Servicing

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that the number of new properties in some stage of foreclosure rose about 2% in May.The company's U.S. Foreclosure Market Report indicates that 92,746 new foreclosure properties were added to the rolls in May. "Our May numbers echo the recent report by the Mortgage Bankers Association, which noted that delinquency and default activities were lower in the first quarter of 2006," said James J. Saccacio, RealtyTrac's chief executive officer. "While our report confirms that the number of properties entering foreclosure is still significantly higher than it was during the same period of 2005, we've now seen two months of decreasing foreclosure rates followed by May numbers that were essentially flat. That three-month trend indicates foreclosure activity has stabilized in most housing markets across the country after spiking sharply at the beginning of the year." The company said Colorado recorded the highest foreclosure rate of any state for the third consecutive month in May, jumping 13% (to 4,198 new foreclosures) from April's level. RealtyTrac can be found online at http://www.realtytrac.com.

Many of the nation's hottest housing markets are cooling, but the strength of the economy is balancing the risk of price declines in the nation's 50 largest housing markets, according to PMI Mortgage Insurance Co., Walnut Creek, Calif.The average score in the PMI U.S. Market Risk Index rose from 287 to 288 in the second quarter, the company reported. This means the company's estimate of the probability of experiencing a home price decline in the next two years has risen from 28.7% to 28.8% in the 50 largest metropolitan statistical areas. According to the index, there are now 13 markets with a greater than 50% chance of price declines over two years, down from 14 in the first quarter. "This quarter's data signals that in many areas the expansion of the housing balloon has slowed substantially," said Mark Milner, chief risk officer of PMI Mortgage Insurance. "The Risk Index also shows that slowing price appreciation is balanced by underlying economic strength. In the absence of an unexpected economic shock, this makes a gradual cooling of the market the most likely outcome." PMI can be found online at http://www.pmigroup.com.

Freddie Mac has reported that its retained mortgage portfolio declined by $700 million, to $723.1 billion, in May.The government-sponsored enterprise is under intense pressure from the Bush administration and regulators to slow the growth of its portfolio while it fixes its accounting and internal control systems. So far this year, Freddie has increased the size of its portfolio by 4.4%, whereas last year the portfolio grew by 9%. Meanwhile, Freddie Mac's issuance of mortgage-backed securities slowed in May to $25.4 billion from $26.6 billion in April -- probably reflecting an overall decline in mortgage originations. In January, Freddie issued $33.7 billion in MBS.

Two tranches of GSAMP Trust 2004-SEA2 have been downgraded by Moody's Investors Service, and two other tranches have been placed on review for possible downgrade.Class B-1 of the transaction was downgraded from Baa3 to Ba3, and class B-2 was downgraded from Ba1 to Caa3. Classes M-4 and M-5 were placed on review for possible downgrade. Moody's also upgraded one tranche issued by GSAMP Trust 2003-SEA2. The negative rating actions were based on a "rapid deterioration" of overcollateralization caused by accelerating losses, Moody's said. "From March to May of 2006. the transaction incurred nearly $4 million in losses," the rating agency reported. The deal consists of seasoned subprime mortgage loans, some of which experienced delinquency prior to securitization. Moody's can be found online at http://www.moodys.com.

Fitch Ratings has upgraded the residential primary servicer rating of National City Home Loan Services, Pittsburgh, from RPS2-minus to RPS2 for alternative-A and subprime loans.In addition, Fitch raised National City's special servicer rating from RSS3-plus to RSS2-minus. The primary servicer ratings are based on the company's "experienced management team, commitment to technology enhancements, and solid internal control environment," Fitch said. The special servicer rating reflects its "reliable default management and asset liquidation methodologies," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Two tranches of RFC's RFSC series 2003-RP1 Trust have been downgraded by Moody's Investors Service.Class M-2 was downgraded from A2 to Baa1, and class M-3 was downgraded from Baa2 to B3. The downgrades were attributed to "high and rapidly rising levels of cumulative loss," a large proportion of severely delinquent loans, and "significant deterioration" of overcollateralization in recent months. The underlying collateral consists of subprime and re-performing residential mortgage loans. Moody's can be found online at http://www.moodys.com.

Barclays Bank PLC, London, has announced an agreement to acquire the U.S. subprime mortgage servicing business of HomEq Servicing Corp. from Wachovia Corp., Charlotte, N.C., for a total consideration of $469 million.The consideration represents net book value for the mortgage servicing rights and fixed assets "and $209 million in respect of advances, the collection of which is fully indemnified by Wachovia," Barclays said. The consideration is subject to an adjustment mechanism based on the value of the MSRs and advances at the closing of the transaction. The company said the acquisition will expand the capabilities of the growing U.S. mortgage securitization franchise of Barclays Capital, the bank's investment banking division. Barclays Capital can be found on the Web at http://www.barclayscapital.com.

Moody's Investors Service has downgraded one subordinated tranche from a mortgage-backed securitization issued by Credit Suisse First Boston Mortgage Securities Corp. in 2001.The downgrade of class M-2 of series 2001-HE25 from A2 to Baa1 "is based on the fact that the bonds' current credit enhancement levels, including excess spread, are low compared to the current projected loss numbers for the current rating level," Moody's said. The rating agency can be found on the Web at http://www.moodys.com.

Manoj Singh has been named senior vice president of market risk oversight at Freddie Mac.Mr. Singh was most recently a senior managing director at Bear, Stearns & Co. He was previously a senior vice president at Lehman Brothers, where he was responsible for the risk management of all mortgage products, including residential mortgage trading and securitization, wholesale trading and securitization, asset-backed securities, and commercial mortgage-backed securities, Freddie Mac said. The government-sponsored enterprise can be found online at http://www.freddiemac.com.

Mortgage products with amortization terms of more than 30 years present "markedly" different risk profiles for different product types, according to a recent study by Fitch Ratings."The main risks associated with a longer amortization schedule are the higher payment increases, increased adverse selection risk, and slower equity build-up," said Suzanne Mistretta, senior director at Fitch. The report looks at the performance of 40-, 45-, and 50-year option adjustable-rate, hybrid, and fixed rate mortgages. Fitch can be found on the Web at http://www.fitchratings.com.