Servicing

First Commonwealth Financial Corp., Indiana, Pa., has announced a repositioning of the mortgage-backed securities portfolio of its subsidiary First Commonwealth Bank to reduce its exposure to interest rate risk.The bank sold $130.7 million of MBS with high premium carrying values, resulting in an after-tax loss of $3.6 million, First Commonwealth said. The average yield of the sold securities was 3.38%, and the average life was approximately 2.9 years. "The proceeds were reinvested in more current coupon mortgage-backed securities with an average yield of 5.3% and an average life of 3.7 years," the company said. First Commonwealth also reported the completion of a previously announced sale of five branch offices and one drive-through location to Clearfield Bank and Trust Co.

Most delinquent borrowers in a recent survey said they didn't respond to servicers' phone calls because they were unaware that their late payments can be rescheduled to help overcome short-term financial difficulties, according to Freddie Mac.The survey, commissioned by Freddie Mac and conducted by Roper Public Affairs, found that 75% of respondents remembered that a servicer called. However, 28% didn't respond because they didn't think it would help them, 17% thought they could manage on their own, and 7% said they didn't have the money to make a payment, Freddie Mac reported. Delinquent borrowers also cited fear, embarrassment, and not knowing whom to call. In addition, 61% of the borrowers were not aware that workout options, such as forbearance and loan modifications, are available if they contact their servicer. The data show that there is a "knowledge gap," Roper vice president Elizabeth Armet said. "People's interest in options available is quite high, but their awareness of these options is quite low." Freddie Mac can be found online at http://www.freddiemac.com.

NVR Inc., a homebuilder and mortgage banker based in Reston, Va., has announced an increase in its revolving credit facility from $150 million to $400 million.The facility matures in December 2010. Thirteen banks are participants in the facility, including JPMorgan Chase Bank NA as administrative agent and U.S. Bank NA as syndication agent. NVR can be found on the Web at http://www.nvrinc.com.

Flagstar Bancorp Inc., a major residential mortgage originator based in Troy, Mich., has reported the private placement of a $600 million securitization of asset-backed notes by Flagstar ABS LLC, a wholly owned subsidiary of Flagstar Bank FSB.The notes, issued through Flagstar Home Equity Loan Trust 2005-1, consist of one class and are backed by home equity lines of credit originated and serviced by Flagstar Bank, the company said. The deal, placed with institutional buyers, used a prefunding structure under which approximately $450 million worth of HELOCs were sold Dec. 8 and approximately $150 million more will be sold within 90 days. Flagstar can be found online at http://www.flagstar.com.

Two certificates previously issued by Chase Funding Loan Acquisition Trust, series 2001-C1, have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are classes IM-1 and IM-2. The rating actions were taken because credit enhancement levels may be low given the projected losses on the underlying pools, Moody's said. The collateral has taken losses that have caused a gradual erosion of the overcollateralization. The securitization is backed by fixed-rate and adjustable-rate subprime mortgage loans that have multiple originators.

Eight classes of certificates issued by GE Capital Mortgage Services Inc. have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are: series 1997-HE3, classes B-1 and B-2; series 1997-HE4, classes B-1 and B-2; series 1998-HE1, classes B-1 and B-2; and series 1998-HE2, classes B-2 and B-3. The watchlist placement was attributed to recent losses and diminishing credit enhancement levels relative to projected losses on the underlying pools, Moody's said. The deals are backed primarily by fixed-rate, first- and second-lien subprime residential mortgage loans. The rating agency can be found online at http://www.moodys.com.

Class M-3 of Residential Asset Mortgage Products Inc. series 2003-RP1 has been downgraded from BBB-plus to BB by Fitch Ratings.Fitch also affirmed the ratings on three other classes in the transaction. The downgrade reflects a deterioration in the relationship between the bond’s credit enhancement and Fitch’s expected future losses on the loans, the rating agency said. Losses to date have been higher than Fitch initially expected and have generally exceeded excess spread over the past 12 months, resulting in a reduction of the overcollateralization amount. The collateral consists of fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties. Fitch can be found online at http://www.fitchratings.com.

Foreclosure filings in Massachusetts ran more than a third higher through October than in the comparable period of last year, according to ForeclosuresMass, Framingham, Mass.Statewide foreclosures were 35.1% higher in the January-October period than the level recorded in the same months of 2004, the online data provider reported. "The dramatic increase in foreclosure activity in Massachusetts is continuing unabated," said Jeremy Shapiro, president and co-founder of ForeclosuresMass. Mr. Shapiro said the high foreclosure rate is expected to continue "into the foreseeable future." The company can be found online at http://www.foreclosuresmass.com.

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.