Servicing

Prepayment rates for 30-year Fannie Mae mortgage-backed securities decreased in January, while 30-year Freddie Mac MBS speeds declined even more sharply, according to Bear Stearns.For Fannie 30-year MBS issues, the aggregate prepayment rate decreased by over 21% in January, compared with a decrease of almost 30% for Freddie Mac issues, Bear Stearns analyst Dale Westhoff reported. "Given that mortgage rates were almost seasonally unchanged from December to January, the bulk of the decline in prepayments can be attributed to seasonal declines in housing turnover activity and the reduced refinancing application activity during the Christmas/New-Year holiday season," Mr. Westhoff said. Meanwhile, Ginnie Mae speeds "slowed less than their conventional counterparts in January." Bear Stearns can be found online at http://www.bearstearns.com.

Two classes of Comfed Mortgage mortgage pass-through certificates backed by adjustable-rate mortgage loans have been placed on review for possible downgrade by Moody's Investors Service.The affected classes are: class A of series 1987-01 and class A of series 1988-01. The actions stemmed from weak performance by the underlying loans, which have taken greater-than-expected losses and are expected to continue to do so, Moody's said. The classes have both taken writedowns. Moody's can be found on the Web at http://www.moodys.com.

HomeBanc Corp., the parent company of Atlanta-based HomeBanc Mortgage Corp., has priced a public offering of 9.5 million shares of common stock at $9.10 per share.HomeBanc said it has granted the underwriters an option to buy up to 1.425 million additional shares of common stock to cover any overallotments. The shares are being sold through J.P. Morgan Securities; Friedman, Billings, Ramsey & Co.; A.G. Edwards & Sons; William Blair & Co.; Flagstone Securities; and Jackson Securities. HomeBanc can be found on the Web at http://www.homebanc.com.

The Federal Housing Administration cannot accurately predict losses on the single-family loans it insures or demonstrate its ability to reduce fraud, according to the president's fiscal year 2006 budget request to Congress."FHA will continue current efforts to develop a credit model that more accurately and reliably predicts defaults," a budget document says. The Office of Management and Budget annually predicts FHA claims on loan defaults and foreclosures will decline, but they don't. In the fiscal year 2005 budget proposal, OMB predicted claims would decline to $4.5 billion. Now OMB estimates the claims will total $5.9 billion when the FY 2005 ends Sept. 30. For FY 2006, OMB projects that FHA claims will decline to $5.4 billion.

The Bush administration will continue to push for a federally insured zero downpayment program for borrowers with strong credit histories and a payment incentives program for borrowers with limited or weak credit histories, despite resistance in Congress and concerns about high default rates and costs."To remove two large barriers to homeownership -- downpayment and impaired credit -- the budget proposes two mortgage programs," the president's fiscal year 2006 budget proposals says. The administration proposed the two Federal Housing Administration loan program in last year's budget. Legislation to create the FHA zero down program was approved by a House committee last year but the bill was stopped in its tracks when the Congress Budget Office estimated the new program would incur $125 million in losses annually. However, the President's budget estimates the zero down program would generate $231 million in revenues annually and help over 200,000 families purchase their first home. The payment incentives program, which is essentially a subprime program with higher FHA premiums, did not get any traction in Congress last year.

GMAC Commercial Holding was the leading commercial mortgage servicer, by total primary and master servicing volume, at the end of 2004, according to data compiled by the Mortgage Bankers Association.GMAC, which had a servicing portfolio of $208.14 billion for the period, was also at the top of the list for 2003. Wachovia is next, at $184.83 billion, followed by Midland Loan Services, with $98.365 billion. (They also held the same positions for 2003.) The association plans to release its servicer rankings data in conjunction with its annual commercial real estate finance/multifamily convention Feb. 6-9 in San Diego. Ranked by commercial mortgage-backed securities primary and master servicing volume, Wachovia topped the list as of Dec. 31 with a servicing volume of $117.56 billion, the MBA reported. GMAC was next, at $111.49 billion, followed by Midland Loan Services at $72.28 billion. The MBA also reported that GMAC ($65.09 billion), GEMSA ($32.40 billion), and Prudential Asset Resources ($24.29 billion) were the largest servicers for life insurance companies and other private investors.

Employment in the mortgage industry held steady in December after lenders added 32,200 new employees to their payrolls in 2004, according to Friday's jobs report by the Bureau of Labor Statistics.The BLS reported that employment in the mortgage banking/broker sector rose by only 200 full-time positions in December to 486,400. (There is a one-month delay in the release of mortgage employment data. The BLS will release the January data on March 4.) Data for the full year show that the annual rate of employment in the mortgage industry rose by 6% in 2004, to 473,800. Meanwhile, Friday's employment report showed that the economy generated 146,000 new jobs in January, and the unemployment rate declined to 5.2%.

Stockholders of Fieldstone Investment Corp., Columbia, Md., have been authorized to resell approximately 43.3 million shares of its common stock, according to the residential mortgage banking company.The authorization came from the Securities and Exchange Commission, which has declared effective a Fieldstone registration statement, the company said. Under the registration statement, the stockholders are permitted (but not obligated) to sell some or all of the shares covered by the prospectus, which were originally sold in a private placement late in 2003. The common stock of Fieldstone, a real estate investment trust, has begun trading on the NASDAQ National Market under the symbol FICC. The REIT can be found online at http://www.fieldstoneinvestment.com.

Fannie Mae will be deleted from the Dow Jones Select Dividend Index and replaced by Astoria Financial because Fannie's recently announced halving of dividends caused the company to fall below the index's yield requirement, Dow Jones Indexes has announced.To be listed in the index, which includes 100 stocks from the Dow Jones U.S. Total Market Index, companies must be among the top 200 by yield, Dow Jones Indexes said. The replacement of Fannie with Astoria will be effective on Feb. 4. Dow Jones said additions to and deletions from the Select Dividend Index do not reflect an opinion on the investment merits of the companies. In January, Fannie Mae announced a reduction in its common stock dividend from $0.52 per share to $0.26 per share in order to boost the company's capital. Dow Jones Indexes can be found online at http://www.djindexes.com.

The senior unsecured debt ratings of PHH Corp., Mount Laurel, N.J., have been lowered from Baa1 to Baa3 by Moody's Investors Service, and PHH's commercial paper program has been downgraded from Prime-2 to Prime-3.The outlook is stable, Moody's said. The downgrades follow an announcement that Cendant Corp. has completed the spinoff of PHH and its mortgage banking and fleet management businesses to shareholders. "These rating downgrades are reflective of the rating agency's assessment that, following the spinoff, PHH will have diminished credit strength due to reduced business and cash flow diversity, and a smaller operating and capital base," Moody's said. The stable outlook reflects an expectation that PHH will focus on maintaining a stable capital structure while leveraging its relationship with Cendant's relocation and real estate businesses, and on preserving liquidity and the stability of its funding sources, the rating agency said. Moody's can be found online at http://www.moodys.com.