Servicing

Five classes from three issues of CDC Mortgage Capital Trust mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-HE1, class B, from BBB-minus to BB-plus; series 2002-HE2, class B-1, from BBB to BB-plus, and class B-2, from BBB-minus to BB; and series 2002-HE3, class B-1, from BBB to BBB-minus, and class B-2, from BBB-minus to BB-plus. In addition, Fitch affirmed the ratings on 33 classes from seven CDC deals. The rating agency attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses. "While Fitch feels there is no material risk of a principal writedown of the downgraded classes under the expected-case scenario, the affected classes are currently unable to satisfactorily sustain the projected stressed-case scenarios required to maintain their respective initial ratings," the rating agency said. The pools consist of fixed- and adjustable-rate subprime mortgages, primarily for one- to four-family residential properties. Fitch can be found online at http://www.fitchratings.com.

Ginnie Mae, which issued the first mortgage-backed security in 1970, is seeking public comment on its initiative to guarantee securitizations of excess servicing fees for the first time."The Excess Yield Program will allow qualifying Ginnie Mae issuers to reduce the amount of mortgage servicing rights on their balance sheets," the proposed rule says. Securitizations would reduce the capital and hedging costs associated with holding MSRs. And Ginnie officials hope it will make the Ginnie Mae program more attractive to lenders and servicers. "The Excess Yield Program should lower costs of, and encourage the origination of, government-insured and guaranteed loans that back Ginnie Mae MBS," the proposal says. "This will directly benefit low- and moderate-income borrowers and further Ginnie Mae's mission of expanding affordable housing." The comment period on the proposed rule ends Nov. 14. Ginnie guarantees mortgage securities backed by Federal Housing Administration, Department of Veterans Affairs, and Rural Housing Service home loans.

While the percentage of loans in foreclosure dropped sharply in the second quarter, the share of loans that were delinquent edged up slightly, according to the Mortgage Bankers Association.The percentage of loans in the foreclosure process fell 8 basis points from the first-quarter level to 1.00%, according to the MBA's quarterly delinquency survey. The foreclosure rate was also down 22 bps from that of one year earlier. Meanwhile, the overall delinquency rate -- the percentage of loans 30 or more days past due -- was 4.34% in the second quarter, up 3 bps from the first-quarter level. However, the overall delinquency rate remained 22 bps lower than it had been in the second quarter of 2004. Doug Duncan, the MBA's chief economist, noted that nearly 96% of mortgage customers were making their payments on time. But he added that the MBA expects "an uptick in delinquency rates over the next few quarters" in states affected by Hurricane Katrina. Higher energy costs may also exacerbate delinquency rates starting in the fourth quarter.

Argent Mortgage has announced a commitment to match up to $1 million in donations from independent mortgage brokers to HomeAid America, a nonprofit provider of transitional homes, in connection with Hurricane Katrina relief.Argent and its affiliates have already committed $3 million to jump-start HomeAid's initiative to begin constructing transitional housing for displaced families, the company said. Brokers can contribute and qualify for Argent matching donations by sending a check made out to HomeAid directly to Argent (Argent Mortgage, 3 Park Plaza, Irvine, Calif. 92614, Attn: Arlene Steinert) or by clicking on the Katrina Relief link on Argent's website at https://www.argentmortgage.com/Katrina.cfm.

Freddie Mac has instructed its 2,300 mortgage servicers to extend immediate relief to all National Guard members on state duty involving Hurricane Katrina recovery operations.The servicers are required to offer relief comparable to that already available to other members of the armed forces under the Servicemembers Civil Relief Act. SCRA protects active-duty service personnel from foreclosure and interest rates in excess of 6%, but National Guard members are not covered unless they are called to state duty in response to a national emergency declared by the president, Freddie Mac said. "Until such a declaration is made, Freddie Mac is instructing its servicers to give National Guard personnel the same SCRA credit protections anyway," the government-sponsored enterprise said. Freddie Mac said it is also reminding servicers to ensure that SCRA protections are available to active-duty and reserve military personnel covered by the law as well as officers of the U.S. Public Health Service. Freddie Mac can be found online at http://www.freddiemac.com.

Trustreet Properties Inc., a real estate investment trust based in Orlando, Fla., has announced the pricing of a private placement of $50 million of 7.5% senior notes due 2015.The notes will be issued at a price of 102.375% of par (plus accrued interest from March 23) and will mature on April 1, 2015, the restaurant REIT said. The company can be found online at http://www.trustreet.com.

Six classes from two Deutsche Financial Capital manufactured housing transactions have been downgraded by Fitch Ratings.The downgrades were as follows: series 1997-I, classes A-3 to A-6, from AAA to AA-plus, and class M, from BBB to B-minus; and series 1998-I, class M, from B-minus to CCC. In addition, Fitch affirmed the ratings on six classes in series 1998-I. Fitch said DFC was a joint venture of Deutsche Financial Services Corp. and Oakwood Acceptance Corp. OAC was a wholly owned subsidiary of Oakwood Homes Corp., which filed for Chapter 11 bankruptcy protection in November 2002.

General Electric Co., Stamford, Conn., will sell 60 million shares of class A common stock of Genworth Financial, Richmond, Va., in a secondary public offering.In addition, GE will sell 21 million shares to Citigroup Global Markets Inc., New York. In turn, an affiliate of Citigroup intends to publicly offer securities exchangeable for Genworth class A common stock. Overallotment options of 9 million shares and 3.15 million shares have been granted to the underwriters of the secondary offering and to Citigroup, respectively. The global coordinator and bookrunner for the offering is Morgan Stanley, with Bank of America Securities, JP Morgan, and Merrill Lynch as joint lead managers and bookrunners. In the Genworth IPO in May 2004, GE sold 30% of the company to the public. An offering announced in March cut its holdings to 51%, and if this deal is completed, GE will own just 32% of Genworth. The market did not react well to the announcement at first. As of shortly before 1 p.m. Sept. 14, Genworth was trading at $31.16 per share, down $0.62 on the day. But at one point after the deal was announced, Genworth was down to $30.91 per share. Among the lines of business GE spun off to Genworth was the mortgage insurance operation based in Raleigh, N.C.

Intellidyn Corp., Boston, has announced that the company is offering free list-suppression services to help direct marketers such as banks and mortgage companies comply with regulations on contacting disaster victims.Intellidyn also said it has donated an undisclosed amount to America's Second Harvest to aid the victims of Hurricane Katrina and has pledged to "adopt" one of more than 300 hurricane-displaced families now relocating to Florida. Peter Harvey, Intellidyn's chief executive officer and president, noted that the U.S. Postal Service is not accepting mail for delivery to certain Gulf Coast ZIP codes and that Louisiana's state of emergency has triggered the state's "do not call" legislation barring telephone solicitation. "Without list segmentation to remove these closed ZIP codes and prohibited calls, companies may waste expensive marketing resources and incur costly return and address correction charges -- or face fines for illegal telemarketing," Mr. Harvey said. Intellidyn can be found online at http://www.intellidyn.com.

Standard & Poor's has announced the commercial release of SPIRE, a proprietary cash flow modeling system for residential mortgage-backed securities.SPIRE (Standard & Poor's Interest Rate Evaluator) provides access to the same tools used by S&P analysts to obtain "rapid feedback" on possible RMBS securitization structures, S&P said. Used in conjunction with other S&P models, SPIRE analyzes the effect of variable interest rates on assets and liabilities associated with structuring RMBS. It incorporates S&P's collateral and cash flow modeling criteria for foreclosure frequency, loss severity, and loss coverage requirements, as well as vectors for voluntary prepayments and interest rate risk, the company said.