Servicing

Fannie Mae has announced new disaster relief flexibility that will allow lenders to base single-family underwriting decisions on a hurricane victim's pre-hurricane credit history.The policy will enable lenders, under certain conditions, to disregard obligations on previously owner-occupied homes when calculating a hurricane victim's debt-to-income ratio, Fannie Mae said. The flexibility will be allowed if: the previous residence is heavily damaged or destroyed and unlikely to be repaired; the lender obtains a property inspection confirming the status of the previous residence; and the borrower demonstrates that he or she is working with the servicer to address the prior mortgage obligation and agrees to apply any property insurance proceeds to the mortgage on the damaged home. "These steps will help more families get into new homes faster while the issues and questions regarding their previous properties are being settled," said Ken Bacon, executive vice president of housing and community development for Fannie Mae. Fannie Mae can be found online at http://www.fanniemae.com.

Two classes of Residential Asset Mortgage Products Inc. series 2001-RM2 group I have been downgraded by Fitch Ratings.Class B-I-1 was downgraded from BB to B, and class B-I-2 was downgraded from B to CC. Fitch also upgraded three classes and affirmed the rating on nine others in the transaction. The downgrades were attributed to a deterioration in credit enhancement and the likelihood that class B-I-3 will be fully written down in as little as six months, "at which time the class B-I-2 will begin taking principal writedowns," the rating agency said. The mortgage pool consists of fixed- and adjustable-rate loans to subprime borrowers secured by first liens on one- to four-family residential properties.

Five certificates from four deals issued by Credit Suisse First Boston Mortgage Securities Corp. in 2002 have been downgraded by Moody's Investors Service, and two others have been placed under review for possible downgrade.The downgrades were as follows: series 2002-5, class IV-B-5, from Ba3 to Caa1; series 2002-10, class II-B-3, from Baa3 to B1, and class II-B-5, from Ca to C; series 2002-19, class II-M-1, from Ba2 to B1; and series 2002-26, class III-B, from Ba1 to Ba3. The certificates placed under review for possible downgrade are class I-B-3 of series 2002-9 and class II-B-4 of series 2002-10. Moody's also confirmed the rating of one certificate. The negative rating actions were based on the fact that credit enhancement levels were too low for the current rating level in view of projected losses, Moody's said. The rating agency can be found on the Web at http://www.moodys.com.

The risk of price declines over the next two years has increased in the nation's 50 largest housing markets, according to the latest PMI U.S. Market Risk Index, whose median risk index value rose 11.6% in the third quarter.PMI Mortgage Insurance Co., the Walnut Creek, Calif.-based mortgage insurer that created the index, said the median value increased from 120 to 134, which means the probability of experiencing a home price decline in the next two years has risen from 12.0% to 13.4% in the 50 largest housing markets. "House prices are sticky, so moving to another phase in the real estate cycle can be a slow process," said Mark Milner, chief risk officer of PMI Mortgage Insurance. "But we believe that over the medium to long term, prices will move into better alignment with local economic factors -- in particular, income." According to the index, markets with a greater than 50% chance of price declines over two years are Boston-Quincy (Mass.), at 551; San Diego-Carlsbad-San Marcos (Calif.), at 536; Nassau-Suffolk (N.Y.), at 532; Santa Ana-Anaheim-Irvine (Calif.), at 522; and Oakland-Fremont-Hayward (Calif.), at 502. PMI can be found online at http://www.pmigroup.com.

Seven certificates from three Residential Asset Mortgage Products Inc. Trust asset-backed securitization deals have been placed under review for possible downgrade by Moody's Investors Service.The affected classes are as follows: series 2002-RS1, classes M-I-2, M-I-3, and M-II-3; series 2002-RS2, classes M-I-2, M-I-3, and M-II-3; and series 2002-RS3, class M-II-3. The rating actions were based on the weaker-than-expected performance of the mortgage pools and the resulting erosion of credit support, Moody's said. "The overcollateralization in the 2002-RS1 and 2002-RS3 deals is being depleted, and pipeline losses for these deals could cause eventual losses on the most subordinate tranches," the rating agency said. "In addition, the overcollateralization in the 2002-RS2 deal has been fully exhausted and the class M-1-3 certificates have realized losses." The transactions consist of a fixed-rate pool and an adjustable-rate pool made up of mortgages that are not eligible for inclusion in Residential Funding Corp. specific loan program securitization because they do not satisfy the underlying guidelines for those programs. Moody's can be found online at http://www.moodys.com.

Citing FBI statistics showing mortgage fraud on the rise, Calabasas, Calif.-based Interthinx has announced the integration of its DISSCO fraud detection and prevention system with Fiserv's easyLender mortgage loan origination system.Loans originated in Fiserv's easyLender now can be instantly submitted to DISSCO for automatic screening, with no rekeying necessary. DISSCO (data integrity search and score system) is an electronic fraud-prevention tool that can instantly search hundreds of mortgage-related data fields in a loan record to identify and score misinformation, inaccuracies, and inconsistencies that could indicate fraud. A DISSCO report is issued with step-by-step recommendations on how to respond. Interthinx can be found online at http://www.interthinx.com.

The Department of Housing and Urban Development and the Department of Veterans Affairs are now permitting lenders to charge borrowers MERS registration fees on all FHA-insured and VA-guaranteed mortgages, according to MERS, a McLean, Va.-based electronic loan registry.R. K. Arnold, president and chief executive officer of MERS, said the agencies' new policy is significant "because it reduces paperwork for lenders and will save borrowers a few more dollars because MERS eliminates the need to prepare and record assignments." The company said HUD has instructed its Homeownership Centers of the new policy and revised its Reference Guide, while the VA has made the change in its Administration Circular 26-05-04 and placed it on the VA loan guaranty website. MERS, which stands for Mortgage Electronic Registration Systems, can be found on the Web at http://www.mersinc.org.

The cash-strapped General Motors announced Monday that it is considering a partial sale of General Motors Acceptance Corp., home to the nation's seventh-largest mortgage banking franchise.GM said in a statement that it is "exploring the possible sale of a controlling interest" in GMAC "to a strategic partner." GMAC Residential and its affiliate, Homecomings, have a combined residential servicing portfolio of $345 billion. Both units are housed in a holding company, Residential Capital Corp., which is 100% owned by GMAC. On Monday GM reported a $1.6 billion loss for the third quarter. Fitch placed GMAC and ResCap on its watchlist, noting that a sale of the unit presents "unique challenges" due to its size. At June 30, GMAC boasted $309 billion in on-balance-sheet assets. Fitch opined that GM likely "will pursue a transaction with some urgency, if for no other reason to maintain GMAC's franchise value."

Four classes of Cityscape Home Equity Loan Trust home equity loan pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: Cityscape 1997-B group I, class M-2F, from A to BBB, and class B-1F, from BBB to BB; Cityscape 1997-B group II, class B-1A, from BBB to C; and Cityscape 1997-C group I, class B-1F, from CCC to C. Fitch also affirmed the ratings on nine classes in the two securitizations. The downgrades to series 1997-B were attributed to "elevated levels of losses and a forecast of continued poor collateral performance," the rating agency said. The overcollateralization is below target, and over 60% of both pools are more than 60 days delinquent, Fitch said. In addition, losses have resulted in a reduction in the principal balance of class B-1A. In series 1997-C, the OC of the fixed-rate portion is below target, more than 30% of the loans are more than 60 days delinquent, and class B-1F has taken a principal writedown, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Residential Capital Corp., the Minneapolis-based parent company of GMAC Mortgage and other residential finance companies, has filed a $12 billion shelf registration statement with the Securities and Exchange Commission for the potential issuance of senior and subordinated debt securities.Any senior notes issued under the shelf, which has not been declared effective by the SEC, would be guaranteed by certain of ResCap's subsidiaries, the real estate finance company said. ResCap said it intends to use the proceeds to repay all affiliated borrowings "on an expedited basis." The company can be found on the Web at http://www.rescapholdings.com.