Servicing

Freddie Mac, American General Financial Services Inc., and ABN Amro Mortgage Group Inc. have joined the coalition headed by the NeighborWorks Center for Foreclosure Solutions to help avert home foreclosures.The coalition now consists of 15 financial services institutions, NeighborWorks, and the Homeownership Preservation Foundation. It aims to minimize foreclosures by providing better research and early alert systems, improving counseling capacity, and expanding partnerships among cities, lenders, and servicers. The program was launched April 11 in Ohio, where foreclosures have more than doubled in the past five years, NeighborWorks said. "The national program will target key hotspots across the country where foreclosure rates have skyrocketed," the organization said. The lenders will provide more than $1 million to the NeighborWorks Center for the campaign, along with trade insights and information, NeighborWorks said.

Wachovia Corp., which is buying Golden West Financial Corp., is "very good" at integrating acquisitions, an American Mortgage Network executive told a news conference held by the Mortgage Bankers Association at its secondary mortgage market conference in Chicago.It is a topic on which John Robbins, AmNet's chairman and chief executive, speaks with authority, because a unit of the Charlotte, N.C.-based Wachovia acquired AmNet last year. From his point of view, the acquisition of AmNet was "relatively seamless," Mr. Robbins said. Wachovia, he said, is "very intelligent" about how it brings companies into the fold. Mr. Robbins, who will be the next president of the MBA, said he does not know whether the deal will affect the San Diego-based AmNet, but that there might be synergies between Golden West and AmNet in terms of product originated. Approximately 70% of Golden West's volume is in option adjustable-rate mortgages, he said, while 40%-45% of AmNet's production is in alternative-A loans, option ARMs, and interest-only loans. Mr. Robbins said this is a good time for companies to be making acquisitions, rather than paying top dollar at the height of the market. "The game here is eat or be eaten," he said.

The next president of the Mortgage Bankers Association is forming a special task force to look into the benefits of a simple, easy-to-understand tool that spells out the strengths and weakness of the loan the borrower has chosen."I see it as a final gut-check for the borrower," said John Robbins, chief executive of the San Diego-based American Mortgage Network, at the MBA National Secondary Market Conference in Chicago. "Here's what you've chosen. These are all the risks, and these are the possible rewards." Mr. Robbins is calling on Fannie Mac, Freddie Mac, and the MBA's Residential Board of Governors to develop recommendations for an industrywide disclosure document, and when and how best to deliver the document to borrowers. While the effort might have the side benefit of calling off state efforts to curtail abusive practices, Mr. Robbins sees it as bringing more transparency to the lending process. "This isn't about the industry being nervous," he told the conference. "It's about helping consumers make truly informed choices" and showing that their welfare is of the utmost importance. The final piece of paper, perhaps a one-pager that outlines the chosen loan's pros and cons, is one way to "make it clear that we want consumers to make informed choices," Mr. Robbins said.

Fannie Mae, which is working through a $10.8 billion earnings restatement scandal, has found yet more accounting errors and will have to repatriate $28.5 billion in assets to its balance sheet.A company spokeswoman told MortgageWire that the government-sponsored enterprise cannot, at this time, determine whether moving the off-balance-sheet assets (Fannie mortgage-backed securities) to its on-balance-sheet portfolio will result in an additional loss or gain. The GSE is in the process of restating its earnings for 2001 through 2004 and has yet to release any profits for 2005 and the first quarter of this year. Fannie says it expects to release the revised 2001 through 2004 earnings after June 30 of this year. The restatement is expected to result in a cumulative loss of $10.8 billion. The information about the $28.5 billion was contained in a new "12b-25" filing with the Securities and Exchange Commission. The filing also reveals that Fannie has dumped $126 billion of its own MBS on the market over the past year. From March 31, 2005 to March 31, 2006, its holdings of its own MBS have fallen by a stunning 27%. The filing also notes that the GSE is still in danger of being delisted by the New York Stock Exchange, though few in the industry believe it will actually happen. Fannie Mae can be found online at http://www.fanniemae.com.

Prestwick Mortgage Group, Alexandria, Va., is brokering the sale of servicing rights on a portfolio of $93 million of Freddie Mac home loans.The weighted average note rate is 5.994%, and the weighted average servicing fee is 25 basis points. The average loan balance is $180,237, with 25 months of average seasoning. Approximately 77% of the loans are backed by homes in Pennsylvania, and approximately 59% were retail originated. The bid deadline is May 16 at 5 p.m. EDT.

Freddie Mac is changing its underwriting requirements to allow for higher homeowners' insurance deductibles.Beginning in July, the company will increase the maximum allowable deductible from 2% to 5% for fire, water, and wind damage coverage for one- to four-unit properties, condominiums, and planned-unit developments, effectively realigning its rules to match current insurance industry practices. As a result of the last two years of severe hurricanes along the Gulf Coast and Florida, most insurers have raised their minimum deductible to 5%, an automatic "disqualifier" under Freddie Mac's current guidelines. Borrowers have always had the option of choosing a higher deductible to save money, but the mandatory increase instituted by some insurance carriers has set a new floor beyond what Freddie Mac currently finds acceptable. Either way, many borrowers are being forced into the private-label market, where mortgage rates tend to be higher than in the agency market, officials said at the Mortgage Bankers Association's National Secondary Market Conference in Chicago. By acknowledging the change in insurance company practices, they said, Freddie Mac is making sure borrowers have access to lower rates.

The "new Freddie Mac" says it will be expanding the list of loan products available through its Web-based selling system this summer by adding a number of 40-year fixed-rate mortgages, a score of adjustable loans, and federally insured rural housing loans."Our main goal is to make sure we provide liquidity across a broad spectrum of the marketplace," Paul Mullings, Freddie's senior vice president of single-family sourcing, said at the Mortgage Bankers Association's National Secondary Market Conference in Chicago. The Freddie Mac official said the company is "putting a lot of money into infrastructure" so it can move more quickly with market forces. "From time to time we will try to innovate ourselves," he said. "But most innovation is taking place in the primary market, and we want to be able to respond to it." When fully implemented, the changes will make it possible for lenders to access, price, and deliver on a flow basis virtually every mortgage product currently offered in Freddie Mac's seller/servicer guide. The company has no interest right now in buying interest-only and payment-option ARMs on a flow basis, but it is studying them, Mr. Mullings said. "As the products evolve, we will evolve with them," he told a news briefing. Freddie Mac can be found online at http://www.freddiemac.com.

Wachovia Corp. struck a deal over the weekend to buy Golden West Financial Corp. for about $26 billion in cash and stock, placing the combined institution squarely among the top 10 in residential servicing and production.The Charlotte, N.C.-based Wachovia, a bank, has shown a growing appetite for mortgages over the past few years, and its purchase of GWF -- the nation's second-largest thrift -- could serve as the first real sign of rapid consolidation in the mortgage finance industry. The Oakland, Calif.-based GWF, the parent of World Savings, is also one of the nation's largest adjustable-rate mortgage lenders. For decades the thrift has been managed by co-chief executive officers Herbert and Marion Sandler, who steered the company through the turbulent waters of the savings-and-loan crisis. According to the Quarterly Data Report, Wachovia ranked 12th in residential production last year, funding $58.1 billion. GWF ranked 15th, with $50.5 billion. Combined, they ranked sixth, with a market share of 3.27%. The companies can be found online at http://www.wachovia.com and http://www.worldsavings.com.

Moody's Investors Service has downgraded the rating of one class of Credit Suisse First Boston Mortgage Securities Corp., Commercial Pass-Through Certificates, Series 1999-C1 and upgraded or affirmed other ratings in the transaction.Due to the rating actions, class L's rating slipped to C from Ca and the ratings of classes C, D, E and F rose, respectively, to Aaa from Aa2, to Aa3 from A2, to A1 from A3, and to Baa1 from Baa2. In addition, Moody's affirmed the ratings of classes A-2, A-X, and F. Moody's can be found on the Web at http://www.moodys.com.

Prepayment rates on 30-year fixed-rate mortgages in Fannie Mae and Freddie Mac mortgage-backed securities declined by 16% and 15%, respectively, in April, according to the Bear Stearns Prepayment Commentary.Overall speeds on 30-year Fannie Mae collateral came in at a constant prepayment rate of 11.4 for the month, down 2.2 CPR from March, Bear Stearns senior managing directors V.S. Srinivasan and Dale Westhoff said in the report. Speeds for comparable Freddie Mac mortgages averaged 10.0 CPR, down 1.8 CPR. "Improving seasonal factors affecting turnover gave way to the drag imposed by a three day decline in the business calendar and a 9 [basis point] back up in rates," they said. The two analysts added, "the decline in speeds was 0.5 to 1.0 CPR more than expected." Overall prepayment speeds for 15-year Fannie and Freddie MBS collateral declined 10%, less than 30-year collateral. Prepayment speed declines on agency hybrids ranged from less than 8% for 3/1 hybrids and 10% for 5/1 hybrids to almost 13% for 7/1 and 10/1 hybrids. Bear Stearns can be found online at http://www.bearstearns.com.