Servicing

Housing interests represented at the Mortgage Bankers Association's annual convention have continued to line up against the possibility that the president's tax reform panel will propose whittling away at the tax deduction for mortgage interest and other cherished writeoffs that support homeownership.Freddie Mac president Eugene McQuade told the Orlando, Fla., convention that any big change in the tax benefits would "profoundly affect" the value of the properties that stand behind trillions of dollars worth of mortgages. "Before we say we are going to change" the deductibility of mortgage interest, "we better understand the broad implications that it will have [for] society," he told the meeting. Calling the writeoff "fundamental to housing values" and "arguably the most successful social program of the last 50-75 years," the Freddie Mac officer said the deduction "is part of the statement made over the years as to where we place our priorities, and with a relatively low cost to the government." Mr. McQuade is also worried that rising interest rates will exacerbate the nation's affordable housing woes. Housing prices are already "at shock levels for most people," he explained, and higher rates will only serve to drive monthly payments even higher. Rates have been so low for so long, he said, that an entire generation of potential buyers have never seen mortgage rates above 6%.

Major League Baseball has announced that it will spearhead an effort to build new homes for victims of hurricanes Katrina and Rita through its support for Habitat for Humanity International.The official announcement of the program, Major League Baseball Rebuilds, will be tied in to the third game of the World Series Tuesday night in Houston. "In the wake of these devastating hurricanes, the baseball community joined together and took immediate action to aid victims in the Gulf Coast region, but the need to support the many people affected by this natural disaster remains a great task," said Allan H. "Bud" Selig, the commissioner of baseball. "Through this initiative, and with the help of our fans around the world, we hope to help the rebuilding and revitalization of the Gulf Coast region." Major League Baseball said it will join with Habitat to build eight houses during the World Series for victims of the two hurricanes.

The mortgage business faces a challenging -- not to mention lucrative -- future, according to Regina Lowrie, president of Gateway Funding and the new chair of the MBA.Of the 30 million new Americans expected over the next two decades, up to half will need a mortgage, Ms. Lowrie said at the group's rain-soaked annual convention in Orlando. The hard part will be accommodating them, for they will require $6-7 trillion in capital from the international markets. Ms. Lowrie called it "a huge challenge." In her inaugural address, she also took a swipe at President Bush's Advisory Panel on Federal Tax Reform, which has discussed the possibility of lowering the cap on the mortgage interest deduction from $1.1 million to $300,000-$350,000. "Enacting this proposal could turn a healthy housing market upside down," she told the convention. Such a change in policy would do nothing to increase the nation's homeownership rate or eliminate the ownership gaps between whites and nonwhites, she said. The tax reform panel's report is due on the president's desk no later than Nov. 1.

In her first official act as chair of the Mortgage Bankers Association, Regina Lowrie says she will create a new council to develop a "tactical plan" that will serve as a guide for the now 3,000-member trade group through the next decade.Described by the Horsham, Pa., lender as a "think tank," the panel of 15-20 members will include "some of the most accomplished leaders" in the housing finance field, Ms. Lowrie said at the MBA's annual convention in Orlando. She said she has "someone in mind" to chair the council but declined to name the person because he, or she, hasn't been asked as yet. Ms. Lowrie told MortgageWire that the group will consist of nonpartisan, independent thinkers who represent all facets of the "food chain," including large and small, commercial and residential, and all the production channels. The MBA's current three-year strategic plan is entering its second year, and Ms. Lowrie expects the council's report, due by the end of summer 2006, to set the framework for the trade group's next blueprint. "I think that, as the trade association that speaks for the housing finance industry, this is a major undertaking," she told MW. "This will be a big part of my legacy."

Class B-1 of Asset Backed Securities Corp. series 1999-LB1 has been downgraded from BB to CCC by Fitch Ratings.In addition, Fitch affirmed the ratings on four other classes in the ABSC deal. The rating agency attributed the downgrade to higher-than-expected collateral losses and deterioration in the relationship between loss expectations and credit support levels. The transaction consists of fixed- and adjustable-rate subprime mortgage loans, primarily on one- to four-family and multifamily properties. Fitch can be found online at http://www.fitchratings.com.

Operation Hope Inc., a nonprofit provider of financial literacy and other programs, and The First American Corp., a data provider, have announced the opening of a joint call center facility in Poway, Calif., that will serve as a virtual financial education and services center for credit and homeownership counseling.The call center will be located on First American's Poway campus and staffed by Operation Hope employees. In addition to its education and counseling functions, the center will promote Operation Hope's Banking on Our Future and Hope Coalition America programs. The center was first announced Oct. 4 as part of Project Restore Hope, a hurricane disaster assistance campaign developed in conjunction with the Federal Emergency Management Agency. The organizations can be found on the Web at http://www.operationhope.org and http://www.firstam.com.

Impac Mortgage Holdings Inc., a real estate investment trust based in Newport Beach, Calif., has reported the issuance of $20 million of trust preferred securities through the newly formed Impac Capital Trust #4.The 30-year securities will bear an interest rate of 8.55% through the dividend payment date in July 2010, and 3.75% above the prevailing three-month London interbank offered rate thereafter, the company said. They are redeemable in whole or in part at the option of Impac on or after July 30, 2010. The mortgage REIT said it intends to use the net proceeds for general corporate purposes. Impac can be found online at http://www.impaccompanies.com.

Class B-3 of GS Mortgage Participation Securities mortgage pass-through certificates, series 2003-3, has been downgraded from BBB to BB by Fitch Ratings.Fitch also upgraded nine classes and affirmed the ratings on 26 classes from 13 GSMPS transactions. The downgrade resulted from higher-than-expected collateral losses and reflects deterioration in the relationship between loss expectations and credit support levels, the rating agency said. "The high delinquency rate (62.7% are 60+ days delinquent) puts this class at a greater risk of future losses," Fitch said. The underlying collateral for the transactions consists of re-performing loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs.

Washington Mutual Inc., Seattle, has reported earnings of $821 million ($0.92 per share) for the third quarter, up from $674 million ($0.76 per share) a year earlier despite a falloff in net income in its home loan segment.Net income for the home loan segment totaled $165 million in the third quarter, down from $208 million in the second quarter and $273 million a year earlier, the company said. "The decrease from the comparable quarters reflects a decline in noninterest income due to lower gain from mortgage loans driven by a more competitive pricing environment for prime home loans in the secondary market, as well as the increasing cost of hedging the [mortgage servicing rights] as interest rates have risen throughout the year," the company said. "Also contributing to around half of the linked quarter variance were gains recorded in the second quarter related to inter-segment sales of loans during the first half of 2005." Net income for the commercial group segment, including Long Beach Mortgage Co., totaled $201 million in the third quarter, up from $139 million a year earlier, WaMu reported. The company can be found online at http://www.wamu.com.

A program aimed at rehabilitating empty foreclosed homes and offering affordable low-downpayment mortgages and downpayment assistance has been launched by Freddie Mac and several partners in Gwinnett County, Ga.Under the program, Building a Better Block Gwinnett, renovated homes will be marketed and sold through participating local real estate professionals, Freddie Mac said. The properties will be renovated by HomeSteps, Freddie Mac's real-estate-owned sales unit. The partners of the government-sponsored enterprise are The Impact! Group, a Georgia nonprofit community development corporation; Taylor, Bean & Whitaker Mortgage Corp., a wholesale mortgage lender based in Ocala, Fla.; and Brand Bank. In addition to expanding homeownership opportunities, the initiative is expected to "stabilize communities that have deteriorated due to the high number of foreclosures that Gwinnett County continues to face," said Marina Peed, executive director of The Impact! Group. The organizations can be found online at http://www.freddiemac.com, http://www.theimpactgroup.org, and http://www.taylorbean.com.