Servicing

Anworth Mortgage Asset Corp., a real estate investment trust based in Santa Monica, Calif., has announced that it expects to recognize a loss from operations of approximately $0.07 per share for the third quarter.Anworth said the increase in interest income (net of premium amortization) from its portfolio of agency mortgage-backed securities was offset by the increase in its cost of borrowings, resulting in an approximately unchanged interest rate spread. The mortgage REIT also announced that its wholly owned subsidiary, Belvedere Trust Mortgage Corp., reported a preliminary loss of approximately $900,000 for the third quarter. The loss was attributed largely to accelerating prepayments and to financing costs that were rising faster than the increases in the yield of its mortgage-related assets. Anworth can be found on the Web at http://www.anworth.com.

Atlanta-based NetBank has completed the sale of most of its mortgage servicing rights on conventional, agency-eligible loans for $119 million, less than the carrying value of the asset.The sale involved underlying mortgages totaling $8.5 billion in unpaid principal. IXIS Real Estate Capital bought the servicing rights on $8.2 billion of the total, though it has retained NetBank to subservice the loans. IXIS invests in mortgage servicing rights, though it does not perform servicing operations. Servicing rights on $230 million of Ginnie Mae loans were sold to an unnamed separate buyer, according to NetBank. NetBank said the sale will result in an after-tax loss of $19.3 million. The company also said it will post an after-tax loss of $8.7 million on the sale of Ginnie Mae mortgage-backed securities that it held as an on-balance-sheet hedge. The company can be found online at http://www.netbank.com.

One year after the implementation of bankruptcy reforms, credit counselors are finding that consumers contemplating bankruptcy are in such dire financial condition that bankruptcy is their only option, and many are delinquent on their mortgage, according to a survey by the National Foundation of Credit Counseling.On average, consumers signing up for pre-filing counseling have unsecured debt that exceeds their annual income by $11,600. The NFCC also noted that 42% of the credit counseling agencies in the survey reported that 26% to 100% of their pre-filing clients are delinquent on their mortgage payments. (In passing bankruptcy reform, Congress mandated that consumers receive credit counseling before filing for bankruptcy protection.) Bankruptcy filings are estimated to total 600,000 this year, which would be the lowest level in 20 years. However, filings are increasing each month and some estimate it will cross one million in 2007-- due to energy prices and the resetting of adjustable-rate mortgages, according to the NFCC report.

Luminent Mortgage Capital Inc., a San Francisco-based real estate investment trust, has priced a public offering of 6 million shares of common stock at $10.25 per share.Luminent said it plans to use the proceeds to buy mortgage assets as part of its residential mortgage credit and spread strategies. The underwriters have been granted an option to buy up to 900,000 additional shares to cover any overallotments. UBS Investment Bank was the sole book-running manager of the offering. The REIT, which invests primarily in U.S. agency and other highly rated mortgage-backed securities, can be found online at http://www.luminentcapital.com.

Freddie Mac has announced the pricing of 20 million shares of noncumulative perpetual preferred stock at $25 per share.The shares (CUSIP: 313400681) bear a dividend rate of 5.90%, the government-sponsored enterprise said. Freddie Mac said it will have the option to redeem all or part of the shares on or after Sept. 30, 2011, at $25 per share plus accrued dividends. The preferred stock is being offered via a syndicate of dealers headed by Lehman Brothers and Merrill Lynch. Fitch Ratings assigned a rating of AA-minus to the preferred stock.

A negative rating outlook has been assigned to Realogy Corp. by Moody's Investors Service because of "continued weakness in the residential real estate market."Moody's also affirmed Realogy's Baa2 long-term ratings and assigned a Baa2 rating to its proposed $800 million offering of senior notes. In explaining the negative outlook, the rating agency cited expectations of double-digit volume declines in home sales and modest price declines in the second half of 2006, as well as mid-single-digit volume declines and modest price declines in 2007. The ratings could be downgraded if profitability continues to decline sharply in 2007 because of falling home sales or prices, or a "material increase" in leverage caused by a large acquisition, Moody's said. Realogy is one of the largest real estate service companies in the world, Moody's said. The rating agency can be found online at http://www.moodys.com.

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that new properties entering some stage of foreclosure fell about 1% in September, although they were 63% higher than the level recorded a year earlier.The company's U.S. Foreclosure Market Report indicates that 112,210 new foreclosure properties were added to the rolls in September. "September was the second straight month in which more than 110,000 new foreclosure filings were reported nationwide, evidence that the spike in August was not just a one-month anomaly," said James J. Saccacio, RealtyTrac's chief executive officer. "Foreclosure filings are up 39% year-to-date and have already surpassed the total number reported in all of 2005." The company said Colorado, Nevada, and Michigan recorded the highest foreclosure rates in September. RealtyTrac can be found online at http://www.realtytrac.com.

The Seattle Federal Home Loan Bank has received regulatory approval to use existing excess stock to capitalize advances so that member banks and thrifts don't have to purchase additional stock in the troubled FHLBank.As approved by the Federal Housing Finance Board, members can tap a shared pool of about $350 million in excess stock when borrowing from the FHLBank during the next two years. Members are generally required to meet a stock purchase requirement when borrowing advances. But the Seattle bank is having a hard time selling stock (with a five-year redemption period) since it suspended dividend payments. By using excess stock, the Seattle bank hopes to increase its advance business and rebuild its earnings. Since the start of the year, advances increased by $5.5 billion to $26.9 billion as of June 30. The Seattle FHLBank has been operating under a supervisory agreement since December 2004.

Class B-4 of Bear Stearns Mortgage Securities Inc. mortgage pass-through certificates, series 1997-6 FRM pool, has been downgraded from CC to C by Fitch Ratings and its distressed recovery rating has been lowered from DR3 to DR4.In addition, three classes in another Bear Stearns deal were upgraded and the ratings on 11 classes in three transactions were affirmed. The downgrade reflects a deterioration in the relationship between the credit enhancement and expected losses, Fitch said.

Five classes of United Companies Financial Corp. manufactured housing securities have been downgraded by Fitch Ratings.The downgrades were as follows: series 1997-4, class A-4, from BBB-plus to BBB-minus; series 1998-1, class A-3, from A-minus to BBB-minus; series 1998-2, class A-3, from A-minus to BBB-plus, and class A-4, from B-plus to B; and series 1998-3, class A-1, from B-plus to B. Fitch also affirmed the ratings on six classes in five UCFC manufactured housing deals, raised the distressed recovery ratings on three classes, and lowered them on two. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses. The loans were originated by United Companies Funding Inc., a wholly owned manufactured housing lending subsidiary of UCFC. In 1998, UCFI announced plans to close down its manufactured housing business, and UCFC filed for Chapter 11 bankruptcy protection the following year. The MH portfolio, servicing rights, and residual interests were later acquired by EMC, a wholly owned subsidiary of Bear Stearns Cos., Fitch reported.