Servicing

Losses on residential mortgage-backed securities loans secured by properties affected by Hurricane Katrina are not likely to be substantial for RMBS rated by Fitch Ratings, according to the rating agency.Fitch said it has reviewed all its rated RMBS transactions for which loan-level data were available -- totaling $475 billion -- and found that only about 0.65% of the outstanding balances are secured by properties in areas declared to be "individual assistance" disaster areas by the Federal Emergency Management Agency. "Given that the areas affected by the flooding and hurricane damage represent a smaller area than the FEMA-designated disaster areas, Fitch believes that losses on the 0.65% exposure will not be substantial," the rating agency said. Fitch also reported that 72% of the approximately $3 billion of loans in such areas consist of subprime product, 15% prime, 9% alternative-A, and 4% "scratch-and-dent" and manufactured housing loans. About 72% of the $3 billion of loans are located in Louisiana, 15% in Alabama, and 12% in Mississippi.

The Cincinnati Federal Home Loan Bank has established a $15 million fund to provide housing assistance for persons displaced by Hurricane Katrina."Given the success of our affordable housing delivery system, our board determined we are uniquely qualified to make a difference in the lives of thousands of displaced residents in critical need of permanent housing within our FHLBank district," said board member Charles Koch, chairman of Charter One Bank NA, Cleveland. The American Red Cross estimates that 33,000 Gulf Coast residents will be temporarily or permanently relocated in Kentucky, Ohio, and Tennessee, which are served by the Cincinnati FHLBank. The government-sponsored enterprise is required to contribute 10% of its earnings each year to fund affordable housing projects. However, the $15 million Katrina fund is "over and above" the congressionally mandated AH set-aside, according to the FHLBank's president, David Hehman.

Freddie Mac is providing additional services to credit unions under a newly restructured alliance with the Credit Union National Association.Under the new agreement, Freddie will provide a special account management team for CUs and it will provide secondary-market execution for single-loan transactions. "Other advantages include implementation and transaction fee discounts for Web-based Mortgagebot with the Loan Prospector business-to-consumer website," Freddie and CUNA said. Mortgagebot is a Web-based loan origination portal. CUNA first entered into an alliance with Freddie in 2002. CUNA senior vice president Wes Miller said the alliance provides CUs with much-needed flexibility to originate mortgages. "Through Freddie Mac, credit unions will have affordable lending solutions to meet the needs of low- and moderate income borrowers," he said.

The founder of merger-and-acquisition firm RJ Easton and mortgage M&A specialist StartBank has combined the two companies, citing the aim of enabling them to work together more closely as a global entity."The two top advisory firms will now operate as a united force going forward under the more widely recognized marquee RJ Easton," said Richard Easton II, founder and chief executive officer of both companies. As a result of the move, StartBank chief operating officer Richard Feldman will become chief operating officer and senior managing director of the combined enterprise and will oversee worldwide advisory operations for RJ Easton. In conjunction with the merging of the two firms, RJ Easton has also launched a newly revised website that Mr. Easton said utilizes the latest in Flash technology. RJ Easton can be found on the Web at http://www.rjeaston.com.

Two classes of Structured Asset Mortgage Investments mortgage pass-through certificates have been downgraded by Fitch Ratings, and a third has been removed from Rating Watch Negative.The downgrades in the SAMI Inc. series 2000-1 group 1 were as follows: class IB4, from BB to BB-minus, and class IB5, from B to B-minus. The rating on class IIIB4 of SAMI Inc. series 2000-1 group 3 was affirmed at BBB and removed from Rating Watch. In addition, Fitch affirmed the ratings on 35 other classes from several SAMI securitizations. The downgrades reflect deterioration in the relationship between credit enhancement and expected losses, Fitch said.

The decline in foreclosures in California has bottomed out, and a shift to a buyer's market in the state could lead to rising mortgage defaults, according to ForeclosureS.com, a distressed property investment advisory firm based in Fair Oaks, Calif.Foreclosures are now below "historic baselines" in some markets, and the default rate "has nowhere to go but up," the firm said. "According to Trendgraphix Inc., the Sacramento metro area saw 2,318 price reductions in May of this year," said Alexis McGee, president of ForeclosureS.com. "In July, we saw 4,100. August, at midmonth, was on track for 4,500. That's a cooling market." Ms. McGee added, however, that this does not suggest the existence of a so-called price bubble. "Contrary to some claims in the media that the sky is falling, we see a plateau forming, with modest price corrections in overheated markets," she said. ForeclosureS.com can be found on the Web at http://www.foreclosures.com.

Class B of First Union Home Equity Loan Trust, series 1997-2, has been downgraded from CCC to C by Fitch Ratings.The downgrade was attributed to the poor performance of the collateral, which consists of subprime fixed-rate and balloon mortgages. Insufficient credit enhancement on the certificates has resulted in principal reductions of the bond balance, the rating agency said. The deal has approximately $1.86 million in foreclosures and real estate owned and may sustain future losses, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

The CRA Qualified Investment Fund, Ft. Lauderdale, Fla., which invests in fixed-income securities to aid affordable housing, has dedicated $50 million toward post-Hurricane Katrina reconstruction in the affected Gulf states and in South Florida and parts of Texas, where the largest numbers of evacuees have relocated.Of the total, $40 million comes from institutional shareholders affected by the storm and $10 million is from individual investors and their investment advisers. The fund said it hopes to raise at least $50 million more. "The reality is that what these communities really need to get back on their feet are major investments in infrastructure, housing, small businesses, schools, and other vital community services," said Barbara VanScoy, the fund's portfolio manager. "This is a power opportunity to show what community investing can do."

Freddie Mac has announced a 90-day moratorium on payments of principal and interest to multifamily borrowers with properties in major disaster areas linked to Hurricane Katrina.Borrowers with properties in disaster areas qualified for individual assistance (as designated by the Federal Emergency Management Agency) should contact their Freddie Mac seller/servicer for more information, the government-sponsored enterprise said. "We are taking this step to help ensure that our multifamily seller/servicers and borrowers have the financial resources they need in the wake of this unusually destructive storm," said Richard F. Syron, Freddie Mac's chairman and chief executive officer. Freddie Mac said the forbearance policy complements the one set forth for its single-family borrowers.

The Foreclosure Economic Advisory Council, a new nonprofit group formed to promote sustainable homeownership by analyzing foreclosure trends, has announced the members of its advisory board.The members are: Wanda Alexander, founder, president, and chief executive officer of Horizon Consulting Inc.; James P. Gaines, a research economist at the business school of a Southwestern university; Bradford R. Geisen, founder of Foreclosure.com in Boca Raton, Fla.; Glenn E. Gromann, senior partner at Smith and Gromann PA, a specialty real estate law firm; Frank Marshall, a frequent speaker at conferences in the real-estate-owned industry; and Michael G. Nathans, founder, president, and CEO of PRBC.com, a credit bureau payment reporting business. Marla Webb has been named senior adviser to the council. "A sustained high rate of foreclosures in the country, as well as the continued uncertainty within the real estate market and the increasing number of homeowners engaged in alternative, low-payment mortgage programs, led us to develop the FEAC -- with the goal of understanding what the primary causes of foreclosures are and how to better promote sustainable homeownership in the U.S.," Ms. Webb said.