Servicing

Loan purchases by Fannie Mae and Freddie Mac fell in October as rising rates and a decline in refinancings continued to slow conventional fundings in the primary market.Freddie Mac bought $34.4 billion in mortgages during the month, a 56% decline from the total in the same month last year. October was Freddie's second-worst purchase month of the year. The congressionally chartered company also revealed that it unwound $1.52 billion in participation certificates (mortgage-backed bonds) with an unidentified seller/servicer. The liquidations occurred in February ($735 million) and October ($785 million). Meanwhile, Fannie Mae acquired $61.8 billion in October, a 38% decline from purchases in the same month a year ago. It was Fannie's fifth-best purchase month of the year. In October, Freddie's portfolio fell slightly (compared with the previous month's level), while Fannie's increased. The government-sponsored enterprises can be found online at http://www.fanniemae.com and http://www.freddiemac.com.

Two certificates from two Delta Funding Corp. Home Equity Loan Trust transactions have been placed under review for possible downgrade by Moody's Investors Service.The affected classes are series 1998-2, class B-1A, and series 2000-3, class B. Moody's also placed six certificates from three transactions under review for possible upgrade. Moody's attributed the negative rating actions to significant losses that have eroded overcollateralization. The transactions are backed primarily by first-lien adjustable- and fixed-rate subprime mortgage loans. With the exception of the 2000-3 deal, they have been serviced by Delta Funding. Countrywide Home Loans Inc. is the servicer for the 2000-3 transaction.

Four classes of certificates issued in four transactions by Aames Mortgage Trust in 2001 have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2001-1, class B, from Baa2 to Ba2; series 2001-2, class M-2, from A2 to Baa1, and class B, from Baa2 to B2 (remains under review for downgrade); and series 2001-3, class B, from Baa2 to Ba1. Moody's also confirmed the ratings on three classes of Aames certificates. The transactions are backed mostly by first-lien, fixed-rate subprime mortgage loans originated by Aames Financial Corp. The rating agency attributed the downgrades to significant losses that have eroded overcollateralization. The class B certificates of the 2001-2 transaction will remain on watch for possible downgrade because high loss severities on the properties held for resale could impair their credit quality further, Moody's said.

Fifty-two classes from 20 Green Tree Financial Corp. (later Conseco Finance Corp.) manufactured housing securitizations have been placed on review for possible downgrade by Moody's Investors Service.The rating agency said the review was prompted by the continued weaker-than-expected performance of Green Tree's pools. "Although repossessions and loss severities have decreased, the improvement has been slower than expected," Moody's said. "As a result, losses remain high and credit support continues to erode. The B-2 classes of many of the pools have been completely written down." The transactions are being serviced by Green Tree Investment Holdings II LLC -- a joint venture of Fortress Investment Group LLC and Cerberus Capital Management -- which bought the MH servicing platform of Conseco Finance in 2003. Moody's can be found online at http://www.moodys.com.

Freddie Mac repurchased $1.76 billion of targeted debt securities with expired call options in connection with a cash tender offer that closed Nov. 19, according to the government-sponsored enterprise.The securities were originally issued as European-style callable debt and have since converted to bullet securities. Tenders were made for 20 securities in amounts ranging from $7.53 million (for 2.65% medium-term notes due Aug. 4, 2006) to $341.57 million (for 2.25% medium-term notes due Dec. 4, 2006), Freddie Mac reported. Freddie Mac can be found on the Web at http://www.freddiemac.com.

Freddie Mac has announced the pricing of a $2.5 billion 5% Gold MACS Strip security.The weighted average coupon is 5.53%, the weighted average maturity is 355 months, and the weighted average loan age is four months, the government-sponsored enterprise reported. The settlement date of the issue (CUSIPs: IO 31282YDN6, PO 3128HVC80) is Nov. 19. The transaction is lead managed by J.P. Morgan Chase and UBS Investment Bank. Freddie Mac can be found online at http://www.freddiemac.com.

NovaStar Financial Inc., a real estate investment trust based in Kansas City, Mo., has announced the completion of a $2.5 billion securitization by its subsidiary, NovaStar Mortgage.The transaction, NovaStar Mortgage Funding Trust series 2004-4, offered 15 rated classes of certificates with a face value of $2.47 billion, NovaStar said. The lead managers of the deal are RBS Greenwich Capital and Wachovia Securities. NovaStar Mortgage can be found on the Web at http://www.novastarmortgage.com.

Impac Mortgage Holdings Inc., Newport Beach, Calif., has priced public offerings of 3.75 million shares of its common stock at $23 per share and 4.0 million shares of preferred stock at $25 per share.The common stock offering produced estimated net proceeds of $81.9 million, and the offering of 9.125% series C cumulative redeemable preferred stock produced an estimated $96.9 million, Impac said. The common stock offering was led by UBS Investment Bank, with Bear, Stearns & Co. as joint lead manager. The preferred stock offering was managed by Bear Stearns, with Stifel, Nicolaus & Co. as co-manager. The company has granted the underwriters of the common stock an option to buy up to 562,500 additional shares, and the underwriters of the preferred stock an option to buy up to 300,000 additional shares, to cover any overallotments. Impac, a mortgage real estate investment trust, can be found online at http://www.impaccompanies.com.

Two classes of IndyMac ABS Inc. home equity issues have been downgraded by Fitch Ratings.The downgrades were as follows: class BF of series SPMD 2000-B group 1, from CC to C; and class BF of series SPMD 2001-B, from BB to CCC. In addition, the ratings on 43 classes in eight IndyMac ABS deals were affirmed. The rating agency attributed the downgrades to "poor collateral performance and the deterioration of asset quality beyond original expectations." Fitch said the percentage of manufactured housing collateral in IndyMac SPMD 2000-B group 1 had tripled (to 37.4%) as of October 2004, and that MH loans "have exhibited very high historical loss severities, causing Fitch to have concerns regarding the adequacy of enhancement in this deal." For series SPMD 2001-B, the percentage of MH collateral had grown from 2.3% at closing to 9.5% as of October. Fitch can be found online at http://www.fitchratings.com.

The California commercial loan delinquency ratio was below one-half of 1% in the third quarter for the 24th consecutive quarter, according to the California Mortgage Bankers Association.The Sept. 30 Quarterly Delinquency Survey found that 99.8% of the California commercial real estate loans serviced by 18 mortgage banking firms were either current or delinquent by only one payment. This represents a delinquency ratio of 0.24%, compared with 0.33% three months ago and 0.24% a year ago. Sixteen of the 18 companies reported no loans more than 30 days delinquent. Of the $60.7 billion of loans being serviced by the 18 mortgage bankers, 15 loans totaling $143.1 million were two or more payments past due. The 15 delinquent loans represent 0.15% of the 9,884 commercial real estate loans included in the survey. For survey purposes, a loan is considered delinquent if it is two or more payments past due, although loans in foreclosure are included regardless of the number of payments past due. The CMBA, based in Sacramento, can be found online at http://www.cmba.com.