Servicing

Fannie Mae has priced two private offerings of noncumulative preferred stock totaling $5 billion as part of a plan to rebuild its capital base.The securities sale to institutional investors should make up for a capital shortfall so that the company can meet its minimum regulatory capital requirement. The Office of Federal Housing Enterprise Oversight recently classified the giant mortgage company as "significantly" undercapitalized. "This placement of preferred stock is a key component of Fannie Mae's capital restoration plan," said Donald Marron, a member of Fannie's board who is working with OFHEO on the plan. "We will be finalizing the details of the capital plan shortly." Besides meeting its minimum capital requirement, Fannie also has to build a capital surplus of 30% above its minimum requirement. Lehman Brothers Inc. served as the sole placement agent for the stock placements, which involved a $2.5 billion, 5.375% convertible preferred stock series and a $2.5 billion nonconvertible floating-rate preferred stock series with an original coupon of 7%. The conversion price to Fannie Mae common stock is $94.31 per share. Fannie Mae can be found on the Web at http://www.fanniemae.com.

Fitch Ratings has upgraded CitiFinancial Mortgage Co.'s residential primary servicer rating for subprime product from RPS2 to RPS2-plus.The upgrade is based on CFMC's "experienced" management team, "reliable" loan administration processes, "effective" default management strategies, and success in managing and resolving delinquent loans, Fitch said. The rating also reflects the financial strength of CFMC's parent, Citigroup, which is rated AA-plus by Fitch. Headquartered in Irving, Texas, CFMC has approximately 1,530 servicing employees and is a national provider of home equity loans and first lien mortgages, Fitch reported.

Fitch Ratings has upgraded Ameriquest Mortgage Co.'s residential primary servicer rating for subprime product from RPS2 to RPS2-plus and its special servicer rating from RSS2-minus to RSS2-plus.The subprime servicer rating reflects the Orange, Calif-based AMC's "demonstrated effectiveness in managing and resolving subprime, nonperforming, and subperforming residential mortgages during a period of rapid servicing portfolio growth," Fitch said. The rating also reflects AMC's expanded call center capacity, effective loan administration, "seasoned" servicing management team, "robust" training programs, "progressive" technology, and "proficient" default management practices, the rating agency said. The special servicer rating takes into account AMC's "successful record of resolving delinquent loans prior to foreclosure," Fitch said. Fitch rates primary, master, and special servicers of residential mortgages on a scale of 1 to 5, with 1 being the highest rating. The rating agency can be found online at http://www.fitchratings.com.

Camco Financial Corp., Cambridge, Ohio, has announced that its subsidiary Advantage Bank has prepaid and restructured $144.1 million in convertible fixed-rate borrowings from the Federal Home Loan Bank of Cincinnati.The early repayment will result in a pretax penalty charge of $18.88 million. The convertible advances had a weighted average interest rate of 6.25% and an average term to maturity of approximately 5.6 years, Camco said. The bank replaced the advances plus the penalty with a structure of maturities ranging up to five years. "The transaction positions itself well in our balance sheet as a result of our recent and continuing efforts to manage towards shorter-duration assets generated from commercial/commercial real estate and consumer loans," said Richard C. Baylor, Camco's president and chief executive officer. The bank can be found online at http://www.advantagebank.com.

Class B-1 of Ryland Mortgage Securities Corp.'s series 1994-5 mortgage securitization has been placed under review for possible downgrade by Moody's Investors Service.In addition, 10 certificates from three transactions have placed under review for possible upgrade. The transactions are backed by first-lien adjustable-rate mortgage loans. The negative rating action was attributed to weak performance by the underlying loans. "The class B-2 and B-3 certificates are fully written down, and the B-1 class has already taken significant writedowns," Moody's said. The rating agency can be found online at http://www.moodys.com.

Class B-2 of Residential Accredit Loan Inc. mortgage pass-through certificates series 1999-QS2 has been downgraded from B to CCC by Fitch Ratings.In addition, Fitch upgraded or affirmed the ratings on 198 classes from 26 RALI securitizations. The downgrade was due to high delinquencies and losses, Fitch said. Anticipated losses could leave the class with no subordination, the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

American Business Financial Services Inc., a Philadelphia-based company that originates, sells, and services home mortgage loans via subsidiaries, has announced that it cannot repay maturing debt obligations until a registration statement has been okayed by the Securities and Exchange Commission.ABFS said it filed the registration statement with the SEC in October, and cannot sell subordinated debentures until it is declared effective. The company said it cannot predict "whether or when" it will get through the SEC registration process. "The company's limited ability to sell subordinated debt during the second quarter of fiscal 2005 and the level of subdebt redemptions experienced during this period seriously depleted the company's cash," ABFS said. As a result of the liquidity problems, the company said it is not in compliance with several requirements of its credit facilities. "Under the terms of these credit facilities, this noncompliance creates an event of default, and the lenders may declare all amounts outstanding under the facilities immediately due and payable; however, to date, the lenders have not elected to take such action," ABFS reported.

NovaStar Financial Inc., a residential mortgage lender based in Kansas City, Mo., has issued a $201 million net interest margin security.The deal -- NovaStar NIM Trust, series 2004-N3 -- consisted of one class of certificates. The bonds are collateralized, self-amortizing debt issued to finance residual securities assets from two NovaStar securitizations, the company said. RBS Greenwich Capital and Wachovia Securities were the lead managers of the deal. NovaStar can be found on the Web at http://www.novastarmortgage.com.

Class B-5 of Bear Stearns Mortgage Securities Inc. series 1997-4 has been downgraded from B to B-minus by Fitch Ratings.The rating agency also upgraded two classes in another deal and affirmed the ratings on seven classes in the two securitizations. The downgrade was attributed to low credit enhancement levels relative to loss expectations. Fitch can be found on the Web at http://www.fitchratings.com.

Ten classes from five Long Beach Mortgage Co. asset-backed securities deals have been downgraded by Moody's Investors Service.The downgrades from Long Beach Home Mortgage Loan Trust Asset-Backed Certificates were as follows: series 2000-1, class M-2, from A2 to Baa3, and class M-3, from Baa1 to B2; series 2001-1, class M-2, from A2 to Baa2, and class M-3, from Baa1 to B1; series 2001-2, class M-2, from A2 to Baa2, and class M-3, from Baa2 to B2; series 2001-3, class M-2, from A2 to Baa2, and class M-3, from Baa2 to B1; series 2001-4, class M-2, from A2 to Baa1, and class M-3, from Baa2 to Ba3. The downgrades were attributed to inadequate credit enhancement given projected losses, and loss levels that have exceeded excess spread and eroded overcollateralization. Moody's can be found on the Web at http://www.moodys.com.