Servicing

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.

H&R Block Inc., Kansas City, Mo., is considering selling Option One Mortgage Corp., Irvine, Calif., one of the nation's largest subprime lenders and servicers.The tax preparation company has also initiated cost-cutting measures at the lender and has hired Goldman Sachs & Co. as an adviser. The nation's sixth-largest subprime originator said it will "consolidate by one-third its loan fulfillment operations by closing 12 branches over the next four months." If Block cannot sell Option One, it might consider spinning it off through the public markets. According to the Quarterly Data Report, Option One services $74 billion in loans, ranking fourth among all subprime servicers. Subprime profit margins are extremely tight right now, and consolidation in the sector is picking up steam. On Monday, NetBank of Georgia said it would close its subprime division. Option One can be found online at http://www.optiononemortgage.com.

Four classes of Structured Asset Securities Corp. Amortizing Residential Collateral Trust, series 2002-BC7, have been downgraded by Fitch Ratings.The downgrades were as follows: class M6, from A-minus to BBB-plus; class B1, from BBB-plus to BB-plus; class B2, from BBB to BB; and class B3, from BBB-minus to BB. Fitch also placed the ratings of classes M2 and M3 of SASCO series 2002-BC10 on Rating Watch Negative. In addition, Fitch affirmed the ratings on six SASCO classes. The negative rating actions were attributed to higher-than-expected delinquencies and losses. Fitch can be found on the Web at http://www.fitchratings.com.

Saxon Capital Inc., a residential mortgage lender and real estate investment trust based in Glen Allen, Va., has reported a net loss of $26.4 million ($0.53 per share) for the third quarter, compared with net income of $31.9 million ($0.63 per share) a year earlier.Saxon, which is being acquired by Morgan Stanley Mortgage Capital Inc., attributed the loss to several factors, including higher short-term interest rates, rising delinquencies, and price competition. The company also reported that its net mortgage loan portfolio stood at $6.8 billion as of Sept. 30, up 9% from the level recorded a year earlier. The REIT can be found online at http://www.saxonmortgage.com.

Irwin Financial Corp., Columbus, Ind., has reported a net loss of $4.2 million ($0.14 per share) for the third quarter, including a loss of $13.4 million from Irwin's conforming mortgage operations, which have been discontinued.A year earlier, Irwin reported net income of $18.5 million. The company noted that it had sold "substantially all" its conforming, conventional mortgage operations in the third quarter, including a majority of the associated mortgage loans and mortgage servicing rights. "Earlier this year, we announced a strategic decision to focus our attention on the growth of our small-business and nonconforming consumer mortgage business and, therefore, determined that we would sell our mortgage origination and servicing platforms," said Irwin chairman Will Miller. "With New Century purchasing our servicing operations and offering employment to the majority of our servicing staff, we now have substantially met our exit goals." The company can be found online at http://www.irwinfinancial.com.

Friedman, Billings, Ramsey Group Inc., an investment banking firm based in Arlington, Va., has reported a net after-tax loss of $67.4 million ($0.39 per share) for the third quarter that it attributed largely to various mortgage-related developments.The results contrasted sharply with net income of $23.0 million ($0.14 per share) for the third quarter of 2005. Noting that it had reclassified its mortgage loan portfolio in connection with a re-evaluation of its mortgage strategy, FBR said the result was a $146.8 million mark-to-market writedown in the value of the portfolio. The company also recorded a $20 million writedown of "other than temporary impairments" in its merchant banking portfolio, the majority of which it attributed to companies doing business in the nonprime mortgage sector. Also contributing to FBR's weakness in the third quarter was a $7.4 million after-tax loss at First NLC Financial Services, a wholly owned nonconforming mortgage lending subsidiary of FBR. The company can be found online at http://www.fbr.com.

IndyMac Bancorp Inc., Pasadena, Calif., has reported record mortgage loan volume and net earnings of $86 million ($1.19 per share) for the third quarter, compared with $78 million ($1.16 per share) a year earlier.IndyMac's mortgage loan production totaled a record $24 billion in the third quarter, up 41% from that of a year earlier, the company said. "While mortgage industry volumes continued to decline, our mortgage production hit a record level for the 11th consecutive quarter, growing 19% over the prior quarter," said Richard H. Wohl, IndyMac Bank's president. "As a result, our market share nearly doubled over last year to an estimated 3.87%, an all-time high for IndyMac, demonstrating strong progress in our core strategy of leveraging our mortgage banking infrastructure." The company said its mortgage servicing portfolio had reached $124 billion, representing 180% growth over the past two years. IndyMac can be found online at http://www.indymacbank.com.