Servicing

MFA Mortgage Investments Inc., New York, has announced that it will recognize about $21 million in noncash impairment charges in the fourth quarter in connection with about $824 million worth of mortgage-backed securities that it no longer plans to hold until a recovery of market value.MFA Mortgage, a real estate investment trust, said the charges are in addition to about $18 million in previously announced losses related to the sale of about $565 million worth of MBS in 2005. "These actions were undertaken based on a number of factors, including the 13 consecutive increases in the target fed funds rate from 1% to 4.25% and a flattening of the yield curve," the REIT said. The company can be found online at http://www.mfa-reit.com.

Citing "questionable appraisals" and other factors, FNB Financial Services Corp., Greensboro, N.C., has announced that its banking subsidiary, FNB Southeast, recorded a $13.6 million special provision for credit losses in the fourth quarter."Through an internal investigation and reviews by independent consultants, the bank has identified a significant number of loans in its Harrisonburg, Va., region which are believed to have questionable appraisals and/or collateral value or which were incorrectly graded for credit risk based on the financial strength of the borrower and other factors," FNB Financial said. The company said the bank has also reclassified certain loans outside the Harrisonburg region because of the borrowers' deteriorating financial condition and the bank's discovery of "a significant reduction in the collateral base" of the loans. FNB Financial said it expects the provision for credit losses to reduce its annual earnings by approximately $8.5 million.

Washington Mutual, Seattle, has reported that it earned just $47 million off its residential lending business in the fourth quarter, a 71% decline from the level of a year earlier.Compared with those of the third quarter, home lending profits fell by 75%. WaMu chairman and chief executive Kerry Killinger attributed the earnings dropoff to a "challenging environment" in residential finance, including increased hedging costs and a flat yield curve. The thrift reports its subprime profits separately from home lending through its "commercial group." That division, which includes nonconforming lender Long Beach Mortgage, earned $164 million in the fourth quarter, a 21% gain from that of a year earlier, but a 24% decline from earnings in the third quarter. Even though its mortgage business suffered, overall earnings at the nation's largest thrift -- and third-largest mortgage lender -- rose 12% to $865 million. WaMu funded $50.4 billion in home mortgages during the quarter, including $11.7 billion in payment-option adjustable-rate mortgages. Its production volume was just about flat compared with that of the same quarter a year ago. In an analyst note, Sandler O'Neill -- which has a "hold" rating on the company -- described the mortgage business as "increasingly competitive in both the prime and subprime segments."

Two classes from Goldman Sachs Mortgage Securities Corp. series 2002-3F have been placed on Rating Watch Negative by Fitch Ratings.The affected classes, both from group 1, are class IB-4 and class IB-5. Fitch also affirmed the ratings on 29 classes from seven Goldman Sachs issues. The Rating Watch placement was attributed to higher-than-expected delinquency levels. The collateral pool consists of fixed- and adjustable-rate mortgage loans extended to prime and alternative-A borrowers, the rating agency said.

The risk of price declines over the next two years has risen in the nation's 50 largest housing markets, but a "soft landing" is likely, according to PMI Mortgage Insurance Co., Walnut Creek, Calif.The median risk index value in the PMI U.S. Market Risk Index rose 25% in the fourth quarter, increasing from 134 to 168, the company reported. This means the probability of experiencing a home price decline in the next two years has risen from 13.4% to 16.8% in the 50 largest housing markets. "We expected what we are seeing in the third-quarter data, which is a moderating of appreciation that, over time, is likely to bring prices back into line with the economic fundamentals that support them, particularly incomes," said Mark Milner, chief risk officer of PMI Mortgage Insurance. Mr. Milner said he believes that a gradual slowing of appreciation will contribute to a soft landing as long as the U.S. and regional economies stay robust. According to the index, there are now 11 markets with a greater than 50% chance of price declines over two years, up from five in the third quarter. PMI can be found online at http://www.pmigroup.com.

Six classes from two Residential Asset Securities Corp. home equity transactions have been downgraded by Fitch Ratings.The downgrades were as follows: RASC series 2001-KS2 group 1, class M-I-1, from AA to AA-minus, class M-I-2, from A to A-minus, and class M-I-3, from BB to B; and RASC series 2001-KS3 group 1, class M-I-1, from AA to AA-minus, class M-I-2, from A to A-minus, and class M-I-3, from BBB-minus to B. Fitch also affirmed the ratings on 12 classes from the two deals. The rating actions were attributed to the "potential negative impact" of loan performance on the bonds. Fitch can be found online at http://www.fitchratings.com.

CDS IndexCo LLC and Markit Group Ltd., both based in New York, have announced the launch of ABX.HE, a synthetic ABS index of U.S. home equity asset-backed securities.The index is a family of five subindices, each consisting of 20 credit default swaps related to U.S. subprime home equity securities. To qualify for inclusion in the index, an issuer must have rated bonds for each of the AAA, AA, A, BBB, and BBB-minus categories, the companies said. CDS IndexCo is a consortium of 16 investment banks licensed as market makers in the Dow Jones CDX indices, and Markit Group is a provider of independent mark-to-market pricing and valuations. The consortium consists of ABN Amro, Bank of America, Barclays Capital, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, UBS, and Wachovia. Markit Group can be found online at http://www.markit.com.

Wells Fargo Home Mortgage has passed the $1 trillion mark in housing receivables, joining an exclusive club that includes itself and Countrywide Home Loans.At Dec. 31, the San Francisco-based WFHM had an "owned servicing" portfolio of $989 billion and $27 billion in subservicing contracts, bringing its total to $1.016 trillion. Compared with the same period a year ago, its home mortgage receivables -- including servicing and subservicing -- increased by 22%. (It values those housing receivables at $12.5 billion.) The figures were released Jan. 17 when Wells Fargo & Co. released fourth-quarter earnings. Despite reaching the $1 trillion mark, Wells' mortgage revenue fell by 20% in the fourth quarter compared with that of the previous quarter. WFHM funded $366 billion in home mortgages in 2005, its second-best production year ever.

Classes B-1 and B-2 from Credit Based Asset Servicing and Securitization LLC series 2000-CB4, a mortgage loan securitization, have been placed on Rating Watch Negative by Fitch Ratings.Fitch also upgraded four classes from two other C-BASS transactions and affirmed the ratings on five classes. The negative rating actions reflect a deterioration in the relationship between credit enhancement and loss expectations, the rating agency said. Series 2000-CB4 consists primarily of subprime conventional fixed-rate and adjustable-rate mortgage loans.

Dallas-based H-Cube LLC, in conjunction with its Zenta subsidiary, has acquired Global Realty Outsourcing, a Stamford, Conn.-based business process outsourcing company specializing in the real estate and mortgage industries.GRO's services include master and primary mortgage servicing, cash flow modeling, lease abstraction, loan underwriting, real estate accounting, and mortgage due diligence, according to GTCR Golder Rauner LLC, which formed H-Cube last year in partnership with Henry Hortenstine. H-Cube later acquired Zenta, a company based in Wayne, Pa. (with primary operations in Mumbai, India) that provides outsourcing services to the financial services industry. "The combination of Zenta's strong capabilities with GRO's high-end analytical services allows H-Cube to offer a broader suite of services to its customers," said Collin Roche, a principal of GTCR. The companies can be found online at http://wwwh-cubeinc.com, http://www.zentagroup.com, http://www.gro.com, and http://www.gtcr.com.