Servicing

Four classes of BankAmerica Manufactured Housing Contract Trust securities have been downgraded by Fitch Ratings.The downgrades were as follows: series 1995-BA1, class B-1, from B to CCC; series 1997-1, class M, from CCC to C; series 1997-2, class M, from CCC to C; and series 1998-2, class B-1, from CCC to C. In addition, the ratings on 14 classes in six BankAmerica MH deals were affirmed. Fitch attributed the downgrades to higher-than-expected losses that have caused "significant" interest shortfalls. Fitch can be found online at http://www.fitchratings.com.

Mortgage loan production margins for mortgage banking companies declined by 40% in the first half of this year, according to peer group surveys conducted by the Mortgage Bankers Association and the Stratmor Group.Despite the decline, the MBA said profit margins remained respectable following the record-breaking profits of 2003. Average pretax production margins fell to 54 basis points during the first six months of the year, compared with an all-time high of 90 bps, or 0.9% of the loan balance, for all of 2003. Driving the decline was lower origination volume, which in turn resulted in higher origination costs, the MBA said. On the bright side, average servicing income was $24 per loan in the first half, a sharp improvement from an average loss per loan of $107 last year. More information about the peer group survey can be found at http://www.mbastratmor.com.

LoanPerformance, a San Francisco-based provider of residential mortgage data and analytics, has scheduled its fourth annual series of half-day symposiums on best practices in mortgage risk management.The meetings will be held in Miami, Charlotte, Boston, Philadelphia, Saint Louis, Chicago, New York, Washington, San Francisco and Costa Mesa starting in late January and concluding in late May. Additional information is available at http://www.loanperformance.com/symposiums.

Markets in California and Massachusetts dominate a list of areas that are most vulnerable to a decline in housing values, according to Standard & Poor's housing volatility index.Nine of the ten metropolitan areas with the highest probability of housing value declines in the event of an economic downturn are in California or Massachusetts, with the tenth being in Florida. Several markets in the New York City region and New Jersey also figure prominently on S&P's list. Standard & Poor's is located on the Internet at http://www.sandp.com

Fidelity National Financial Inc., a Jacksonville, Fla.-based provider of title insurance and other financial products and services, has reported the repurchase of more than 2.53 million shares of FNF common stock from Willis Stein & Partners and J.P. Morgan Chase for $112.2 million.Willis Stein, a Chicago-based private equity firm, was the lead investor in an investment group that owned Aurum Technology when FNF acquired Aurum in March 2004, FNF said. J.P. Morgan Chase was escrow agent for Aurum's former stockholders. FNF chairman and chief executive William P. Foley II noted that FNF recently announced its intent to implement a stock repurchase program once a recapitalization of the company is completed. He said the opportunity to repurchase the Willis Stein and J.P. Morgan shares presented "an efficient means to repurchase a large block of stock through resources already available to the company." FNF can be found online at http://www.fnf.com.

Subordinate classes from two fixed-rate mortgage securitizations issued by Credit Suisse First Boston Mortgage Securities Corp. have been placed under review for possible downgrade by Moody's Investors Service.The affected tranches are class B from series 2002-9 group II and class M-1 from series 2002-19 group II, Moody's said. The rating agency attributed the actions to the fact that the bonds' credit enhancement levels -- including excess spread and interest-only classes -- "may be low" for the current rating level, given projected losses. The IO class for series 2002-9 matured recently and the IO class for series 2002-19 will mature in the near future, Moody's said. "We project that as each IO class matures, such group will again have positive excess spread to cover some losses," the rating agency said.

Meanwhile, Foreclosures.com is also warning that falling sales volumes in Northern and Southern California "could be a harbinger of a long-awaited price correction in overheated Golden State housing markets."Alexis McGee, president of Foreclosures.com, said declining prices and "nonexistent" real income growth, combined with rising interest rates on adjustable-rate mortgages, will strain many household budgets next year in California and boost mortgage defaults. "The affordability issue is finally coming home to roost," Ms. McGee said. "A survey by the Public Policy Institute of California released on Nov. 18 showed that 24% of residents are considering leaving because of high housing costs, and 31% say that housing costs put a financial strain on their households today." She pointed to a 13.3% year-over-year drop in sales volume in Southern California and a 4.7% decline in the Bay Area as indicators that housing markets are beginning to undergo a correction.

Rising foreclosures in the Phoenix metropolitan area represent a "disturbing" trend that may largely be a result of predatory lending, according to Foreclosures.com, a Sacramento, Calif.-based investment advisory firm specializing in distressed property.Alexis McGee, president of Foreclosures.com, said there were 1,165 new notices of trustee sales in Arizona's Maricopa County in October, and 1,254 in November. "This rise in foreclosure activity is a disturbing trend, because the Phoenix area economy is in full recovery and housing sales are still strong," Ms. McGee said. "Twenty percent of home sales are to incoming retirees who often bring cash and stable incomes with them." Ms. McGee said she suspects predatory lending as a "major" contributing factor, noting that Arizona has not enacted legislation aimed at curbing abusive lending practices. "These lenders put people into loans with outrageous fees and terms the borrowers cannot possibly meet," Ms. McGee said. "Then they just wait for the inevitable default and foreclose." The company can be found online at http://www.foreclosures.com.

American Home Mortgage Investment Corp., a real estate investment trust based in Melville, N.Y., has priced a public offering of 3 million shares of 9.25% series B cumulative redeemable preferred stock at $25 per share.The stock will be noncallable for five years and is expected to trade on the New York Stock Exchange under the symbol "AHM PrB," the mortgage REIT said. The underwriters have been granted an option to buy up to 450,000 additional shares to cover any overallotments. The lead manager and sole bookrunner of the offering is Friedman, Billings, Ramsey & Co. American Home can be found on the Web at http://www.americanhm.com.

Freddie Mac plans to issue $7-11 billion of Reference Notes in the first quarter, as well as $2-6 billion of syndicated callable notes, according to the government-sponsored enterprise's latest Quarterly Funding Announcement.The planned issuance would result in a net reduction (excluding repurchases) of $4.5-8.5 billion of outstanding Reference Notes, as $15.5 billion of the securities will mature during the quarter, Freddie Mac said. The GSE said it does not plan to issue any EuroReference Notes in the first quarter. Freddie Mac can be found online at http://www.freddiemac.com.