Servicing

Option One Mortgage Corp., Irvine, Calif., has announced that it will extend for an additional 90 days the payment deferral period for borrowers affected by hurricanes Katrina and Rita.The deferral period now extends to 180 days from the date of the disaster declaration for Hurricane Katrina by the Federal Emergency Management Agency, or until the end of February, Option One said. In addition to payment deferral during that period, the company said it will not file negative credit reports, assess late fees, or pursue legal actions in progress, such as foreclosure. "[W]e encourage any borrower who has not been in touch to please contact us so we can help them work out the best solution for their particular circumstances," said Teji Singh, Option One's senior vice president of servicing operations. Option One said it may extend the relief measures past 180 days on a case-by-case basis. The company can be found online at http://www.optiononemortgage.com.

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that the number of new properties in some stage of foreclosure decreased 12% nationwide in November.The company's Monthly U.S. Foreclosure Market Report indicates that 71,606 new foreclosure properties were added to the rolls in November. "After reaching their highest level of the year in October, foreclosures in November retreated to closer to the levels we saw earlier this fall and in the summer," said James J. Saccacio, RealtyTrac's chief executive officer. "While fewer foreclosures in most of the Gulf Coast states contributed to this, it also continues the trend of seeing the national foreclosure rate drop the month after a significant spike." The company said Florida was the only Gulf Coast state with increasing foreclosures in November, with 8,872, an increase of 16% and the most foreclosures reported by any state. RealtyTrac can be found online at http://www.realtytrac.com.

ABN Amro Mortgage Group Inc., Ann Arbor, Mich., has reported that computer tape containing data on approximately 2.0 million residential mortgage customers was lost while being transported by DHL.The company, a subsidiary of Chicago-based LaSalle Bank Corp., said the tape did not contain any data related to LaSalle Bank accounts other than residential mortgages. "We understand that this incident may cause concern for our customers, and we deeply regret that it has occurred," said Thomas M. Goldstein, AAMG's chairman and chief executive officer. "We have begun notifying our customers and are dedicating resources to assist them and to answer any questions they may have. Although we have no reason to believe that this information has been misused, we are also informing them of steps they can take to protect themselves." The company said it has also arranged for its residential mortgage customers to enroll in a credit monitoring service for 90 days at no cost to them. The company can be found online at http://www.lasallebank.com.

Fannie Mae has announced that it will reduce its minimum servicing fee on adjustable-rate mortgages to 25 basis points starting Jan. 1.The secondary-market agency also indicated that it may be willing to cut the minimum ARM servicing fee to 12.5 bps for high-quality servicers. "On a negotiated basis, the minimum servicing fee on certain adjustable rate mortgages may be reduced to a level below 25 bp," according to Fannie announcement 05-08. Fannie currently requires a minimum servicing fee of 37.5 bps on most ARMs. The 12.5 bps minimum servicing fee on uniform hybrid ARMs will remain in effect for 2006.

The Legacy Bank, Harrisburg, Pa., has completed a restructuring of its marketable securities portfolio by selling chiefly mortgage-backed securities, resulting in an after-tax loss of about $400,000 in the fourth quarter, according to George H. Groves, the bank's chairman and chief executive officer.The securities have a total book value of approximately $24 million, a weighted average yield of 3.77%, and an average expected life of 2.8 years. The bank said the proceeds of the restructuring will provide the liquidity to avoid a high-cost refinancing of about $24 million of time deposits maturing in the next 60 days. "The bank does not anticipate a significant impact on stockholders' equity because the securities were sold exclusively from Legacy's available-for-sale security portfolio and, accordingly, were already carried on the balance sheet at current market values," the bank said. Legacy can be found online at http://www.thelegacybank.com.

The Federal Home Loan Bank of Chicago earned $197.5 million in net income for the first three quarters of this year, down 34% from that of the same period in 2004, according to an application filed by the Chicago bank to register its stock with the Securities and Exchange Commission.The Chicago FHLBank, which continues to operate under a supervisory agreement, blamed the decline in earnings "primarily" on the increase in short-term interest rates this year, along with declines in its advance and mortgage purchase business. The Boston, New York, and San Francisco FHLBanks have registered their stock with the SEC, and the Cincinnati FHLBank recently filed an application to register. "This is an important step in the completion of the registration process," said Mike Thomas, president and chief executive of the Chicago bank. The $83 billion Chicago FHLBank held $43.4 billion in Mortgage Partnership Finance loans as of Sept. 30, and approximately $500 million of the conventional MPF loans are located in the Gulf Coast states hit by hurricanes Katrina and Rita. The Chicago bank said it does not believe its losses will be material, but it is still working with a master servicer and the originating institutions to develop a loss estimate.

Arbor Realty Trust Inc., a real estate investment trust based in Uniondale, N.Y., has announced the completion of the sale of $50 million of trust preferred securities in a private placement.The trust said it will use the proceeds to repay short-term debt and provide capital to fund loan originations. The trust preferred securities have an approximately 30-year term and bear interest at a floating-rate of 2.75% above the three-month London interbank offered rate. Arbor, which specializes in real-estate-related bridge and mezzanine loans, can be found online at http://www.thearbornet.com.

Scratch-and-dent transactions, which are becoming more commonplace in the U.S. residential mortgage-backed securities arena, have generally performed up to expectations, according to Fitch Ratings.In a special report titled "Scratch & Dent: This Is Not Your Father's MBS," the rating agency reports that it has analyzed 36 transactions from 15 issuers in the first three quarters of 2005, totaling almost $7 billion (a 436% increase from the level recorded two years ago). "Scratch-and-dent transactions have generally performed at expectations, due in part to RMBS servicers' workout and liquidation procedures, as they directly affect loan recoveries," said Vincent Barberio, a Fitch managing director. "Subprime and special servicers are generally best-suited to service pools of distressed loans because they typically deal with a greater number of poorly performing loans and have adequate tools in place to handle them." The combinations of collateral any one scratch-and-dent pool can contain make it hard to compare such deals, and therefore it is important to analyze each transaction individually, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

First BanCorp, the parent company of FirstBank Puerto Rico, San Juan, has announced that it will restate its earnings from 2001 through the first quarter of this year because certain of its mortgage-related transactions do not qualify as sales for accounting purposes.The company said a "substantial portion" of its mortgage-related transactions with Doral Financial Corp. and R&G Financial Corp. since 1999 do not so qualify. The restatements will also correct the accounting treatment of certain interest rate swaps, First BanCorp said. The Doral and R&G transactions in question were accounted for as purchases of residential real estate loans and commercial mortgage loans. The restatement will reflect the transactions as commercial loans secured by mortgages, the company said. The revised classification will not result in a need for additional reserves, but it has led the company to terminate its commitments to purchase mortgage loan portfolios from Doral, First BanCorp said. The company can be found online at http://www.firstbankpr.com.

The overall delinquency rate rose modestly during the third quarter, and the Mortgage Bankers Association says Hurricane Katrina is to blame.As of Sept. 30, 4.44% of residential home loans were delinquent, according to the MBA's quarterly delinquency survey. That was up 10 basis points from the level of June 30, but it was down by the same amount from that of one year earlier. However, the MBA said the increase in the third quarter reflects higher delinquencies in Mississippi (where the delinquency rate rose to 17.44% in the third quarter) and Louisiana (where it rose to 24.63%) stemming from widespread property destruction and damage from the hurricane. Excluding the impact of the hurricane, delinquency rates for all loan types were lower. In fact, excluding the hurricane effect reduces the overall delinquency rate by 13 bps, according to the MBA. The foreclosure rate also declined nationwide in the third quarter.