Servicing

Bear Stearns & Co. has announced the development of a monthly mortgage performance index aimed at helping investors assess risk when investing in mortgage-backed securities.The Bear Stearns Performance Index features nontraditional metrics such as the cash-flow status of delinquent loans and covers more than 3,000 transactions in the private-label mortgage market. "Borrower defaults have been understated in recent years because record home price increases have resulted in far fewer recorded losses -- the traditional measure of default," said Gyan Sinha, senior managing director and head of Bear Stearns' asset-backed research. "Our deal-level reports also give investors the ability to better estimate the number of borrowers who are going to default from delinquency as opposed to those who are on a successful repayment plan." The company can be found online at http://www.bearstearns.com.

The Senate has passed a consumer bankruptcy bill by a 74-25 vote, clearing the measure -- which addresses some foreclosure issues -- for quick action in the House.The bill is the product of eight years of congressional debates and amendments, according to the American Bankers Association. "The time has come for this fair and balanced bill to become law," ABA executive vice president Edward Yingling said. The 500-page bill (S.256) contains language that prohibits bankruptcy judges from reducing the amount of a debtor's mortgage. This cram-down provision reinforces a Supreme Court decision, but it could become controversial if housing prices start to decline. One provision sought by the Mortgage Bankers Association would remove a $4 million cap on single-asset bankruptcies so that owners of large commercial properties cannot drag out the bankruptcy process and delay foreclosure at the lender's expense. "We are very pleased the Senate has passed this legislation," MBA senior vice president Kurt Pfotenhauer said. President Bush has signaled that he is ready to sign the bankruptcy bill.

Freddie Mac has announced the beginning of a quiet period vis-á-vis the equity investment community in connection with the forthcoming release of its financial results for 2004.The move is in accordance with Freddie Mac's corporate disclosure policy, the government-sponsored enterprise said.

The U.S. CMBS Loan Delinquency Index declined 4 basis points in February to 1.23%, marking the first time in several years that delinquencies in all four major property types fell simultaneously, Fitch Ratings has reported.The rating agency said declines are often the result of resolutions through asset sales of real estate owned properties that result in losses. In the office and multifamily sectors, the amount of new defaults was slightly below the amount of resolved delinquents, Fitch reported, whereas in the industrial and retail sectors the declines resulted largely from the resolution of larger loans. The 16% decline in the dollar balance of industrial loans was largely due to the resolution of two industrial properties in North Carolina, both of which involved selling properties at significant losses. A similar pattern emerged in the retail sector, where Fitch attributed a 7% decline to the sale of several large loans that were REO properties. Hotel delinquencies, which have improved steadily over the past year, rose 3.6%.

Classes A-1 to A-5 of Bombardier Capital Mortgage Securitization Corp.'s manufactured housing series 2000-A have been downgraded from B-minus to CCC by Fitch Ratings.In addition, Fitch affirmed the ratings on 19 classes in six Bombardier MH transactions. The rating agency said the downgrades were due to poor performance of the underlying collateral as well as diminishing credit enhancement. "In the series 2000-A transaction, overcollateralization has been fully depleted, and the high level of losses incurred has resulted in the full writedown of classes M-2, B-1, and B-2," the rating agency said. The collateral consists of manufactured housing installment sales contracts and first-lien mortgage loans on the real estate where the manufactured homes are permanently affixed.

Eight classes from four Credit Suisse First Boston Mortgage Securities Corp. issues of mortgage-backed pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: CSFB series 2002-5 group 4, class IVB5, from BB to B, and class IVB6, from B to CC; CSFB series 2002-18 group 2, class IIB5, from BB to CCC, and class IIB6, from B to C; CSFB series 2002-22 groups 3 and 4, class DB4, from BB to B, and class DB5, from B to CC; and CSFB series 2002-24 group 1, class IB4, from BB-minus to B-minus, and class IB5, from B-minus to C. In addition, Fitch upgraded seven CSFB classes and affirmed the ratings on 25 classes. The downgrades "reflect the deterioration of credit enhancement relative to consistent or rising monthly losses," the rating agency said. Despite mortgage insurance coverage, the subordinate classes "will not be able to sustain the significantly high monthly losses at the current ratings," Fitch said. The rating agency can be found online at http://www.fitchratings.com.

First American Real Estate Information Services has unveiled LienWatch, a new product designed to help mortgage servicers by providing advance warning of borrower default on second mortgages.Because the first-lien holders take precedence in the event of foreclosure, holders of second liens are exposed to a much greater risk of loss. First American said this is the first tool designed to provide servicers with an early warning to help them manage second-lien portfolios and minimize losses. The service will alert second-lien servicers about any foreclosure action taken on the first lien and provide other data about the first mortgages on the property. The First American Corp., the parent company of First American Real Estate Information Services, can be found online at http://www.firstam.com.

Entrust Financial Services, a Denver-based mortgage banking company, has announced a stock purchase agreement under which Entrust Mortgage will become a subsidiary of BBSB LLC and after which Entrust Financial will have only nominal assets.Entrust Financial said the agreement provides that BBSB will buy all issued and outstanding shares of Entrust Mortgage in exchange for the cancellation of all Entrust Financial's obligations to BBSB and Entrust Mortgage and the assumption of certain obligations of Entrust Financial to third parties. Entrust Financial "has been unable to secure sufficient additional capital or enter into a transaction with a strategic partner that would allow the company to continue its operations," the company said. Entrust Financial said its board will continue to analyze the company's strategic options after the stock sale. The company can be found online at http://www.entrustfs.com.

The nationwide inventory of foreclosed residential properties declined 7% in February, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.There were 18,824 new foreclosed residential properties listed in the United States in February, and such properties totaled 72,877 overall, the company reported. "Following a year of heavy growth in foreclosure inventory in many parts of the country, foreclosures have leveled off in the first two months of 2005," said Brad Geisen, president and chief executive officer of Foreclosure.com. "The 7% drop in both new and total foreclosures in February can largely be attributed to the short month." The company can be found online at http://www.foreclosure.com.

Mortgage companies that favor slashing the Fannie Mae/Freddie Mac minimum servicing fee will look to "alternative" measures to help manage their housing receivables if the two GSEs don't make a change, according to the Mortgage Bankers Association.In a new report that discusses the pros and cons of slashing the fee, the MBA says that among its members there "has been little discussion" about a compromise over the issue. In February, the MBA held a private, members-only forum on whether the government-sponsored enterprises should cut the minimum servicing fee from the current 25 basis points to 12.5 bps. Seller/servicers that favor a cut say they would save millions of dollars a year in hedging costs if more of the servicing "strip" were allowed to be sold into the secondary market. Those who want to maintain the status quo have cited expensive servicing technology maintenance costs that need to be recouped, loan buyback concerns, and compliance costs, among other reasons. Fannie and Freddie are considering reducing the minimum servicing fee, but no action is imminent, industry sources have told MortgageWire.