrywide's existing business activities and future diversification efforts." The company can be found online at http://www.countrywide.com.

Foreclosures in Florida rose by 21% in October, according to Default Research Inc., a foreclosure research company based in Mt. Pleasant, Pa.Serdar Bankaci, president and chief executive officer of Default Research, said condominiums "could be the bargain of the season" in South Florida. "There were a lot of condos bought for investment purposes, and with the downturn in the real estate economy, many investors are being forced to sell their condos for much cheaper than what they paid for them." The highest increases in the foreclosure rate came in Clay County, with a 40% rate, and Lee County, with 38%, Default Research reported. The company said increases in the tri-county region of South Florida were as follows: Palm Beach, 26%; Miami-Dade, 25%; and Broward, 23%. Default Research can be found online at http://www.defaultresearch.com.

National City Corp., Cleveland, has announced that it will revise its third-quarter earnings from $0.90 per share to $0.86 per share to reflect a lower estimated value for mortgage servicing rights and a higher estimate of reserves for repurchased mortgages than previously reported.The company said the value of MSRs will be $21 million lower than its Sept. 30 estimate, decreasing loan servicing revenue from the previously reported $125 million to $104 million. The raising of National City's estimate of reserves for repurchased loans by $18 million will reduce loan sale revenues from the previously reported $233 million to $215 million, the company said. National City can be found online at http://www.nationalcity.com.

NetBank -- which is restructuring its entire mortgage operation -- posted a $73 million loss in the third quarter, while revealing that it has signed a supervisory agreement with its regulator, the Office of Thrift Supervision.In its earnings release, the company said it has been hurt by loan buybacks, noting that "Although repurchase demands improved from last quarter, they remained at an elevated level." The Atlanta-based NetBank recently pulled the plug on its subprime affiliate, Meritage Mortgage, Beaverton, Ore. In mid-October, it sold 70% of its residential servicing portfolio ($8.5 billion in receivables), booking a $19.3 million loss on the sale. The company can be found online at http://www.netbank.com.

The servicing operations of Homecomings Financial will be integrated into the servicing operations of GMAC Mortgage Servicing, according to Residential Capital Corp., the Minneapolis-based parent company of GMAC Mortgage.The company said it will integrate primary, subservicing, and master servicing operations to form a debt service utility capable of managing any loan product as part for ResCap's domestic servicing portfolios. Tony Renzi, chief operating officer of ResCap's residential finance group, said the integration will add value for homeowners as well as investors and subservicing clients. He told MortgageWire that the integration of the Homecomings servicing operation should be completed by April 2007 and that ResCap does not currently plan to close any of its five servicing sites. ResCap anticipates doubling the size of the servicing portfolio (which totals $424 billion in loans) over the next five years, he said. ResCap can be found on the Web at http://www.rescapholdings.com.

Anworth Mortgage Asset Corp., a real estate investment trust based in Santa Monica, Calif., has reported an unaudited net loss to common stockholders of $3.4 million ($0.07 per share) for the third quarter, compared with net income available to common stockholders of $3.5 million ($0.07 per share) a year earlier.Anworth said its portfolio of agency mortgage-backed securities totaled approximately $4.65 billion as of Sept. 30, allocated as follows: adjustable-rate mortgages, 29%; hybrid ARMs, 54%; fixed-rate MBS, 17%; and floating-rate collateralized mortgage obligations, less than 1%. The mortgage REIT also announced that the current yield on its agency MBS was 5.41% at the end of the third quarter. Anworth can be found on the Web at http://www.anworth.com.

Prepayment rates on 30-year fixed-rate mortgages in agency mortgage-backed securities rose 14% in October, according to analysts at Bear Stearns & Co.The increase in speeds reflected a 17-basis-point rally in mortgage rates and a one-day increase in the business calendar, senior managing directors V.S. Srinivasan and Dale Westhoff said. Aggregate speeds on 30-year Fannie Mae collateral stood at a constant prepayment rate of 11.4 CPR for the month, up 1.2 CPR from their September levels, while 30-year Freddie Mac speeds registered at 10.6 CPR, up 1.5 CPR, the analysts reported. Over all, speeds on 2006 Fannie Mae originations rose from 8.1 CPR in September to 10.5 CPR in October, while more-seasoned vintages recorded a smaller increase. Speeds on Ginnie Mae 30-year collateral rose by 5%. "We expect next month's report to show a 5% decline in speeds on discount coupons, while speeds on premium coupons should remain relatively unchanged," the analysts said. Bear Stearns can be found on the Web at http://www.bearstearns.com.