Servicing

Class B of Soundview Home Equity Loan Trust series 2000-1 has been downgraded from BBB to BB-plus by Fitch Ratings.Fitch also affirmed the ratings on nine classes in two Soundview transactions. The downgrade was attributed to a deterioration in the relationship between credit enhancement and expected losses. The mortgage loans backing the deals consist of fixed- and adjustable-rate loans to subprime borrowers. The rating agency can be found online at http://www.fitchratings.com.

The Mortgage Industry Standards Maintenance Organization, a not-for-profit subsidiary of the Mortgage Bankers Association, has released its first data standard for the commercial/multifamily mortgage industry.The release of version 1.0 of the Commercial Servicing Transfer Standard is the first of many planned for the industry, MISMO said. It was chosen to be MISMO's first commercial standard "because it answers the industry's need for a standardized way to move large amounts of data and improve what is currently a labor-intensive process," the organization said. MISMO said its data standards will ultimately "reduce costs, streamline processes, improve accuracy, increase data transparency, and boost investor confidence in mortgages as an asset class." MISMO can be found online at http://www.mismo.org.

Homecomings Financial Network Inc., Dallas, has announced an extension (for an unspecified period) of its mortgage relief for families most affected by Hurricane Katrina.For homeowners whose homes were flooded, Homecomings said it will continue to waive fees and penalties, suspend foreclosure activity, forgo collection actions, and cease negative credit reporting. In addition, the company said it is working on a case-by-case basis to provide various assistance options, including a special loan modification program. Homecomings is a business unit of Residential Capital Corp.'s U.S. Residential Finance Group, which can be found on the Web at https://www.rescapholdings.com.

In the wake of the prime lending sector's refinance contraction, the nonprime sector has picked up and become more mainstream, accounting for 28% of total loan originations, according to a panel member at the Mortgage Bankers Association's National Mortgage Servicing Conference and Expo in Phoenix.Rick Glass, managing partner with R.T. Glass & Associates, made the comments at a panel called "Repositioning Non-Prime Servicing," where he and other sector executives shared their thoughts on key challenges and competitive strategies in this market. Michael Drawdy, senior vice president at Countrywide Financial Corp., said half of subprime ARMs will be due in the summer and over the next 14 months. "There will be some people who can't pay for an ARM change," Mr. Drawdy said. "That is why you must make sure there is a system in place for collections -- to make sure borrowers know their options." Panelists talked about repayment plans and ARM modifications aimed at helping borrowers stay in their homes. Over the next 12-24 months, there is a potential for severe delinquencies, they said.

Fannie Mae is working with lenders to develop a streamlined refinancing process for borrowers who want to bail out of adjustable-rate mortgages.Rising short-term interest rates and borrower awareness of the risks associated with interest-only and option-payment ARMs is creating the potential for a major shift to fixed-rate loans or safer hybrid ARMs, according to Fannie Mae executive vice president Tom Lund. "A lot of our largest partners are talking about trying to create a streamlined capability to take some of these ARM borrowers back into a fixed-rate or longer-term hybrids, maybe with an IO feature," Mr. Lund told a Morgan Stanley housing conference. "They see that as the next big trend." He noted that Fannie Mae might not be able to purchase some of the newly refinanced loans. But the secondary-market agency is working with its customers to try to make such refinancings easier for lenders and consumers. Fannie Mae can be found online at http://www.fanniemae.com.

Class B of Asset Backed Funding Corp. mortgage-backed securities series 2002-SB1 has been downgraded from B to CCC by Fitch Ratings, and class M-3 has been placed on Rating Watch Negative.Fitch also upgraded six classes from two ABFC issues and affirmed the ratings on 45 classes from 10 issues. The rating agency attributed the negative rating actions to a deterioration of credit enhancement relative to monthly losses. Fitch can be found online at http://www.fitchratings.com.

The nationwide inventory of foreclosed residential properties rose 3.5% in January, to 95,073, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.There were 23,982 new foreclosed residential properties listed in the United States in January, the company reported. "The ballooning inventory of available foreclosure properties should be an area of concern among lending institutions," said Brad Geisen, president and chief executive officer of Foreclosure.com. "It puts pressure on REO departments to reduce this expanding inventory." The company can be found online at http://www.foreclosure.com.

Fannie Mae has extended and limited its foreclosure moratorium in the Gulf Coast states to 21 counties and parishes that sustained the most damage in hurricanes Katrina and Rita.However, the government-sponsored enterprise is continuing to give its servicers flexibility in other devastated areas. The new guidance, which extends the current moratorium until the end of May, stresses that "foreclosure proceedings may begin (or continue) only when foreclosure is the only alternative." The GSE says it is particularly concerned that many borrowers who were forced to evacuate their homes have not contacted their lenders and servicers. Fannie Mae says servicers should continue their "proactive efforts" to contact borrowers and that the GSE will assist in those searchers. "In some cases, we will work with commercial search service providers to perform a comprehensive multi-state search in an attempt to locate the borrower," Fannie said. Fannie Mae can be found online at http://www.fanniemae.com.

The cost of repairing the 95,000 properties in New Orleans damaged by flooding related to Hurricane Katrina will total $8 billion to $10 billion, according to a study by the Mortgage Bankers Association.Flood insurance is expected to cover $4 billion to $5 billion, leaving $3 billion to $6 billion in uninsured losses, the MBA said. The pre-Katrina market values of the properties totaled $17 billion to $18 billion, according to the study, which used property-level damage reports on over 117,000 properties and applied repair cost estimates based on structure types, location, degree of damage, and current builder quotes. Damage percentages vary dramatically by ZIP code, ranging from only 2% of structures to 95%, the MBA said. The study was written by Jay Brinkmann, the MBA's vice president of research and economics, and Wade Ragas, president of Real Property Associates and retired head of the Real Estate Market Center at the University of Orleans. The MBA can be found online at http://www.mortgagebankers.org.

Mortgage lenders are now following in the footsteps of credit card and auto lending operations by incorporating predictive analytics to better manage risk, according to James Caldwell, a partner with Deloitte & Touche LLP, at the MBA's National Mortgage Servicing Conference & Expo in Phoenix."There are several stages of increasing sophistication in collections, ranging from traditional to enhanced and then to risk-based," Mr. Caldwell told conference attendees during his session, "Leveraging Predictive Analytics to Drive Profit in Mortgage Collections." Deloitte & Touche conducted an online survey with the assistance of the Mortgage Bankers Association in which it conducted in-depth interviews with senior executives. With rising rates, concerns over housing prices, and a strained economic outlook, the survey found that lenders are implementing a variety of techniques to lower costs and boost revenues. "Mortgage lending has always looked for trends in customer data," Mr. Caldwell said. "However, sophisticated analytic tools can recognize critical patterns beyond trends. The market for decision analytics software in the U.S. was $2.3 billion in 2004 and is expected to grow by 30% in the next two years."