Servicing

BRT Realty Trust, a real estate investment trust based in Great Neck, N.Y., has announced the sale of $30 million of trust preferred securities in a private placement.The mortgage REIT said the sale will enable it to continue the expansion of its lending activities. The 30-year securities will bear interest of 8.49% through April 30, 2016, and at a floating rate of 2.90% above the three-month London interbank offered rate after that, the company said. BRT can be found online at http://www.brtrealty.com.

Saxon Capital Inc., a residential mortgage lending and servicing real estate investment trust based in Glen Allen, Va., has announced the pricing of a private offering of $150 million of senior notes due in 2014.The notes will bear interest at a fixed rate of 12%. The net proceeds will be used chiefly to acquire additional third-party mortgage servicing rights and whole loans in bulk, Saxon said. The REIT can be found online at http://www.saxonmortgage.com.

Alesco Financial Trust, a Philadelphia-based specialty finance real estate investment trust, has agreed to merge with Sunset Financial Resources, a Jacksonville, Fla.-based specialty finance REIT.Sunset will issue 1.26 shares of its stock for each Alesco share. The REITs said the merged company will pursue Alesco's strategy of focusing on trust preferred securities issued by banks and insurance companies, middle-market loans, and residential mortgage-backed securities. Alesco is managed by Cohen Brothers Management LLC, Philadelphia. Sunset has entered into an interim management agreement with Cohen Brothers that allows the REIT to convert its existing assets into assets consistent with the investment strategy of the merged companies. Alesco is currently not publicly traded, while Sunset trades on the New York Stock Exchange. Based on Sunset's April 27 closing price of $8.85 per share, each Alesco share is valued at $11.15 per share.

Fitch Ratings has downgraded 21 classes in Conseco Finance/Green Tree Finance manufactured housing transactions.Fitch also affirmed its ratings on 223 classes in 56 Conseco/Green Tree deals. The rating agency said the downgrades stem from collateral losses that have exceeded excess spread, causing bond writedowns and a deterioration in credit enhancement. Fitch said it expects collateral performance to remain "relatively stable" for transactions issued before 1999. But for deals issued since then, despite an expected modest improvement in collateral performance, the rating agency said longer amortization terms, higher percentages of repo-refinances, and generally weaker collateral attributes "will result in only modest decreases in the default rate over the next several years." Fitch can be found online at http://www.fitchratings.com.

Countrywide Financial Corp., Calabasas, Calif., has reported net earnings of $683.5 million ($1.10 per share) for the first quarter, a 1% decline from $688.9 million ($1.13 per share) in the first quarter of 2005.Pretax earnings by the company's mortgage production sector rose from $102 million in the fourth quarter to $284 million, chiefly as a result of improved gain-on-sale margins, the company said. However, these earnings were down dramatically from $735 million a year earlier because of higher interest rates and a flatter yield curve, according to Countrywide. Angelo R. Mozilo, Countrywide's chairman and chief executive officer, said the production sector's pretax margin rose to 30 basis points in the first quarter, compared with 9 bps in the fourth quarter. The loan servicing sector produced $249 million in pretax earnings, up from $17 million a year earlier, the company reported. Countrywide can be found online at http://www.countrywide.com.

Fitch Ratings has announced the introduction of Distressed Recovery ratings for U.S. and European structured finance transactions (including residential and commercial mortgage-backed securities) that are designed to estimate recoveries for distressed and defaulted securities.Fitch said the new DRs will affect 314 RMBS transactions, 60 CMBS deals, 64 asset-backed securities deals, and 101 collateralized debt obligations. Olivier Delfour, a Fitch managing director, said the new ratings are "part of an effort to provide an enhanced analytical approach" to structured finance securities that are rated B or below and are distressed or defaulted. The ratings will range from DR1 (the highest) to DR6 to designate a transaction's recovery prospects. Fitch can be found online at http://www.fitchratings.com.

Fannie Mae needs to "do more" so that working families trying to afford a home have an alternative to exotic mortgages, according to the mortgage giant's top executive.Being a low-risk enterprise does not mean "avoiding risk entirely," Fannie Mae president and chief executive Daniel Mudd told a National Association of Realtors regional summit. "Our job is to look deeply into our mortgage data and try to stretch our tolerances so that we can serve more people who need serving the most -- working families struggling to own or rent a home," Mr. Mudd said. He noted that borrowers are choosing interest-only and payment-option adjustable-rate mortgages so they can "squeeze" into a house. "But there's a problem here, of course. For working families, exotic mortgages can be a poison apple," he said, as the mortgages reset and the monthly payment goes up. Fannie Mae can be found online at http://www.fanniemae.com, and the NAR can be found at http://www.realtor.org.

IndyMac Bancorp, which acquired Freedom Financial from Lehman Brothers in 2004, may now spin off a stake in the nation's largest reverse mortgage lender through an initial public offering.In response to a question during IndyMac's quarterly earnings call, IndyMac chairman and chief executive Michael Perry said his company is "seriously considering" an IPO for its Financial Freedom subsidiary. He added that there is a "75% to 90% chance we'll do it." A spinoff of Financial Freedom would allow the company to recruit and maintain top management with stock options and let them run the company, Mr. Perry said. Financial Freedom, based in Irvine, Calif., closed $2.9 billion of reverse mortgage accounts last year. It is also the largest servicer of reverse home loans, managing a 77,000 loan portfolio.

Four classes of Ocwen Residential MBS Corp. Home Equity Loan Trust securities have been downgraded by Fitch Ratings.The downgrades were as follows: series 1998-R1, class B-3, from BBB-minus to BB; series 1998-R3, class B-1, from A to BBB; series 1999-R1 group A, class B-4A, from BB to B; and series 1999-R1 group F, class B-4F, from CC to C. In addition, Fitch upgraded four classes from two Ocwen deals and affirmed the ratings on 19 classes from five Ocwen transactions. Fitch said the downgrades resulted from a deterioration in the relationship between credit enhancement and loss expectations. Fitch can be found online at http://www.fitchratings.com.

IndyMac Bancorp Inc., Pasadena, Calif., has reported earnings of $80 million ($1.18 per share) for the first quarter, up 26% from $63 million ($0.98 per share) a year earlier, and record mortgage volume of $20 billion.IndyMac touted the record loan production, which was up 72% from the level of a year earlier, and said it had doubled its market share to 3.89%. "In the first quarter, we deployed a total of $509 million of our capital in our mortgage production divisions, an 83% increase over last year," said Michael W. Perry, IndyMac's chairman and chief executive officer. "However, given mortgage industry margin pressures and our lower-margin conduit operations comprising a higher percentage of our production volume, the [return on equity] on this capital declined from 97% last year to 51% this quarter, still a strong return on our capital." The mortgage pipeline totaled a record $10.4 billion as of March 31, up 39% from that of a year earlier, the company said. IndyMac, the holding company for IndyMac Bank FSB, can be found online at http://www.indymacbank.com.