Servicing

Two classes from DLJ Mortgage Acceptance Corp. mortgage pass-through certificate series 1994-3 have been downgraded by Fitch Ratings.The downgrades were as follows: class B2, from A to BBB-plus; and class B-3, from BB to B. In addition, three classes in another DLJ deal were upgraded and the ratings on 12 classes in four DLJ deals were affirmed. The rating agency attributed the downgrades to higher-than-expected levels of serious delinquencies (90 days or more).

The growing popularity of interest-only home loans in the subprime mortgage market "may trap unwary New York metro area homebuyers into situations from which the only exit is default and foreclosure," according to Foreclosures.com, a Sacramento, Calif.-based investment advisory firm.Alexis McGee, president of Foreclosures.com, said homebuyers who take out such loans can find themselves with homes they can't afford when the loans convert to what she called "real world" mortgages. "These loans are very seductive," Ms. McGee said. "They offer below-market interest rates for two or three or five years, with no reduction of principal, and then convert automatically into fully amortized loans for the balance of the 30-year term."

Robin Grieves has been named to head Freddie Mac's Market Risk Oversight department.Mr. Grieves will be responsible for, among other things, measuring interest rate risk; creating risk management reporting and management controls; and monitoring compliance with internal risk management policies and procedures. He taught portfolio management and financial engineering to graduate students at Thunderbird, The Garvin School of International Management in Arizona. Mr. Grieves was also director of fixed-income research and government bond strategist at HSBC Securities and vice president for government bond strategies at Salomon Brothers. He also worked previously at Freddie Mac, from 1987 to 1992, as a director in the company's financial research department. Freddie Mac can be found online at http://www.freddiemac.com.

Two classes from Amresco's series 1997-3 mortgage-backed securities issue have been downgraded by Fitch Ratings.Class M-2F of Amresco series 1997-3, group 1, was downgraded from A to BBB, and class B-1F was downgraded from BB to C and removed from Rating Watch Negative. In addition, Fitch upgraded two classes and affirmed the ratings on 27 classes from various Amresco issues. The rating agency said the downgrades are due to mounting collateral losses that have depleted credit enhancement. Fitch can be found online at http://www.fitchratings.com.

The New York Federal Home Loan Bank has rebuilt its retained earnings and will resume paying normal dividends this year, according to the bank's president, Alfred DelliBovi.The FHLBank has reached its retained earnings target of $196.5 million with the payout of a 3.05% dividend for the fourth quarter. "With adequate retained earnings now accumulated, we anticipate paying out higher dividends the remainder of 2005," Mr. DelliBovi says in a letter to stockholders. In the third quarter of 2003, the New York bank took a $183.0 million loss on the sale of credit-impaired manufactured housing securities and did not pay a dividend. The FHLBank paid an average dividend of 1.83% over the next four quarters.

The Chicago Federal Home Loan Bank, which is in the midst of a restatement, has declared a 5.5% dividend for the fourth quarter.The FHLBank paid a 6% dividend in the third quarter, but a 5.5% dividend is the maximum the bank can pay under its supervisory agreement with the Federal Housing Finance Board. The Chicago bank is still weeks away from filing its third-quarter financial statement and a restatement of 2003 earnings, according to spokesman David Feldhaus. The bank is also behind in reporting origination data for its Mortgage Partnership Finance program. The last report showed $7.6 billion in total MPF loan production for the second quarter.

Fidelity National Financial, Jacksonville, Fla., has announced that its mortgage and banking technology business, Fidelity National Information Services, has received commitments for $3.2 billion in credit facilities needed to bring about a previously announced recapitalization.The senior credit facilities consist of two term loans of $1 billion and $1.8 billion and a $400 million revolving credit facility. FNF said FNIS intends to fully draw upon the $2.8 billion in term loans at closing, at an expected interest rate of 200 basis points above the London interbank offered rate. Once the deal is closed, Fidelity will pay a $10-per-share dividend to its shareholders. The recapitalization plan was announced in December in connection with an agreement to sell a 25% stake in FNIS to Thomas H. Lee Partners LP and Texas Pacific Group for $500 million. FNF chairman and chief executive William P. Foley II said the recapitalization, the special dividend payment, and the closing of the 25% equity interest sale will all occur in late February or early March. Leading the lender consortium providing the credit facilities will be Bank of America, J.P. Morgan Chase, Wachovia, Deutsche Bank, and Bear, Stearns & Co. Fidelity can be found online at http://www.fnf.com.

SPS Holding Corp., the Salt Lake City-based servicer of nonprime mortgage loans, says its stockholders have signed a letter of intent with Credit Suisse First Boston and its affiliate, DLJ Mortgage Capital, that will likely lead to a sale of the servicer to CSFB.Describing the deal as a "strategic agreement," SPS said it expects (as part of the pact) to enter into a servicing rights purchase agreement with CSFB to acquire servicing rights related to mortgage loans totaling about $6 billion over the next 12 months. SPS said it expects to begin acquiring servicing rights from CSFB in the near future. "Any transaction related to the stock of SPS will be subject to the satisfaction of due diligence by all parties," SPS said. The company said it expects the transaction to close within six months if a definitive agreement is signed. SPS, formerly known as Fairbanks Capital, services about 270,000 nonprime residential mortgage loans from facilities in Salt Lake City and Jacksonville, Fla.

Arbor Realty Trust Inc., New York, has announced the closing of a collateralized debt obligation through two subsidiaries: the issuer, Arbor Realty Mortgage Securities Series 2004-1 Ltd., and the co-issuer, Arbor Realty Mortgage Securities Series 2004-1 LLC.Arbor said another subsidiary retained the equity interest in the issuer, with a value of approximately $164 million. The CDO, consisting of approximately $305 million of floating-rate notes, is secured by a portfolio of real-estate-related assets with a face value of approximately $441 million. The portfolio consists chiefly of bridge and mezzanine loans and junior participating interests in first mortgages, Arbor said. "Our cost of funds has been reduced and the term of the CDO is longer than the terms of our other credit facilities," said Ivan Kaufman, Arbor's chief executive officer. "In addition, the CDO structure provides us with greater flexibility in financing our future loans and investments."

CFN Liquidating Trust, the successor to ContiFinancial Corp. and affiliates pursuant to their confirmed Chapter 11 bankruptcy plan, has announced the termination of Soundview Home Equity Loan Trust 1999-1.The termination of the securitization was completed more than a year before the anticipated early redemption date for the Soundview Trust asset-backed notes, CFN Trust said. It was accomplished through the purchase and tender of notes with a principal balance of approximately $109 million. "The termination was concluded in connection with the sale by auction of the portfolio of real estate and promissory notes secured by residential mortgages owned by the Soundview Trust," CFN Trust said. The trust lauded the performance of its asset manager, Boston Portfolio Advisors Inc., and its business and tax counsel, Miller Nash LLP, for their handling of what it termed a "unique, complex transaction."