Servicing

Employment in the mortgage sector fell slightly from its historically high level in September, and it appears that mortgage brokers may be exiting the market, according to the October employment report released Nov. 5 by the U.S. Bureau of Labor Statistics.The BLS report shows that jobs in the mortgage banking/broker sector fell by 100 full-time positions in September to 458,600. (There is a one-month lag in BLS reporting of mortgage-sector employment data, and the October data will not be released until Dec. 3.) The data show that mortgage companies added 3,500 employees to the payrolls in September, while the number of mortgage brokers declined by 3,600. Meanwhile, the BLS report shows that the U.S. economy generated 337,000 new jobs of October -- the biggest increase since March. The credit intermediation industry added 8,000 jobs in October, the BLS said. The BLS can be found online at http://stats.bls.gov.

Six classes of notes from collateralized debt obligations issued by Corvus Investments Ltd. and Savannah II CDO Ltd. have been downgraded by Fitch Ratings.The Corvus downgrades were as follows: class A-1, from BB to BB-minus; class A-2, from BB to BB-minus; class B, from B to CCC; and class C, from CCC to CC. In the Savannah deal, class A was downgraded from BB to BB-minus and class B was downgraded from B to CCC. All the downgraded classes, as well as class D in the Corvus deal and class C in the Savannah deal, remain on Rating Watch Negative "due to the continuing uncertainty of the timing and ultimate resolution of both transactions' current impaired assets and the risk of further deterioration in the reference pools," Fitch said. The portfolios are composed of residential mortgage-backed securities, commercial MBS, real estate investment trusts, asset-backed securities, CDOs, and corporate credits, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Fifteen classes from six Long Beach home equity and mortgage loan securitizations have been downgraded by Fitch Ratings.The downgrades from Asset Backed Securities Corp., Long Beach Home Equity Loan Trust series 2000-LB1 were as follows: group 1, class M2F, from BBB-plus to BBB-minus, and class BF, from CC to C; group 2, class M2V, from A to BBB, and class BV, from BBB-minus to BB-minus. The downgrades from Long Beach Home Mortgage Loan Trust deals were as follows: series 2000-1, class M-2, from A to BBB-minus, and class M-3, from BBB-minus to CCC; series 2001-1, class M-2, from A to BBB, and class M-3, from BBB to BB; series 2001-2, class M-2, from A to BBB, and class M-3, from BBB to B; series 2001-3, class M-2, from A to BBB-plus, and class M-3, from BBB to B; series 2001-4 group 1, class I-M2, from A to A-minus, and class I-M3, from BBB to B-plus; and series 2001-4 group 2, class II-M3, from BBB to BB-minus. In addition, Fitch affirmed the ratings on 20 classes in the six Long Beach deals. The downgrades were attributed to high loss levels. Fitch can be found on the Web at http://www.fitchratings.com.

Countrywide Financial Corp., Calabasas, Calif., has provided earnings guidance for 2005, estimating that it will earn between $3.25 and $4.25 per share based on lower mortgage industry origination volume but higher market share.Countrywide said it expects to produce between $250 billion and $390 billion of loans next year, based on an estimated range of total mortgage origination volume of $1.8 trillion to $2.7 trillion for the industry. That would give Countrywide a market share of 14.0% to 14.5%. Countrywide also said it expects to see an average loan servicing portfolio of $920 billion to $950 billion next year.

Sixty percent of the homeowners who refinanced their homes in the third quarter tapped into their equity by getting a mortgage at least 5% larger than the original loan, up dramatically from 42% in the second quarter, according to Freddie Mac's quarterly refinance review.The figure was up even further from 34% in the third quarter of 2003, the government-sponsored enterprise said. "In the latter half of the second quarter and in the first half of the third quarter, 30-year fixed mortgage rates were above 6%, which led to a big falloff in refinance applications," said Frank Nothaft, Freddie Mac's chief economist. "The largest decline was in homeowners looking to save money by lowering their mortgage rates, since most mortgages already carry very low rates. However, for cash-out refinancers these low rates were a very cost-effective way for them to finance a big project such as home improvements or to consolidate and pay off consumer debt." Freddie Mac can be found online at http://www.freddiemac.com.

Anworth Mortgage Asset Corp., Santa Monica, Calif., has priced 1 million shares of series A cumulative preferred stock at a liquidation value of $25 per share.The shares have an annual coupon of 8.625%. The underwriters have been granted an option to buy up to 150,000 additional shares to cover any overallotments. The net proceeds of the offering are expected to total about $23.9 million, or about $27.5 million if the overallotment option is exercised in full, the company said. Anworth is a mortgage real estate investment trust.

Aames Investment Corp., Los Angeles, has priced a public offering of 35 million shares of common stock at $8.50 per share and agreed to sell 5 million additional shares at the same price in a private placement.The gross proceeds from the public offering will be $297.5 million. The private placement, which provides for certain discounts, is expected to result in aggregate proceeds of $39.5 million, Aames said. The private placement was made with Friedman, Billings, Ramsey Group Inc. The sole book-running manager of the public offering is Friedman, Billings, Ramsey & Co. Inc. Aames, a mortgage real estate investment trust, can be found on the Web at http://www.aames.net.

Freddie Mac is finding attractive pricing on adjustable-rate mortgages, including interest-only loans, according to the company's top investment officer, Patricia Cook."Agency and triple-A-rated nonagency ARM products currently represent an increasing percentage of our total purchases" for the retained mortgage portfolio, the executive vice president for investments said. "These products provide attractive risk-adjusted returns." Ms. Cook made her remarks in response to questions during a teleconference in which top Freddie executives briefed analysts and investors on the company's business outlook. On the investment side, "we permit IO mortgages to be included as collateral backing nonagency triple-A securities in which we invest," she said. Meanwhile, growth of the retained portfolio slowed to a 3.1% annual rate in September. Freddie executives estimate the growth rate for the year will be in the low to middle single digits.

Freddie Mac executives have reiterated their goal to release full-year 2004 financial results by the end of the first quarter next year and resume quarterly reporting with the second quarter, but they also warn that this timetable is "aggressive" and cannot be guaranteed.Eugene McQuade, Freddie Mac's president and chief operating officer, said the corporation remains on track to meet its financial reporting goals and hopes to report full-year 2005 results "on a timely basis." But Freddie Mac executives also said in a conference call with investors and analysts after the market closed Nov. 1 that missing a reporting target by a few days should not be seen as a cause for alarm. "We expect to be able to complete the process of catching up on our financial reporting with our 2005 results, but I caution that we still have a lot of work to do," said Martin Baumann, Freddie's executive vice president and chief financial officer, during the conference call. Freddie Mac can be found online at http://www.freddiemac.com.

Belvedere Trust Mortgage Corp., a subsidiary of Anworth Mortgage Asset Corp., Santa Monica, Calif., has completed its first securitization under a new shelf registration, according to Anworth.The deal, BVMBS 2004-1, involves the sale of approximately $600 million in securities issued by BellaVista Funding Corp., a subsidiary of Belvedere Trust. "Our goal is to expand our acquisition and securitization of high-quality mortgage assets," said Claus Lund, Belvedere's chief executive officer. The underwriters of the deal were Countrywide Securities Corp. and RBS Greenwich Capital Markets. Anworth is a mortgage real estate investment trust.