Servicing

Effective next month, Freddie Mac will stretch the period lenders have to originate, document, and sell construction-to-permanent mortgages to the secondary-market company from six to 18 months.The longer time frame will remove separate time lines for origination, construction, and sales of loans financing either new construction or renovations, allowing for a more streamlined process. The change is intended to give lenders and their clients more time and flexibility to accommodate unexpected changes in construction scheduling, and should be particularly helpful in giving move-up buyers more time to sell their homes in the slowing real estate market. It should also help thousands of Gulf Coast borrowers waiting for grants or insurance proceeds to commence repairing their storm-damaged homes or experiencing construction delays. The pending changes make it clear that Freddie Mac is financing only the permanent "takeout" mortgage and not loans for land acquisition, development, or construction.

Fannie Mae has announced cash tender offers for up to $21.04 billion of callable debt securities during the week of Oct. 23.The securities were originally issued with European-style one-time call options that have since expired. The government-sponsored enterprise said the offers are part of its effort to maintain a liquid and transparent market for its debt products. The lead manager and global coordinator for the tender offers will be Goldman, Sachs & Co., and the co-dealer managers will be Lehman Brothers Inc. and Merrill Lynch Government Securities Inc. Fannie Mae can be found online at http://www.fanniemae.com.

Mortgage Industry Advisory Corp., New York, has announced the launch of a new website at an address that the company says "more accurately depicts the breadth of its offerings."The name of the new site is MIACAnalytics.com. MIAC was founded in 1989 by Wall Street veterans Bob Husted and Paul Van Valkenburg to provide whole-loan and mortgage servicing rights hedge advisory and valuation services. Since then, the company's services have evolved to include valuation, accounting and risk management services, secondary systems, and strategic asset sales. "The scope of our products and services has broadened such that it no longer makes sense for us to position ourselves solely on the servicing side of the business," said Mr. Van Valkenburg. MIAC said it serves as an outsourced project manager for 150 financial institutions across the country. MIAC's original website can still be found online at http://www.servicing.com. The new website can be found at http://www.miacanalytics.com.

The new chairman of the Mortgage Bankers Association is calling for an "industrywide commitment to personal responsibility."Taking over the reins of the MBA at the group's annual convention in Chicago, John Robbins said the "industry must take a leadership role so our customers receive the best information possible, allowing them to make an educated decision on the mortgage program they have selected." If the business chooses to abdicate that responsibility, Mr. Robbins warned in opening the three-day conference, "then we deserve to be subjected to the unending stream of punitive legislation and regulation [that's] sure to follow." The chairman of American Mortgage Network, San Diego, said lenders should have the borrower's best interest at heart, not their own. The "simple litmus test" should be to "always make sure borrowers have what they need to make the right choice," he said. Unlike those who blame the news media for the black eye lenders have received from news stories about predatory lenders, the new MBA leader said the real culprits are those who wrote the loans. "They obviously put their personal compensation ahead of their borrowers' well being," he told the convention. Mr. Robbins also said the MBA could lose its well-earned credibility with news organizations, lawmakers, and regulators if its members don't hold themselves to a higher standard. There should be laws to punish the "few bad apples ... that will always exist in any group, no matter the profession." he said. The MBA can be found online at http://www.mortgagebankers.org.

Angelo R. Mozilo, chairman and chief executive officer of Countrywide Financial Corp., has agreed to continue as chairman and CEO through the end of 2009, the company has announced.The terms of the new contract were not disclosed. Stanford L. Kurland, who was once considered a possible heir to Mr. Mozilo as CEO, resigned from the company recently as president and chief operating officer and was replaced by David Sambol, a 21-year veteran of Countrywide. Mr. Mozilo had indicated that he planned to stay on as chairman, but it was unclear whether he would remain as CEO beyond the end of this year. The company can be found online at http://www.countrywide.com.

Capstead Mortgage Corp., Dallas, has reported a net loss from continuing operations of $1.49 million for the third quarter, compared with net income of $4.15 million a year earlier.After considering the payment of preferred share dividends, the numbers resulted in a net loss of $0.35 per share in the third quarter and a loss of $0.05 per share a year earlier, Capstead said. The company attributed the recent loss to lower financing spreads. The company said its mortgage securities portfolio increased to approximately $5.2 billion in the third quarter, as acquisitions of adjustable-rate mortgage securities totaled $810 million, more than offsetting $436 million of portfolio runoff. Capstead can be found on the Web at http://www.capstead.com.

Eighteen classes from 10 Credit Suisse First Boston home equity securitizations have been downgraded by Fitch Ratings.In addition, two classes from two other CSFB Home Equity Asset Trust have been placed on Rating Watch Negative. Fitch also affirmed the ratings on 39 classes in 10 CSFB deals. The negative rating actions were attributed to a deterioration in the relationship between monthly losses and excess spread that is generally producing a decline in overcollateralization. "Rapid prepayments and the significant increase in [the London interbank offered rate] have resulted in less subordination and less excess spread than initially anticipated at this point in the transactions' seasoning," Fitch said. The rating agency added that prepayments have resulted in adverse selection, causing the expected loss on the remaining pool balances to be higher than expected.

Home Properties LP, a subsidiary of Rochester, N.Y.-based Home Properties Inc., has priced an offering of $175 million aggregate principal amount of exchangeable senior notes due in 2026.In addition, Home Properties said the subsidiary is offering $25 million of notes that may be issued, at the option of the initial purchasers, within 12 days. The company said it expects to use about $58 million of the approximately $172 million of net proceeds to repurchase shares of its common stock, about $70 million to repay debt under its revolving credit facility, and the remainder for general corporate purposes. Home Properties, an apartment real estate investment trust, can be found online at http://www.homeproperties.com.

Meanwhile, Washington Mutual chairman and chief executive Kerry Killinger says the federal guidance on nontraditional mortgages will have a "limited" effect on its payment-option ARM lending program, but he wants to see a level playing field with regard to federal- and state-regulated entities."For the guidance to be truly effective in safeguarding consumers, we do believe all mortgage lenders should be held to the same standards," the CEO told investors and analysts during a conference call on the company's third-quarter results [see previous item]. State regulators are expected to issue similar guidance in a couple of weeks. "We continue to evaluate the guidance," Mr. Killinger said. "However, based on preliminary analysis and initial discussions with our regulator, the Office of Thrift Supervision, while we expect some changes, the impact on the origination of the option ARM products in our Home Loans group appears limited." The giant thrift originated $37.2 billion of home loans in the third quarter, and 30% were option adjustable-rate mortgages. The average credit score is 707, and the loan-to-value ratio of the portfolio is 57%, Mr. Killinger said, adding that demand for hybrid ARMs has increased.

Washington Mutual Inc., Seattle, has reported earnings of $748 million ($0.77 per share) for the third quarter, a decline from $821 million ($0.92 per share) a year earlier that WaMu attributed in part to efficiency initiatives and a sale of mortgage servicing rights.The company's Home Loans group recorded a net loss of $33 million in the third quarter, compared with net income of $302 million a year earlier, WaMu said. The results included net after-tax charges of $31 million related to the sale of $2.53 billion of mortgage servicing rights and after-tax charges of $33 million related to the company's efficiency initiatives, which are expected to continue into the fourth quarter, the company said. Home loan volume totaled $37.20 billion in the third quarter, down 10% from $41.36 billion in the second quarter and down 34% from $56.47 billion a year earlier. WaMu can be found online at http://www.wamu.com.