Servicing

Based on the overwhelming response to its first full-blown conference on loan fraud, the Mortgage Bankers Association is considering adding a second event later this year.Opening the National Fraud Issues Conference Monday in Chicago, Chairman-elect John Robbins said the MBA "expanded the room twice" and still had more than 150 people on the list waiting to get in. Georgia Attorney General Thurbert Baker, who is in line to become chairman of the National Association of Attorneys General, said he is "urging" his counterparts in other states to follow Georgia's lead in enacting laws making mortgage fraud a felony punishable by up to 20 years in prison. "Most important," Mr. Baker told the meeting, "we don't have to wait until the money's taken. We can act as soon as the misrepresentation is made, and that allows us to get at the problem before (lenders) are bilked out of millions and entire neighborhoods are destroyed." The Georgia AG said more than 100 cases have either been or opened or are waiting to be opened," and "we are training prosecutors all over the state." Assistant Georgia AG David McGlaughlin said he takes great delight in being able to lock up scam artists. "Drug dealers live in fear that today is the day they are going to have their faces pushed into the concrete and handcuffed. Now mortgage fraudsters feel the same way," Mr. McGlaughlin said. "That’s the beautiful thing for me as a prosecutor."

Florida has replaced Georgia as the hottest spot in the country for mortgage fraud, according to the latest figures from the Mortgage Asset Research Institute.Utah moved up to second place, while the Peach State slipped to third, MARI said in a statistical report released at the Mortgage Bankers Association's First Annual National Fraud Issues Conference. Officials at the meeting Monday attributed the decline in the MARI Fraud Index for Georgia to the state's year-old law which codifies mortgage fraud as a crime. To date, Georgia is the only state to specifically make loan fraud a criminal offense. But at least five others -- New Jersey, Utah, Colorado, Oklahoma and California -- are considering similar legislation. "It's getting people's attention," Georgia Attorney General Thurbert Baker said at the conference. "It shows the impact that state laws can have," agreed California attorney Arthur Prieston, a specialist in fraud. According to the MARI index, the fraud rate in Georgia went from three times the national average to less than twice the national average, "a far cry from 2003, when it far outstripped every other state." On a national level, however, MARI found that problems in loan application misrepresentation remain high. Colorado and Illinois are seeing more instances of fraud, while South Carolina has shown a marked improvement, according to the report.

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.