Servicing

Residential Capital Corp., the newly formed holding company for Residential Funding Corp. and GMAC Mortgage Corp., has been assigned a negative rating outlook by Fitch Ratings.In addition, Fitch upgraded the long-term and short-term ratings of GMAC Bank from BBB-minus to BBB and F3 to F2, respectively, and assigned the bank a negative rating outlook. Fitch said ResCap was created by General Motors Acceptance Corp. (which retains 100% ownership) to provide more operational and financial flexibility and to improve the liquidity of the residential mortgage business. The rating agency said approximately $8.2 billion of GMAC's intercompany debt remained outstanding as of March 31, of which $5.0 billion will be converted to long-term subordinated debt. Fitch said it expects that "a portion of proceeds raised through any ResCap corporate debt issuance may be used to repay intercompany debt to GMAC." The credit ratings of Detroit-based GMAC were recently downgraded to "junk" status due to financial woes at its automotive corporate parent.

The recent drop in long-term interest rates will spark additional refinancing, but much of it will likely come from borrowers refinancing out of adjustable-rate loans and home equity products, the chief economist of Freddie Mac has told MortgageWire.Economist Frank Nothaft said that because rates have remained "low and relatively stable" over a number of years, most people who could refinance to improve their rate and terms have already done so. But with the yield curve between short- and long-term interest rates tightening, and many hybrid ARMs approaching a conversion to one-year adjustable status, some borrowers will find that at today's rates, they can refinance into a fixed-rate product with a lower interest rate than their fully adjusted ARM. In addition, borrowers with home equity lines of credit may find that their HELOC rate, often about 3 percentage points above the prime rate, exceeds current fixed mortgage rates. That may lead them to refinance their first loan, rolling their HELOC debt into a cash-out refinancing.

Thornburg Mortgage Inc., Santa Fe, N.M., has priced a follow-on offering of 4.0 million shares of common stock at $30.80 per share.The offering raised net proceeds of $117.3 million, Thornburg reported. The book-running lead manager was Citigroup Global Markets Inc., and A.G. Edwards & Sons, Piper Jaffray & Co., RBC Capital Markets Corp., and Flagstone Securities LLC were the co-managers. Thornburg has granted the underwriters a 30-day option to purchase up to 600,000 additional shares to cover any overallotments. The company can be found online at http://www.thornburgmortgage.com.

New foreclosed residential properties declined by 17% in May, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.Such foreclosures totaled 22,734 in May, and the nationwide inventory of foreclosed residential properties totaled 74,011, down 4% from April's level, the company reported. "Foreclosure inventory in 2005 has reflected the current volatility and geographic variations of the overall housing market," said Brad Geisen, president and chief executive officer of Foreclosure.com. "The tendency for homeowners to enter into adjustable-rate mortgages, no-downpayment loans, and other low-initial-cost options has resulted in an atmosphere where slight changes in interest rates or economic conditions have a dramatic effect on ownership." The company can be found online at http://www.foreclosure.com.

Prepayment rates for 30-year Fannie Mae and Freddie Mac mortgage-backed securities rose slightly in May, spurred by seasonal increases in turnover in the face of mixed refinancing activity, according to Bear Stearns.Fannie Mae 30-year MBS speeds increased from a constant prepayment rate of 18.7 CPR to 19.2 CPR overall, while comparable Freddie Mac speeds remained nearly unchanged, said Bear Stearns analyst Dale Westhoff. Meanwhile, Ginnie Maes saw "larger, more consistent" speed-ups across the coupon stack, resulting in a widening of the Ginnie Mae-conventional prepayment gap, he reported. Mr. Westhoff noted that the conforming 30-year mortgage rate had dropped more than 40 basis points from its recent peak of 6.10% in April. "This has increased the proportion of fixed-rate borrowers facing refinancing opportunities of 40 bps or more from just 21% at the beginning of April to roughly 34% at the current 30-year mortgage rate of 5.68%," he said/ The increase in refi opportunities "should boost June prepayments by roughly 10%-15%," Mr. Westhoff said. Bear Stearns can be found online at http://www.bearstearns.com.

MuniMae, a Baltimore-based investor in multifamily mortgage debt and equity, has announced an agreement to acquire Glaser Financial Group Inc., a commercial mortgage banker based in St. Paul, Minn.If certain performance standards are met, the acquisition price will be approximately $67 million payable in cash and stock, MuniMae said. After the closing of the transaction, Glaser will operate as part of MMA Financial, an operating subsidiary of MuniMae. "This acquisition brings significant scale to our origination platform in the upper Midwest as well as our Fannie Mae and Freddie Mac servicing portfolios, and further strengthens our product offerings related to senior housing," said Michael Falcone, MuniMae's president and chief executive officer. The company said about 40% of Glaser's originations are related to housing for senior citizens, and that its servicing portfolio totals $3.5 billion. MuniMae can be found online at http://www.munimae.com.

Class B of Impac SAC mortgage pass-through certificates, series 2001-6 pool 1, has been downgraded from BB to B by Fitch Ratings.The rating agency also affirmed the ratings on 12 other classes from three Impac transactions. Fitch attributed the downgrade to poor collateral performance and a greater-than-expected deterioration of asset quality.

Eight classes from five securitizations of Credit Suisse First Boston Mortgage Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings,The downgrades were as follows: series 2001-2, classes B-3 and B-4, from BB to B, and class B-5, from B to C; series 2001-9, class B-5, from B to CCC; series 2002-5 G4, class IVB5, from B to CCC, and class IVB6, from CC to C; series 2002-18 G2, class IIB4, from BBB to BB; and series 2002-24 G1, class IB4, from B-minus to CCC. In addition, six classes were upgraded and the ratings on 39 other classes from 10 CSFB issues were affirmed. Fitch said the downgrades reflect declining credit enhancement "relative to consistent or rising monthly losses." The rating agency can be found online at http://www.fitchratings.com.

C-BASS, a firm that specializes in servicing and securitizing credit-sensitive residential mortgages, has hired Peter Cerwin as a managing director in the capital markets group.Mr. Cerwin's responsibilities at C-BASS include working on new business opportunities and executing transactions from a capital markets perspective. He will report to John Draghi, chief investment officer. Mr. Cerwin joins C-BASS after four years as a director in the securitized products group at Deutsche Bank Securities.

HomeBanc Corp. completed a securitization of approximately $980 million of sequential pay notes backed by adjustable-rate, residential first and second mortgages.HMB Acceptance Corp., a HomeBanc subsidiary, retained approximately $7.3 million of class M-5 notes and $5.9 million of class B notes, as well as a certificate representing all the equity in the trust. The company said the trust will be classified as a taxable mortgage pool for federal income tax purposes and as a result a portion of the residual income that is derived from HomeBanc's interest in the trust will be treated as excess inclusion income. The trust includes approximately $985 million of loans originated by HomeBanc's subsidiary, HomeBanc Mortgage Corp, the company said. "Substantially all of the mortgage loans provide for the payment of interest only for a period of up to ten years, and in some cases after an initial fixed rate period of six months of three, five and seven years, based on the six-month [London interbank offered rate] plus a margin," HomeBanc said. Underwriters for the transaction were Bear Stearns & Co. Inc. and KeyBanc Capital Markets.