Servicing

Popular Financial Holdings Inc. has created a new mortgage servicing subsidiary called Popular Mortgage Servicing Inc.The company said the new unit is "the culmination of a strategic move for the company, which allows it to purchase third-party loan servicing rights from other lenders, along with interim servicing opportunities." Popular can be found online at http://www.popularinc.com.

Zacks.com, the online unit of Zacks Investment Research Inc., Chicago, is featuring a trio of mortgage real estate investment trusts in its Growth and Income Profit Track.They are American Home Mortgage Investment Corp., Melville, N.Y.; New Century Financial Corp., Irvine, Calif.; and Thornburg Mortgage Inc., Santa Fe, N.M. The companies targeted by Zacks for the list are those that have unusually high dividend yields. American Home raised its quarterly dividend to $0.96 per share, after regaining its financial footing in the first quarter. Its dividend yield is 10.3%, Zacks said. New Century also raised its dividend to $1.80 per share, the sixth straight increase since the subprime lender adopted a REIT structure in the fourth quarter of 2004. New Century's dividend yield is 13.8%. While Thornburg did not raise its first-quarter dividend of $0.68 per share (the same as a year earlier), its dividend yield stands at 9.8%. According to Zacks, "despite what is expected to be a tough 2006, [Thornburg] believes it can maintain its current dividend level and expects its prospects to improve once the market environment changes." Zacks can be found online at http://www.zacks.com.

Despite rising interest rates, mortgage-related debt issuance increased 13.9% in the first quarter compared with the level recorded in the first quarter of 2005, according to The Bond Market Association.Issuance in this category climbed to $468.9 billion from $411.5 billion, the association said. The association can be found on the Web at http://www.bondmarkets.com.

Eight tranches in six securitizations backed by Aames collateral (and issued by Aames or Morgan Stanley) have been downgraded by Moody's Investors Service, and two others have been placed on review for possible downgrade.The downgrades from Aames Mortgage Trust were as follows: series 2001-3, class M-2, from Ba3 to B2, and class B, from B3 to Caa3; and series 2002-1, class M-2, from A2 to Baa1, and class B, from Baa2 to B1. The downgrades from Morgan Stanley Dean Witter Capital I Inc. Trust were as follows: series 2002-AM1, class B-1, from Baa3 to Ba2; series 2002-AM2, class B-1, from Baa3 to B2; series 2002-AM3, class B-2, from Baa3 to B1; and series 2002-HE2, class B-2, from Baa3 to Ba3. Classes on review for possible downgrade are class M-1 of Aames Mortgage Trust 2001-3 and class B-1 of Morgan Stanley Dean Witter Capital I Inc. Trust 2002-HE2. In addition, Moody's upgraded one tranche from the Aames 2002-2 transaction. The negative rating actions were attributed to higher-than-expected severities on liquidated loans and an accelerating pace of losses, with an accompanying deterioration of credit enhancement. The collateral consists of subprime residential mortgage loans.

The Federal Agricultural Mortgage Corp., Washington, has reported net income of $5.0 million ($0.44 per share) for the first quarter, compared with $4.9 million ($0.42 per share) for the first quarter of 2005."Farmer Mac's strategic diversification of its marketing focus, begun last summer, has continued to produce tangible results," said Henry D. Edelman, Farmer Mac's president and chief executive officer. "First-quarter 2006 new business volume was $648.5 million, following on strong fourth-quarter 2005 volume of $330.5 million." The government-sponsored enterprise can be found online at http://www.farmermac.com.

New foreclosures in Massachusetts hit their highest level in 10 years in March, according to ForeclosuresMass, Framingham, Mass.The company said 1,487 foreclosures were recorded in March, 62% higher than the level of a year earlier, bringing the quarterly total to nearly 3,800. "It is quite clear that every month thousands of homeowners are reaching a breaking point in Massachusetts -- the number of property owners facing foreclosure continues to climb at alarming rates," said Jeremy Shapiro, president and co-founder of ForeclosuresMass. "While there are many factors, including higher interest rates, spiraling property values, and a flat economy, that contribute to the increase in foreclosures, it seems clear that higher energy costs are also pushing some homeowners to the brink." The company can be found online at http://www.foreclosuresmass.com.

Five classes from three deals issued by Long Beach Mortgage Co. have been downgraded by Moody's Investors Service, and seven classes from three other deals have been placed under review for possible downgrade.The downgrades of Long Beach Mortgage Loan Trust Asset Backed Certificates were as follows: series 2001-4, class M2, from Baa1 to Ba3, and class M3, from Caa1 to Ca; series 2002-1, class II-M1, from Aa2 to A2, and class M2, from A2 to Baa3; and series 2002-2, class M3, from Baa2 to Ba3. Under review for possible downgrade are (from Long Beach deals) classes M-1, M-2, and M-3 of series 2000-1 and classes M2F and M2V of series 2000-LB1, and (from an Asset Backed Securities Corp. deal) classes M-3 and M-4 from series 2002-HE3. The rating actions were taken because the transactions "have taken significant losses, causing gradual erosion of the overcollateralization," the rating agency said. "In addition, the severity of loss on the liquidated loans has begun to increase due, among other factors, to a higher concentration of manufactured housing loans." The transactions are backed primarily by first-lien subprime mortgage loans originated by Long Beach.

MortgageBrokers.com Holdings Inc., Toronto, has announced the approval by its board of directors of a 4-for-1 forward split of its common shares.All shareholders on record as of June 14, 2006, are eligible to receive four shares of common stock for every common share held, the company said. "The stock split will better position the company to attract new retail and institutional investors, as well as increase our liquidity," said Alex Haditaghi, chief executive officer of MortgageBrokers.com.

The mortgage banker of the future will be an organization that is both horizontally and vertically integrated, along the lines of Countrywide Financial Corp., according to Paul Miller, a buy-side equity analyst for the Friedman, Billings, Ramsey Group.Speaking at the Mortgage Bankers Association National Secondary Market Conference in Chicago, Mr. Miller said the continued evolution of the nonagency securitization market will disintermediate the government-sponsored enterprises and other Wall Street nonproducers of mortgage assets. Countrywide is the model, as two-thirds of its production is traded on the secondary market, not by Wall Street, but by its internal operations. In the future, mortgage bankers will have to do all four loan categories -- prime, subprime, alternative-A, and niche -- to stay in business, Mr. Miller said. Many of their best loans will have to be put into portfolio in order to be profitable. Finally, mortgage bankers will need to be better at retaining their servicing portfolio, something they have not done a good job of so far, Mr. Miller said. The successful mortgage banker will retain over 40% of its servicing customers and cut out the mortgage broker, he said.

Fannie Mae is planning a number of changes to its My Community Mortgage suite of loans in an effort to reach deeper into the first-time buyer market -- and placate lenders.As outlined in a fast-paced session Tuesday at the Mortgage Bankers Association's National Secondary Market Conference in Chicago, the company is going to waive the minimum $500 borrower contribution required of borrowers who are purchasing single-family houses, allow for 2-1 buydowns, and add a 40-year, fully amortizing term as an option. The company also is planning a change in the way its automated underwriting system, Desktop Underwriter, looks at condominiums, according to Jeanne Hunter, director of product development at Fannie Mae. Another change "targeted for this summer" is a more streamlined pricing system. The new "much more simplified" system will replace one that is now "too complicated," said Ms. Hunter, who told a conference session that the pending improvements are a result of customer feedback. Lenders have been particularly vocal about their belief that DU penalizes condos, so the next release will treat condos the same as single-family detached units, which should result in more favorable underwriting decisions, she said. Fannie Mae can be found online at http://www.fanniemae.com.