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Sanders Morris Harris Group Inc., a Houston-based investment banking firm, has announced the formation of an expanded fixed-income unit based in New York.William Sprague, a Sanders Morris Harris managing director, said the firm capitalized on a unique opportunity after Merrill Lynch acquired assets of the Advest Group from AXA Financial. "A complete 30-person fixed-income team chose to join Sanders Morris Harris, giving us the nucleus that we plan to expand in the months ahead," Mr. Sprague said. The firm offers a full range of investment banking services, including brokerage services for hedge funds and mortgage-related fixed-income security sales and trading. It can be found online at http://www.smhgroup.com.

The delinquency rate on home equity loans fell 42 basis points in the third quarter, reflecting overall improvement in the consumer credit sector, according to the American Bankers Association.The delinquency rate on home equity loans dropped from 2.75% in the second quarter to 2.33%. However, past-due accounts among home equity lines of credit increased slightly to 0.46%, from 0.43% in the second quarter, according to the ABA survey. The delinquency rate on mobile home loans fell from 3.74% to 3.31%. ABA chief economist James Chessen said that despite improvement in consumer credit overdue rates, there are still "signs of financial stress" related to rising short-term interest rates, higher fuel prices, and last year's hurricane season. The ABA can be found on the Web at http://www.aba.com.

Eight classes from Long Beach Mortgage Loan Trust, series 2002-2, have been downgraded by Fitch Ratings.The downgrades were as follows: group 1, class I-M2, from A to BBB, class I-M3, from BBB-minus to B, and classes I-M4A and I-M4B, from B to CCC; and group 2, class II-M2, from A to BBB, class II-M3, from BBB-minus to B, and classes II-M4A and II-M4B, from B to CCC. Fitch also affirmed the rating on one other class in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement levels and loss expectations. Group 1 of the transaction is backed by first-lien adjustable- and fixed-rate conforming mortgage loans, and group 2 is backed largely by first- and second-lien adjustable- and fixed-rate nonconforming mortgage loans. Fitch can be found online at http://www.fitchratings.com.

Investment banking firm Sandler O'Neill has dropped coverage of Fannie Mae and Freddie Mac due to what it calls a "realignment" of the companies it covers.Analyst Laura Kaster, who last covered the government-sponsored enterprises for Sandler, could not be reached for comment by MortgageWire's deadline. Prior to Ms. Kaster, Sandler analyst Mike McMahon had covered the two GSEs for several years but moved on in 2005 to following only depositories. Until accounting scandals at Fannie and Freddie, Mr. McMahon had been mostly bullish on the stocks. When Sandler terminated coverage, it had a "buy" rating on Fannie and a "hold" on Freddie.

Prepayment rates for 30-year mortgages in Fannie Mae mortgage-backed securities fell by only 10% in December despite a 28-basis-point rise in mortgage rates, but the aggregate speed was the lowest in five years, according to Bear Stearns & Co.The aggregate speed on 30-year Fannie Maes was a constant prepayment rate of 13.8 CPR, down from 15.4 CPR in November, marking the first time it has been below 15 CPR since January 2001, said Bear Stearns analyst Dale Westhoff. The aggregate prepayment rate on Freddie Mac 30-year collateral declined 13%, from 14 CPR in November to 12.1 CPR in December. Meanwhile, aggregate speeds for 30-year Ginnie Mae collateral fell by 10%, from 21.4 CPR in November to 19.3 CPR in December. Mr. Westhoff said the speed decline for Ginnie Maes was uniformly distributed across the coupon stack. "Despite the relatively stable mortgage rates over the last two months, we would expect prepayments to decline by over 15% [in January], with premium coupons showing a larger decline," the analyst said. Bear Stearns can be found online at http://www.bearstearns.com.

A National Association of Realtors study last year found that investors accounted for about 23% of home sales transactions, but the NAR's chief economist said investor activity in 2006 is a "wildcard" that could affect home prices and home sales activity.David Lereah, like other economists who participated in a Homeownership Alliance teleconference, said he expects investor activity to decline in 2006. If investors pull out of the market too quickly, that could "hurt housing," he said. David Seiders, chief economist at the National Association of Home Builders, said the biggest risk would be that investors not only stop buying, but also move the properties they have purchased back onto the market en masse, putting downward pressure on prices. Economists said that investor activity will have the most impact in markets where home values have risen quickly in recent years and those with significant resort and tourism industries. The alliance can be found online at http://www.homeownershipalliance.com.

Mortgage companies shed 200 employees in November, according to the latest national employment report, ending a 20-month hiring spree that added over 53,000 full-time employees to their payrolls.The U.S. Bureau of Labor Statistics reported that employment in the mortgage industry slipped from 533,900 in October to 533,700 in November. The last hiccup in hiring occurred in August 2004 when employment slipped by 100 positions in September 2004. The Mortgager Bankers Association says it expects to see more declines this year in mortgage industry employment as origination volumes decline from 2005 levels. However, the contraction in employment could be offset because purchase mortgage originations, which are labor-intensive, are expected to remain at high levels, MBA financial economist Jay Brinkmann pointed out. And loan officers can still do fairly well with lower volumes because the average loan size has risen substantially over the past few years. "So we might not see some of the same shrinkage" in loan officers and mortgage brokers as in the past, Mr. Brinkmann said.

Thornburg Mortgage Inc., Santa Fe, N.M., has reported doubling the size of its asset-backed commercial paper facility to $10 billion.The company said the facility provides it with another way to finance its adjustable-rate mortgage securities portfolio. Thornburg Mortgage Capital Resources LLC, a special-purpose bankruptcy-remote entity created especially for the CP facility, acts as the financing vehicle by issuing commercial paper in the form of short-term notes, Thornburg said. Lehman Brothers Inc. is the structuring agent and lead dealer for the transaction. Thornburg, a real estate investment trust and mortgage lender focused on the jumbo ARM segment, can be found online at http://www.thornburg.com.

CharterMac, a New York-based real estate finance company focused on the multifamily sector, has announced the receipt of formal listing approval from the New York Stock Exchange.The company said it plans to transfer the trading of its common stock from the American Stock Exchange to the NYSE on Jan. 10 under its current symbol, CHC. CharterMac can be found on the Web at http://www.chartermac.com.

Luminent Mortgage Capital, San Francisco, has announced that it intends to reposition its spread portfolio assets to improve profitability and dividend-paying capacity and that it has discontinued the use of hedge accounting.The repositioning will involve the sale of some mortgage-backed securities and will entail the recording of a noncash impairment charge of approximately $112 million in the fourth quarter, the company said. Luminent said it believes the move will accelerate its diversification into high-yielding residential mortgage credit investments and enable it to achieve higher returns on equity. As a result of the discontinuation of hedge accounting, as defined in Statement of Financial Accounting Standards No. 133, all changes in the value of Luminent's portfolio of hedges will be reflected in the company's consolidated statement of operations under generally accepted accounting principles, Luminent said. The company can be found online at http://www.luminentcapital.com.