Servicing

Mortgage stocks as a group are undervalued, according to a new research report issued by Morgan Stanley.Morgan analyst Ken Posner says he envisions a healthy rebound in profit margins for residential originators "once the industry has cut capacity," but adds that he is uncertain on the timing. Mr. Posner writes that the industry's "shake-out" is just beginning and that, if the housing market turns bearish, the correction he foresees could last into 2007. National Mortgage News recently reported that mortgage bankers funded $925 billion in loans in the third quarter, the industry's best quarter in two years. Lenders and analysts alike are predicting production declines in the quarters ahead. In his new report, Mr. Posner upgraded his rating on Fannie Mae from "equal-weight" to "overweight."

Two home equity loan pass-through certificates from a deal issued by Long Beach Mortgage Co. in 2000 have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are classes M2V and BV of Asset Backed Securities Corp., Long Beach Home Equity Loan Trust 2000-LB1. The transaction is backed by primarily first-lien adjustable- and fixed-rate subprime mortgages originated by Long Beach. Two subordinate classes from the adjustable-rate group were placed on review for possible downgrade because credit enhancement levels may be low given the projected losses on the underlying pools, Moody's said. The transaction has taken significant losses, causing gradual erosion of the overcollateralization, the rating agency reported.

Two classes from two mortgage-backed deals issued by Credit Suisse First Boston Mortgage Securities Corp. have been downgraded by Moody's Investors Service.Class B-3 of series 2001-2 was downgraded from Baa2 to Ba1, and class VII-M-2 of series 2002-AR31 was downgraded from Baa2 to Ba2. The downgrades were based on the fact that the bonds' credit enhancement levels, including excess spread where applicable, may be low in view of projected losses, the rating agency said. Moody's can be found online at http://www.moodys.com.

Slowing price appreciation in several California housing markets has produced growing defaults in the state, according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm.Alexis McGee, president of ForeclosureS.com, said notices of default totaled 10,247 in major Southern California counties in the third quarter, but only 3,150 in eight of the nine San Francisco Bay Area counties. "Defaults in California's southland are moving off the historic baseline because the housing markets there are finally cooling down," she said. Defaults are still low in the Bay Area because their price correction "had just barely begun," the company said. ForeclosureS.com can be found on the Web at http://www.foreclosures.com.

RealtyTrac, an online foreclosure marketplace based in Irvine, Calif., has reported that the number of new properties in some stage of foreclosure increased 18.6% nationwide in October to a new monthly high for the year.The company's Monthly U.S. Foreclosure Market Report indicates that 81,382 new foreclosure properties were added to the rolls in October. "Some of the increase can be attributed to foreclosure activity ramping up again in Louisiana and Mississippi after being disrupted by the recent hurricanes," said James J. Saccacio, RealtyTrac's chief executive officer. "But it's possible that increasing interest rates and other economic factors are beginning to move foreclosures closer to their historic levels." The company said Texas reported the highest number of new foreclosures of any state in October, with 16,386, an increase of 68%. RealtyTrac can be found online at http://www.realtytrac.com.

NeighborWorks America will receive up to $1.275 million from The Homeownership Preservation Foundation, Minneapolis, to support homeownership education and foreclosure prevention.The partnership will link the HPF's toll free number, which offers free foreclosure prevention counseling and advice, with NeighborWorks' national network of organizations that provide homeownership education and counseling. The HPF has committed to grant up to $425,000 over the next 12 months and may contribute an additional $850,000 over the next two years based on the success of the program. The HPF can be found online at www.hpfonline.org.

Remend, a San Mateo, Calif.-based provider of default management software tools, has raised an additional $4.2 million in Series A financing that the company plans to use to accelerate market expansion and the continued development of Remend Manager, its principal software product.The new offering complements a $6.3 million Series A offering that closed in April of 2005, completing the Series A financing for a total of $10.5 million. The lead investors were ONSET Ventures and ArrowPath Venture Partners. Remend's products are designed to integrate borrowers, servicers, lenders, real estate agents and investors into a common online workspace.

The Department of Housing and Urban Development has extended its moratorium on foreclosures of FHA-insured houses in areas directly impacted by hurricanes Katrina and Rita for another 90 days.HUD extended the moratorium until Feb. 29 to give servicers "additional time in which to confirm the homeowners intention and ability to repair the home, retain homeownership and resume making regular mortgage payments," according to a FHA mortgagee letter. Immediately after Katrina struck the Gulf Coast on Aug. 29, FHA, Fannie Mae and Freddie Mac announced mandatory suspensions of mortgage payments for three months to provide relief to hurricane victims. That mandatory forbearance period is coming to end. Now FHA, Fannie and Freddie are advising servicers to continue forbearance on a case-by-case basis.

The Market Composite Index, an overall measure of mortgage applications, fell to 635.4 for the week ending November 18, down from 657.6 a week earlier as a 7% drop in refinancing reduced loan application volume, according to the Mortgage Bankers Association.The MBA's seasonally adjusted home purchase index fell slightly to 472.3 from 477.9 a week earlier, while the refinancing index declined to 1584.1 from 1702.4 a week earlier. Moreover, the refinancing index was down 17% compared to four weeks earlier. The refinancing share of mortgage applications dipped to 39.9% of total applications from 40.4% the previous week. The adjustable-rate share of activity rose to 33.2%, from 32.9% the previous week. The Mortgage Bankers Association can be found online at www.mortgagebankers.org.

Chase has selected Fiserv's mortgage servicing platform, MortgageServ, to complete a formal due diligence to replace and "substantially upgrade" various legacy platforms for servicing its $515 billion portfolio, the companies have announced.Scott Powell, Chase's head of servicing, said Chase plans to "consolidate and upgrade" its platform to help expand the company's mortgage business. (Chase recently announced plans to add 800 mortgage officers, an increase of 30%, over the next year.) Leslie M. Muma, Fiserv's president and chief executive officer, said the servicing platform will enable Chase to integrate delinquency and default management into its core servicing system and will provide "the flexibility to roll out new products quickly to meet customer needs." The companies can be found online at http://www.jpmorganchase.com and http://www.fiserv.com.