Servicing

Prepayment rates on 30-year fixed-rate mortgages in agency mortgage-backed securities increased 3% in July, according to Bear, Stearns & Co.Overall speeds on 30-year Fannie Mae collateral stood at a constant prepayment rate of 23 CPR, up only 1 CPR from those recorded in June, while 30-year Freddie Mac collateral prepaid at 21 CPR, said Bear Stearns analyst Steven Bergantino. Meanwhile, Ginnie Mae speeds actually fell by 1 CPR in July, to 27 CPR. "The primary cause for the weak July numbers was a two-day drop in the number of business days," Mr. Bergantino said. "The 20-day business calendar in July, compared with 22 days in June and 23 in August, has probably pushed a number of mortgage closings that could have taken place in July into the adjacent months." Despite the "generally muted response of July prepayments to refinancing opportunities," discount speeds remained at historically high levels, he said. For example, fully seasoned 5.0% coupons registered an 18 CPR in July, "more than 75% above historical current coupon prepayment rates even after adjusting for seasonal effects on turnover," Mr. Bergantino reported. Bear Stearns can be found online at http://www.bearstearns.com.

Mortgage lenders and brokers added 10,500 full-time employees to their payrolls in June, according to a U.S. Bureau of Labor Statistics report released Aug. 5.The surge in hiring came as single-family originations spiked in the second quarter and the rate on the 30-year fixed-rate mortgage dipped below 5.5% in late June. The hiring activity also may reflect an improving commercial real estate sector. The July employment report shows that jobs in the mortgage banking/broker sector rose from 505,200 in May to 510,700 in June. (There is a one-month lag in BLS reporting of mortgage-sector employment data. The July data will be released Sept. 2.) Friday's employment report shows that the U.S. economy generated 207,000 jobs in July and the unemployment rate remained unchanged at 5.0%. The stronger-than-expected jobs report also included an upward revision of new hires in May from 146,000 to 166,000.

Fitch Ratings has revised its rating outlook on the Puerto Rican financial institution Popular Inc. from stable to negative in the wake of Popular's announcement that it will acquire E-Loan Inc.The rating outlook applies to the long-term A ratings of Popular and its subsidiaries. Fitch also affirmed all its ratings on the companies. Noting that Popular "intends to capitalize on E-Loan's well-developed Internet platform for mortgage lending to complement its nonprime mortgage product line," the rating agency said the negative rating outlook reflects its concern that Popular's core capital will decline as a result of the acquisition "to the low end of its rating peer group, a concern given the heightened risk profile of the organization." Fitch can be found online at http://www.fitchratings.com.

LoanPerformance, San Francisco, has announced that its mortgage securities database now contains loan-level information on more than $1 trillion in securitized mortgages.The company said its database is the industry's largest repository of non-agency mortgage- and asset-backed securities data. It tracks more than 100 million loans contributed by mortgage servicers, securitizers, and portfolio lenders in the United States, according to LoanPerformance. The company, a subsidiary of First American Real Estate Solutions, can be found on the Web at http://www.loanperformance.com.

Oak Street Mortgage, Carmel, Ind., has announced the selection of GMAC Mortgage Corp.,Horsham, Pa., to subservice its mortgage loans on a private-label basis.Under the arrangement, GMAC Mortgage will subservice the loans that Oak Street originates for resale to third parties. "GMAC Mortgage's ability to customize their service levels by type of loan and their willingness to do all of this under our brand was the key to our decision," said Dennis Trent, chief operations officer of Oak Street Mortgage. The company said it will use GMAC Mortgage's DSU platform, which allows it to service various mortgage loan products under any brand identity.

Paul J. Abbamonto has been named executive vice president and chief production officer of ResMAE, a wholesale specialty residential mortgage lender and servicer based in Brea, Calif.Mr. Abbamonto joined ResMAE in 2002 as executive vice president of wholesale production. He will now be in charge of commercial and correspondent lending (as well as wholesale lending), portfolio management, and loan servicing, the company said. ResMAE, which stands for Residential Mortgage Assistance Enterprise, can be found online at http://www.resmae.com.

IndyMac Bank has entered into a strategic alliance with America's Community Bankers to provide correspondent services to the association's member banks and thrifts.Under the terms of the agreement, ACB community banks will be able to sell loans to the Pasadena, Calif., thrift on a servicing-retained basis. "The servicing-retained feature will allow our members to sell mortgages into the secondary market while still maintaining an ongoing relationship with their customers," said William Kroll, president and chief executive of ACB Business Partners. IndyMac Bancorp is the nation's 12th-largest mortgage originator, according to the Mortgage Industry Directory published by National Mortgage News. In 2004, its correspondent division purchased $13.7 billion in loans. "IndyMac Bank is proud of this alliance with ACB," said Len Israel, president of IndyMac's correspondent division. ACB members will have access to IndyMac's QuickPricer and e-MITs technology that provides "online risk-based pricing, decisioning, and rate-locking in less than one minute," he said. ACB also has alliances with Fannie Mae, Freddie Mac, Countrywide Financial Corp., CitiMortgage, and Freedom Financial.

The class C notes of Ingress I Ltd., a collateralized debt obligation supported in part by residential and commercial mortgage-backed securities, has been downgraded from B-minus to CC by Fitch Ratings.Fitch also affirmed the ratings on three other classes in the CDO. The downgrade was attributed to the fact that the overcollateralization ratio of class B failed its required level on each payment date after Sept. 30, 2003, "causing the class C notes to capitalize missed interest payments of over $3.2 million." The CDO is backed by a static pool of asset-backed securities, RMBS, CMBS, and real estate investment trusts.

Residential Capital Corp., Minneapolis, has announced the closing of a $3.5 billion syndication of its bank facilities.The syndication consists of a $1.75 billion three-year term loan; an $875 million three-year revolving loan; and an $875 million 364-day facility that includes a term loan option. The terms and conditions of the bank facilities were not disclosed. GMAC established ResCap earlier this year as a holding company and transferred to it the ownership of GMAC Mortgage Corp. and Residential Funding Corp.

Fitch Ratings has advised lenders that the payment-shock risk inherent in option adjustable-rate mortgages requires a special operational focus on default management.Fitch said mortgage servicers "should have extensive default management procedures and practices" in place prior to taking on option ARM servicing assignments. "The servicer's objective is to return loans to performing status whenever possible, but that may be more difficult if option ARM borrowers simply turn in the keys when their property value is not sufficient enough to cover their debt," said Karen Eissner, a Fitch director. Fitch can be found online at http://www.fitchratings.com.