Servicing

New foreclosed residential properties surged by 50% in March, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.Such foreclosures totaled 28,190 in the United States in March, and the nationwide inventory of foreclosed residential properties totaled 80,757, up 10% from that of February, the company reported. "Foreclosures are most prevalent in areas of the country where home values are not rising, such as Ohio, Texas, South Carolina, and Michigan," said Brad Geisen, president and chief executive officer of Foreclosure.com. "However, if the combination of rising interest rates and dropping home values continues, foreclosure inventory will likely continue to rise across the country." The company can be found online at http://www.foreclosure.com.

The stock prices of Fannie Mae and Freddie Mac are undervalued, even if reform legislation limits the size of their retained mortgage portfolios, according to Jonathan Gray of Sanford C. Bernstein & Co.Mr. Gray, in a report issued last week, noted that Rep. Richard Baker's proposed legislation does not place a cap on the GSEs, though some critics, including Federal Reserve Chairman Alan Greenspan, have called for a cap on the GSE portfolios. Without a cap, Mr. Gray estimated that the GSEs each have a fair share price expectation of between $70 and $75 based on 2006 earnings estimates. With a $200 billion portfolio cap, the share price range would drop to $60 to $65 per share.

The rating on class B-1 of Manufactured Housing Contract Sr/Sub Pass-thru Trust 1999-2 has been lowered from CC to D by Standard & Poor's Ratings Services.The rating agency attributed the action to "the reduced likelihood that investors will receive timely interest and the ultimate repayment of their original principal investment." S&P cited a recent interest shortfall and said it believes such shortfalls will continue "given the adverse performance trends displayed by the underlying pool of collateral." S&P can be found online at http://www.standardandpoors.com.

Irwin Financial Corp., Columbus, Ind., has announced that it expects to report a "small loss" for the first quarter due chiefly to losses in its mortgage business.Irwin said the mortgage losses resulted largely from the interest rate environment and the cap on the valuation of mortgage servicing rights imposed under generally accepted accounting principles. The company said it expects earnings per share to return to original projections for the rest of the year, but that profitability in the next three quarters is not expected to offset the first-quarter loss enough to produce full-year earnings greater than those of 2004. "We have noted for years that the mark-to-market and lower-of-cost-or-market cap on the carrying value of mortgage servicing rights required under GAAP would likely create this outcome at some point," said Irwin chairman Will Miller.

Fidelity National Financial, Jacksonville, Fla., has launched an enhanced version of its BuyBankHomes.com website portal for selling bank-owned homes.The online portal is dedicated to marketing properties that have completed the foreclosure process. Fidelity said the redesigned user interface offers a clean, intuitive environment for both experienced bank-owned property investors and consumers new to the market. Fidelity said the new site incorporates Intelligent Map Searching, so that users are no longer required to be familiar with specific property location data such as city or ZIP code. The layered map feature allows users to start with a broader area, like a state, and zoom in on local markets. The site also features new bidding capabilities for live, online auctions.

ACE USA, Philadelphia, has announced expanded distribution of its ACE Disaster Mortgage Protection policy outside its traditional mortgage service provider channel.The move will allow general agents and their producers to have direct access to real-time quoting and buying of DMP coverage through a dedicated website. ACE DMP insurance pays a homeowner's monthly mortgage payment and makes available emergency cash if the home becomes uninhabitable for 48 hours due damage from a covered disaster. "The recent windstorm losses in Florida, along with the storms and mudslide losses in California, made us aware that we must make our ACE Disaster Mortgage Protection product available to a broader group of American homeowners," said Patricia Goudarzi, executive vice president of ACE Select Markets, a division of ACE USA. "Homeowners may not be aware that while the typical property policy pays for the repairs to their home, it does not make their mortgage payments or provide emergency cash if the home becomes uninhabitable." The dedicated website for DMP coverage can be found at http://www.marketplacemakers.com.

Hanover Capital Mortgage Holdings earned $8.1 million, or $0.97 per share, versus $8.0 million, or $1.35 per diluted share, in 2003.President and CEO John Burchett said HCM’s investments in subordinate MBS continue to perform well. HCM held subordinate MBS investments related to $13.7 billion of prime mortgages at the end of last year. He said the company’s primary goal this year will be to continue its investment strategy and to grow its capital base. The company issued $20 million of trust-preferred securities in March to raise capital for additional investment through its core REIT portfolio. The company is located on the Internet at http://www.hanovercapitalholdings.com.

CitiMortgage, St. Louis is offering an extensive suite of mortgage and construction loan financing options designed exclusively for HouseRaising Inc. homebuyers. The partnership allows CitiMortgage to be the sole lender with "the right of first offer on all construction and permanent mortgage financing" to HouseRaising, a Charlotte based company that provides a patented homebuilding and management process to buyers who act as contractors in building their own homes. According to senior vice president of CitiMortgage's retail lending business, Fred Bolstad, the lender's goal is "to provide as many outlets for homeownership as we can." HouseRaising chairman and CEO, Charles Skibo noted that one of the main advantages to the partnership consists in the CitiMortgage broad range of lending options and its geographic presence that serve both HouseRaising and its customers. HouseRaising said the new CitiMortgage product features a single closing process, fixed rate financing, flexible reserves for change orders, a built-in review of the contractor and construction/renovation project, and a range of financing and payment options.

Freddie Mac is moving ahead with plans to grow its $664.5 billion mortgage portfolio even though Congress is considering ways to cut or slow its growth.Rep. Richard Baker, R-La., is expected to unveil a GSE bill (possibly on April 5) that will require Freddie and Fannie Mae to reduce their mortgage holdings over time. Nevertheless, Freddie executive vice president Patricia Cook told investors and analysts that recent changes in interest rates are "likely to present an opportunity to grow the portfolio a little quicker than in 2004." Long-term, Freddie expects portfolio growth will stay in line with the overall growth of mortgage debt outstanding, she said during a conference call on the company's 2004 financial results. At the same time, Freddie is expanding its loan purchases to serve "all segments of originations," chief operating officer Eugene McQuade said. This means the government-sponsored enterprise will purchase more subprime products for its retained portfolio or for securitization. Through the guarantee business and capital markets operation, Freddie wants to "buy the market and distribute the risk," Mr. McQuade said.

Fitch Ratings has downgraded eight classes from a group of Delta Funding mortgage transactions but upgraded or affirmed a greater number of classes in total from the same group of deals.The classes downgraded were: series 1997-2, class M-1 to A from AA and class M-2 to BB from BBB+; series 1999-2, class B to CC from CCC; series 1999-3, class M-2 to BBB from A and class B to C from CCC; series 2000-1, class B to CC from B-; series 2000-2, class M-2 to BBB- from A; and series 2000-4, class M-2 to CCC from B. Fitch can be found on the Web at http://www.fitchratings.com.