Servicing

The boards of the Securities Industry Association and The Bond Market Association have voted to merge the two organizations, pending a vote by their member firms scheduled to be completed by the end of July.If the merger is approved, the combined organization is slated to be known as the Securities Industry and Financial Markets Association. "The merger is a tangible recognition of rapid market convergence, which has blurred traditional distinctions separating investors, asset classes, and different regions of the world," the associations said. The new organization will be structured to reflect this, with three business groups (capital markets, private client, and asset management) and three regional boards (U.S., European, and Asian), the associations reported.

Classes IB-4 and IB-5 from Goldman Sachs Mortgage Securities Corp. series 2002-3F have been removed from Rating Watch Negative by Fitch Ratings.Fitch affirmed the ratings on the two classes and on four other classes from the transaction. The Rating Watch removal followed a review of certain nonperforming loans. "Fitch no longer expects that the liquidation of these loans will have any significant impact on the level of credit enhancement for the class IB-5 and class IB-4 bonds," the rating agency said.

Hanover Capital Mortgage Holdings, Edison, N.J., has announced that the company and certain subsidiaries have entered into a master repurchase agreement with the New York branch of a German bank to finance the purchase of up to $200 million of prime residential mortgage loans.The bank is Deutsche Zentral-Genossenschaftbank, Frankfurt AM Main. Hanover said the five-year agreement provides financing of whole loans at a spread to the London interbank offered rate. The company said it expects to use the facility to expand its investments in residential mortgages and its subordinate mortgage-backed securities. Hanover, a mortgage real estate investment trust, can be found online at http://www.hanovercapitalholdings.com.

The performance of home equity loans at banks improved in the first quarter, while the overdue rate on home equity lines of credit increased slightly, according to the American Bankers Association.As of March 31, the home equity delinquency rate fell to 1.94% from 2.07% at the end of 2005. The past-due rate on HELOCs increased to 0.55%, up from 0.51% three months earlier. It marked the fifth consecutive increase in the overdue rate for HELOCs, though the products remained the consumer credit category with the lowest delinquency rate in the ABA's survey. Credit card delinquencies also rose in the first quarter, and ABA chief economist James Chessen said rising interest rates and weak consumer savings are taking a toll. "Not since the Great Depression has the national savings rate remained below zero for so long," he said. "Absent savings to cushion financial stress, some consumers end up missing a payment on their credit card loan." The ABA can be found online at http://www.aba.com.

Fannie Mae has announced that many changes to its MyCommunityMortgage product line -- including 40-year mortgages, new adjustable-rate and interest-only options, streamlined pricing, and expanded eligibility -- will go into effect in August and September.The changes, some of which were outlined in May at the Mortgage Bankers Association's National Secondary Market Conference in Chicago, are aimed at expanding the MCM line of affordable housing products. The government-sponsored enterprise said, for example, that standard whole-loan commitments and mortgage-backed security pool purchase contracts for delivery of MCM first-lien fixed-rate mortgages (and certain ARMs) will be offered beginning Aug. 1. Streamlined pricing that reduces the number of options requiring different guaranty fees or whole-loan pricing will also become available on Aug. 1, along with commitment and delivery options for 40-year loans. Several MCM IO options will be added as of Sept. 1. Numerous other MCM changes are presented in Fannie Mae announcement 06-07, "Community Lending Enhancements -- MyCommunityMortgage." Fannie Mae can be found online at http://www.fanniemae.com.

Fidelity National Property and Casualty Insurance Co., a subsidiary of Fidelity National Financial, has received permission to purchase a portfolio of 63,000 flood insurance policies from Southern Family Insurance Co.Fidelity said it had received permission from the Circuit Court of Florida to purchase the entire portfolio of flood insurance policies of Southern Family through the Florida Department of Financial Services. The policies are part of the National Flood Insurance Program. Fidelity said it will service the policies through its in-house flood processing unit located in St. Petersburg, Fla. Southern Family, a member of the Poe Financial Group, was placed in receivership by the state of Florida on June 1. FNF can be found on the Web at http://www.fnf.com.

1st National Bank of Arizona has selected GMAC Mortgage Corp. to subservice mortgage loans.FNBA is a privately held bank that focuses on alternative-A lending. GMAC Mortgage specializes in subservicing multiple products and asset grades on one system. Ranked as the country's third-largest subservicer, GMAC Mortgage had a subservicing portfolio in excess of $41.8 billion at the end of March. FNBA's wholesale, correspondent, and warehouse divisions lend in 49 states. The bank, which has $3.4 billion in assets, can be found online at http://www.fnbavenue.com.

Heritage Bank of Commerce, San Jose, Calif., has acquired a portfolio of fixed- and adjustable-rate closed-end home equity loans from Fremont Bank for $10.3 million, according to Heritage Bank's parent company, Heritage Commerce Corp.The average yield of the portfolio is 6.504%. The fixed-rate loans, amortized over periods of five to 15 years, have a face value of $8.5 million and an average yield of 6.498%, the company reported. The adjustable-rate loans, amortized over 30 years (with the balance of unpaid principal due at the end of the 15th year), have a face value of $1.8 million and an average yield of 6.533%. The parent company can be found online at http://www.heritagecommercecorp.com.

New foreclosures in Massachusetts recorded in May were more than double those of a year earlier, according to ForeclosuresMass, Framingham, Mass.The company said 1,613 foreclosures were recorded in May, 105% higher than the level of a year earlier and 165% higher than that of May 2004. "We expected foreclosure rates to increase again this year, but the levels we are tracking outdistance our earlier predictions," said Jeremy Shapiro, president and co-founder of ForeclosuresMass. "It is clear that many homeowners, especially those with adjustable-rate mortgages, are being pushed closer to the edge as interest rates rise at such a consistent clip. We may be witnessing a 'perfect storm' scenario where a flat real estate market, higher interest rates, rising energy costs, and specialty loans are causing significant difficulty for thousands of Massachusetts property owners." The company can be found online at http://www.foreclosuresmass.com.

Foreclosure activity is surging in several Western housing markets, partly as a result of "high-risk mortgages," according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm and publisher of foreclosure information.The company said Los Angeles County reported over 14,000 notices of default as of June 22, with over 700 properties that have gone to foreclosure. Foreclosure activity is also rising sharply in Denver and Phoenix, according to Alexis McGee, president of ForeclosureS.com. "Interest-only loans and so-called option adjustable-rate mortgages with very low initial rates and high negative amortization are financial time bombs," Mr. McGee said. "When these loans reset to full amortization and market rates, the payment shock to homeowners is severe." The company can be found on the Web at http://www.foreclosures.com.