Servicing

Origen Financial Inc., a Southfield, Mich.-based real estate investment trust that originates manufactured housing loans is reducing its reported interest income and earnings recognized by $1.7 million for the 14-month period ended Dec. 31, 2004.The reduction, it said, comes from "an isolated interpretive error" in accounting for a pool of loans acquired at a discount in October 2003. Loans acquired from others at a discount must be accounted for differently than loans originated by Origen. The pool, which has a face value of $56 million, was bought for $48 million; the discount was because of the known and anticipated number of delinquencies in the pool. The appropriate accounting treatment will reduce earnings per share at Origen by $0.03 per share for the period Oct. 8, 2003 to Dec. 31, 2003 and will increase the loss per share for 2004 by $0.06. Therefore, Origen has a loss of $3.0 million or $0.14 per share for 2004, instead of the reported $1.8 million or $0.08 per share loss.

Freddie Mac has created a new program, Reference REMIC securities, to offer new structured mortgage-backed securities.Freddie Mac said the new real estate mortgage investment conduit securities will borrow some features from the company's Reference Notes program, including a quarterly issuance calendar and offerings through a syndicate dealers. In addition, the REMICs feature a "guaranteed maturity class" to reduce extension risk for investors and intraday electronic pricing that is expected to reduce the disparity between bid and offer prices. Mark Hanson, vice president for mortgage funding at Freddie Mac, said that the REMIC market might have lost some investors in recent years because of the increasing complexity of deals. Freddie Mac hopes the characteristics of this REMIC program will bring those investors back into the market and attract new investors. "When you put all those together, we think what you have is a much more attractive collection of features," he said. The first deal, likely to be announced on April 4, will total at least $2 billion, Freddie Mac said. Subsequent quarterly offerings will be at least $1 billion in size.

Four mortgage acquisition specialists in Denver are launching a new firm, Steel Mountain Capital, to buy both performing and nonperforming mortgage loans and other assets.Tony Rowe, Tim Campbell, Kelly Garland and Bill Already, who most recently worked together as senior executives of Security National Principal Acquisitions, have now partnered with Silver Point Capital, an approximately $4 billion investment firm focused on credit analysis and credit-related investments, to form Steel Mountain.

Many first-time homebuyers and homeowners who refinanced are at risk because of mortgage appraisal fraud, according to a report from Demos, a nonpartisan, public policy group headquartered in New York.The report, "Home Insecurity: How Widespread Appraisal Fraud Puts Homeowners At Risk," said countless homeowners have borrowed more money than their homes are really worth. The author of the report, David Callahan, said, "As home prices have continued to increase above inflation, even nearing 20% per year in some cities, American homeowners are vulnerable as never before to financial ruin if home prices fall to their natural market value." He said between 2001 and 2004 Americans borrowed $485 million against the equity in their homes. "It is beginning to look like the American dream of financial security through homeownership is becoming a myth for far too many." The data for the report were based on a number of sources including a National Association of Realtors statement before a U.S. Senate subcommittee in March 2004 claiming increasing lender pressure and appraisal fraud; a petition sent by the appraisal industry alleging the lending industry had pressured them to produce inflated values and testimonials of individual appraisers.

National Tax Search, a provider of property tax management services, will provide property tax services for Cohen Financial, a commercial real estate finance company.NTS will provide property tax tracking, reporting and payment services to Cohen Financial’s commercial mortgage loan servicing portfolio. NTS’s property tax system, TaxQ, will automatically monitory different taxing schedules and multiple due dates, the company said. NTS’s website is located at http://www.nationaltaxsearch.com.

With more borrowers seeking to modify their commercial mortgage backed securities loans in increasingly complicated ways, Fitch Ratings has published a new report explaining its rationale for evaluating these requests.The report is designed to educate borrowers and CMBS servicers about the evaluation process and document needs when Fitch is asked for a rating confirmation. In issuing a confirmation, Fitch confirms that a modification to an existing loan will not affect the ratings of the transaction. The paper covers request issues such as assumptions, defeasance, management changes, and more complicated issues such as tenants-in-common structures.

Moody’s Investors Service has downgraded the financial strength rating of Fannie Mae from "A-" to "B+" with a stable outlook.At the same time, Moody’s affirmed Fannie Mae’s "Aaa" senior unsecured debt rating with a stable outlook and its "Prime-1" rating for short term debt. The bank financial strength rating had been under review for downgrade since Sept. 28 of last year, following a report by the Office of Federal Housing Enterprise Oversight. Fannie Mae’s subordinated debt and preferred stock ratings, at "Aa2" and "Aa3," remain on review for possible downgrade. The rating agency’s website is http://www.moodys.com.

Class B3 of CWMBS (Countrywide Home Loans Inc.) mortgage pass-through certificates series 2001-3 (Alt 2001-2) has been downgraded from B to CCC by Fitch Ratings.The rating agency also removed class B4 of CWMBS series 2003-41 from Rating Watch Negative. In addition, Fitch upgraded four classes and affirmed the ratings on 22 classes in five CWMBS transactions. Fitch attributed the downgrade to losses and high delinquencies relative to decreasing credit support levels. Fitch can be found on the Web at http://www.fitchratings.com.

GE has priced a secondary offering of stock in Genworth Financial, the spinoff that includes GE's mortgage insurance business.A total of 85,000 shares of Genworth class A common stock are being sold in the secondary offering at a price of $26.50 per share. The underwriters do not have an overallotment option. Concurrently, Genworth will repurchase directly from GE approximately 19.4 million shares of Genworth's class B common stock for $500 million. GE, as the selling stockholder, will receive net proceeds of approximately $2.6 billion and after the transactions will own approximately 52% of Genworth's common stock. GE chairman and chief executive Jeff Immelt termed the offering an "important next step in the reduction of our investment in insurance." GE said that, subject to market conditions, it expects to continue reducing its investment over the next two years as Genworth transitions to full independence.

Two mezzanine certificates from Origen Manufactured Housing Contract senior/subordinate asset-backed certificates, series 2001-A, have been downgraded by Moody's Investors Services.The downgrades were as follows: class M-1, from Ba2 to B1, and class M-2, from Caa2 to Ca. Moody's attributed the downgrades to the continued weaker-than-expected performance of the pool and the resulting erosion in credit support.