Servicing

Prime and alternative-A mortgage asset performance will remain stable next year in the United States, but subprime asset performance will decline, according to Fitch Ratings.The refinancing trend is expected to continue, but at a slower pace as rates rise, the rating agency said. The prospect of higher rates on adjustable-rate mortgages will increase the percentage of refis into fixed-rate mortgages, ARMs with longer fixed periods, option ARMs, and 40-year mortgages, Fitch predicts in a report titled "Global Structured Finance: 2006 Outlook and 2005 Review." Noting the "excellent performance" of subprime assets over the past two years, Fitch foresees a dropoff in performance "as higher rates and slower home price growth curtail the cash-out refinancing boom and cause some borrowers to experience payment increases on ARM loans." Delinquencies on subprime assets may rise as much as 10%-15%, but credit enhancement on subprime securities has risen rapidly and "should help protect bonds from the expected decline in loan performance," Fitch declared. The rating agency can be found online at http://www.fitchratings.com.

Four classes of Chase Funding Mortgage Loan asset-backed certificates have been placed on Rating Watch Negative by Fitch Ratings.The affected securities are the IB classes of series 1999-1 group 1, series 1999-2 group 1, series 1999-3 group 1, and series 1999-4 group 1. In addition, Fitch upgraded one class and affirmed the ratings on 13 classes in the four transactions. The watchlist placements were attributed to losses in recent months, which have prevented the overcollateralization from maintaining its target amount. Additionally, the group 1 of each transaction no longer benefits from the cross-collateralized excess spread of the group 2. As a result of the increased losses and the reduction in cross-collateralized excess spread, monthly losses have generally exceeded the monthly excess spread for the past six months. The pools consist of fixed-rate subprime mortgage loans secured by first-lien mortgages or deeds of trust on residential properties.

Two classes from C-BASS mortgage loan asset-backed certificates series 2003-RP1 have been downgraded by Fitch Ratings.Class B-1 was downgraded from BBB-plus to BBB, and class B-2 was downgraded from BBB to BB. Fitch also affirmed the ratings on four classes in the transaction. The downgrades reflect deterioration in the relationship between credit enhancement and loss expectations, the rating agency said. Losses have exceeded excess spread for the past 12 months, which has caused the overcollateralization to decline steadily. The trust consists primarily of one-to four-family, adjustable-rate and fixed-rate mortgage loans, FHA-insured and VA-guaranteed mortgage loans, manufacturing housing installment contracts, and installment loan agreements secured by first and second liens on residential properties. Fitch said the mortgages include loans that had defaulted and are re-performing or performing under the provisions of a bankruptcy or forbearance plan, or loans that are performing under the terms of the related original notes or such notes as modified. Fitch can be found online at http://www.fitchratings.com.

Interactive Mortgage Advisors, Denver, is offering a $432 million bulk package of mortgage servicing rights backed by government-sponsored enterprise and government-insured loans.IMA would not disclose the identity of the seller, but noted in its offering circular that the portfolio "represents the entire servicing portfolio of the seller." IMA added that the seller will "discontinue business" once the sale process is completed. The bid deadline is Dec. 13.

Financial Industry Computer Systems Inc., Dallas, has announced new upgrades to eStatus, a residential mortgage loan servicing product that provides online customer service for borrowers.The upgrades to eStatus (which interfaces in real time with Mortgage Servicer, the FICS residential mortgage servicing system) enable lenders to present "a more unified branding message" on their websites and to create a more user-friendly environment for borrowers, FICS said. A lender can reduce incoming call volume by sending a standardized e-mail message to borrowers encouraging them to view statements and notices on the lender's eStatus website, according to FICS. "Because documents are available for display in eStatus as soon as they are generated in Mortgage Services, borrowers always have access to up-to-date information about their loans," the company said. FICS can be found online at http://www.loanware.com.

Class II-B-2 of Credit Suisse First Boston Mortgage Securities Corp. series 2002-22 has been placed under review for possible downgrade by Moody's Investors Service.The action is based on the fact that the bonds' credit enhancement levels, including excess spread, are low compared with the projected loss numbers for the current rating level, the rating agency said. Cumulative losses in the deal have exceeded the rating agency's original expectations, Moody's said. The company can be found online at http://www.moodys.com.

Bresler & Reiner Inc., Washington, has announced the completion of a $40 million private placement of 30-year trust preferred securities through a newly created subsidiary, Bresler & Reiner Statutory Trust I.The proceeds of the private placement will be used to repay debt with less favorable terms and provide added liquidity for future investments, the company said. The securities bear interest at 8.37% for the first five years, and thereafter at the three-month London interbank offered rate plus 3.50%. They are redeemable at par beginning in January 2011. Bresler & Reiner, which owns and develops commercial and residential properties, can be found online at http://www.breslerandreiner.com.

Genworth Financial, Richmond, Va., has reported the pricing of General Electric's secondary public offering of 38 million class A shares of Genworth's common stock at $34.66 per share.Genworth, whose mortgage insurance subsidiary is headquartered in Raleigh, N.C., said GE would own approximately 18% of Genworth's common stock if the underwriter's overallotment option to buy up to 2.85 million additional shares is exercised. (The sole underwriter of the offering is Morgan Stanley & Co.) Genworth said it will not receive any proceeds from the transaction. The company noted that GE has indicated its intention to sell its remaining holdings in Genworth by the end of next year. Genworth can be found online at http://www.genworth.com.

Fiserv Inc. has announced the formation of Fiserv Lending Solutions' Portfolio Services, Boulder, Colo., which will target the secondary mortgage market.The new company will help those in the mortgage portfolio investment business identify and mitigate risks in their portfolios, Fiserv said. "We help firms get comfortable with what they are paying for when they have a portfolio of residential mortgage loans," said James L. Smith, executive vice president of FLS-Portfolio Services. "That helps facilitate whole-loan sales transactions of their mortgage-backed securities for Wall Street firms." Fiserv can be found on the Web at http://www.fiserv.com.

Meanwhile, Freddie Mac's board of directors has announced a dividend of $0.47 per share on the corporation's voting common stock for the fourth quarter, up 34% from $0.35 in the fourth quarter."Today's dividend announcement reflects our strong capital position and demonstrates our increasing confidence in Freddie Mac's long-term business prospects," said Richard F. Syron, Freddie's chairman and chief executive officer. The board also declared the following preferred stock dividends per share: $0.47 on its 1996 and 1998 variable-rate stock; $0.7675 on its 6.14% stock; $0.72625 on its 1997, 2001, and 2002 5.81% stock; $0.625 on its 5% stock; $0.6375 on its 1998 and 1999 5.1% stock; $0.6625 on its 5.3% stock; $0.72375 on its 5.79% stock; $0.4475 on its 1999 variable-rate stock; $0.49125 on its January 2001 variable-rate stock; $0.46511 on its March 2001 variable-rate stock; $0.48125 on its May 2001 variable-rate stock; $0.75 on its 6% stock; and $0.7125 on its 5.7% stock. The dividends will be payable on Dec. 30 to stockholders of record as of Dec. 12.