Servicing

Three tranches of Solstice ABS CDO Ltd. have been downgraded by Fitch Ratings.The downgrades were as follows: class B notes, from AA to AA-minus; class C notes, from A-minus to BBB; and preferred shares, from BB-minus to B. Fitch said the downgrades stemmed from poor performance through impaired and defaulted assets. Assets rated below BBB-minus have increased from about 12% to over 25% of Solstice's outstanding collateral debt securities since February 2003, Fitch said. The proceeds of the collateralized debt obligation were used to buy an investment portfolio consisting chiefly of CDOs, residential mortgage-backed securities, commercial MBS, asset-backed securities, corporate debt securities, and real estate investment trusts. Fitch can be found online at http://www.fitchratings.com.

IndyMac Bancorp Inc., Pasadena, Calif., the holding company for IndyMac Bank, has reported pro forma net earnings of $56.4 million ($0.88 per share) for the third quarter, compared with net earnings of $49.7 million ($0.87 per share) a year earlier.The company said earnings were reported on a pro forma basis rather than under generally accepted accounting principles in order to provide comparability with its earnings reports in previous quarters. (The difference between GAAP and pro forma earnings in the third quarter stems from the implementation of SEC Staff Accounting Bulletin No. 105 and purchase accounting adjustments related to IndyMac's acquisition of Financial Freedom Holdings Inc., the company said.) IndyMac produced a record $10.3 billion of mortgage loans in the third quarter, up 21% from the level of a year earlier, the company said. "The results this quarter were very strong due to solid execution on our two key strategies: to use our thrift portfolio capabilities to generate increased earnings and to increase market share as the mortgage industry transitions to a more normal post-refinance boom level," said Michael W. Perry. IndyMac's chairman and chief executive officer. IndyMac can be found online at http://www.indymacbank.com.

Saxon Capital Inc. has reported the securitization of nonconforming and conforming mortgages in a $900 million transaction.RBS Greenwich Capital was the lead manager on the deal, Saxon Asset Securities Trust 2004-3. Merrill Lynch & Co., JP Morgan, and Credit Suisse First Boston were co-managers. Saxon can be found on the Web at http://www.saxoncapitalinc.com.

The Pennsylvania Supreme Court is making it very difficult for warehouse lenders to conduct business in the state because of its "shocking" decision regarding bailee letters, according to WarehouseOne, a warehouse lender based in West Trenton, N.J.The idea that the potential purchaser "owns the notes in violation of the express terms of the bailee letters is shocking to any knowledgeable observer that reads the Court's decision," WarehouseOne general counsel Mark Loreto says in urging the state Supreme Court to vacate its decision in Pioneer v. CoreStates. Bailee letters are supposed to protect a lender's interest in loans when they are sent to potential investors for inspection. But the court ruled against Pioneer Commercial Funding Corp., even though the defunct California warehouse lender did not get paid for the loans it sent with a bailee letter. The $1.7 million payment was wired to the wrong lender, and CoreStates Bank NA, Philadelphia, used it to cover overdrafts by that lender. WarehouseOne contends that the state Supreme Court's validation for the conduct in the case provides a roadmap for fraudulent schemes. The decision also indicates that the Pennsylvania courts "stand ready to support those who perpetuate such frauds," WarehouseOne says in an amicus brief on behalf of Pioneer. Pioneer has petitioned the Pennsylvania Supreme Court to rehear the case. Wachovia Corp., which owns CoreStates, contends that the court correctly ruled that CoreStates had the right to offset the overdrafts.

LandAmerica Financial Group Inc., Richmond, Va., has announced an agreement to purchase LoanCare Servicing Center Inc., a mortgage loan subservicing company based in Norfolk, Va.The terms of the agreement were not disclosed. LandAmerica said LoanCare subserviced approximately 45,000 loans with principal balances of approximately $5 billion in 50 states and the District of Columbia as of Sept. 30. "This move is a strategic step toward reaching LandAmerica's goal of becoming the premier provider of real estate transaction services," said Charles H. Foster Jr., chairman and chief executive officer of LandAmerica. The company can be found online at http://www.landam.com.

Fitch Ratings has announced the addition of performance data for select issuers to its Performance Indices for the U.S. subprime residential mortgage-backed securities sector.The subprime issuers were chosen based on 2000-2003 issuance volume, and Fitch developed a performance index for each of the issuers' RMBS transactions going back to 1998, the rating agency said. The indices are segmented by product type (fixed- and adjustable-rate mortgages) and will be updated quarterly, beginning in October. Fitch can be found online at http://www.fitchratings.com.

Fannie Mae has announced the addition of several data elements to its disclosures for mortgage-backed securities and other structured transactions.Beginning in November, investors will have access to new statistics on whole-loan real estate mortgage investment conduits, the government-sponsored enterprise said. Using PoolTalk, a tool that retrieves pool-level information on Fannie Mae securities, they will now be able to obtain weighted average coupon and weighted average maturity quartiles, as well as distributions on loan age, loan size, WAC, WAM, geographic location, origination year, amortization terms, amortization type, property type, occupancy, and loan purpose, the GSE said.

Fannie Mae has announced a new Internet-based technology that it says will enhance the company's short-term debt securities issuance and provide additional and more-timely information by replacing telephone interfaces with real-time pricing.Debt Transaction Application is an electronic trading platform that will be used to manage the daily issuance of Fannie Mae's U.S. dollar-denominated, non-interest-bearing short-term notes. DTA is designed to improve ease of use by dealers, provide more pricing and issuance information, and enable Fannie and its dealers to execute transactions faster and more efficiently, Fannie Mae said. "This Web-based technology will streamline investors' morning routine by significantly compressing the time between entering an order with their dealer and knowing the order has been confirmed for the specific amount, maturity, and price," said Linda Knight, Fannie Mae senior vice president and treasurer. DTA was created through a partnership with SunGard Financial Networks. Fannie Mae can be found online at http://www.fanniemae.com.

Fidelity Information Systems, Jacksonville, Fla., is investing millions of dollars to enhance its home equity line of credit servicing functionality.Fidelity said about half of its Mortgage Servicing Package customers currently have the HELOC functionality installed in their organizations. MSP is used to service some 30 million mortgage loans. As part of the enhancements, Fidelity said it intends to provide MSP users with credit card interfacing for HELOC loans. Fidelity said Dovenmuehle Mortgage, EMC Mortgage, Navy Federal Credit Union, and Aurora Loan Services are among the firms capitalizing on the HELOC benefits.

Freddie Mac acquired $35.19 billion in loans during September, its second-worst purchase month of the year.Meanwhile, Fannie Mae acquired $63.45 billion, its fourth-best purchase month of the year. For the year to date, Freddie Mac has purchased $383.75 billion in loans, and Fannie has bought $560.01 billion. It has been anticipated that Fannie might grow more slowly in coming months as it tries to raise additional capital to please its regulator. However, September's purchases reflect commitments entered into during the summer. Meanwhile, Freddie's retained portfolio fell slightly in September, to $660.71 billion, from $661.35 billion the month before. Fannie's portfolio increased to $904.76 billion from $895.42 in August. The two government-sponsored enterprises can be found online at http://www.freddiemac.com and http://www.fanniemae.com.