Servicing

Prepayment rates for Fannie Mae and Freddie Mac mortgage-backed securities slowed across the board in the July reporting period, while Ginnie Mae MBS speeds also slowed but remained "significantly faster than comparable conventionals," according to Bear Stearns analyst Dale Westhoff.Among Fannie Maes, the 2003 vintage 30-year 5.0% and 5.5% coupons slowed by constant prepayment rates of 1.3 CPR and 3 CPR, respectively, while the 6.0% through 7.0% coupons slowed by 7-10 CPR, Mr. Westhoff said. "We expect minimal market reaction to these numbers given that they are generally in line with market consensus," he said. "Nevertheless, there may be a sigh of relief from higher-coupon pass-through and [interest-only] investors as a substantial slowdown finally takes hold in all of these issues." Among Ginnie Maes, Mr. Westhoff said Bear Stearns believes that "the erosion in the credit performance of FHA/VA loans is adding up to 4 CPR" to baseline Ginnie Mae prepayments, pushing them "well above" comparable Fannie Maes in most issues. "Contrary to many expectations, today's report has widened the prepayment differential" between Fannies and Ginnies, he said. Bear Stearns can be found online at http:///www.bearstearns.com.

Mortgage lenders added 3,000 full-time employees to their payrolls in June, according to the July employment report released Aug. 6 by the U.S. Bureau of Labor Statistics.The BLS report shows that jobs in the mortgage banking/broker sector rose from 454,300 in May to 457,300 in June. (There is a one-month lag in BLS reporting of mortgage sector employment data.) But after five consecutive months of employment gains, BLS economists estimate that the mortgage sector lost jobs in July. The credit intermediation industry shed 16,000 jobs in July, and mortgage banking makes up a large piece of that interest-rate-sensitive industry, according to BLS economist Michael Stropel. Although the actual mortgage banking numbers for July will not be released until next month, Mr. Stropel said the estimate is based on what "we have seen in the past versus what we are seeing right now," including a "stark" decline in refinancings. The BLS can be found online at http://stats.bls.gov.

The Washtenaw Group Inc., a holding company for Washtenaw Mortgage Co., Ann Arbor, Mich., that resulted from the wholesale mortgage company's spinoff from Pelican Financial Inc., has reported net income of approximately $117,000 ($0.03 per share) for the second quarter, down dramatically from $3.41 million ($0.76 per share) a year earlier.Mortgage origination volume totaled $384 million in the second quarter, down 70% from $1.3 billion in the second quarter of 2003. The company said the results for the quarter were aided by a valuation-adjustment charge of approximately $3.94 million to the mortgage servicing rights portfolio that was required under generally accepted accounting principles. Charles C. Huffman, chairman and chief executive officer of Washtenaw, said he was not happy with the results but that the company had performed well in view of the spinoff from Pelican and the industrywide downturn in residential mortgage activity. "We have quickly adapted to market conditions by downsizing, without compromising response time or service quality," he said. "We continue to increase our broker network, which exceeds 2,000 independent brokers across the U.S."

Accredited Home Lenders Holding Co., San Diego, has announced plans for a public offering of $50 million of preferred stock by an indirect subsidiary, Accredited Mortgage Loan REIT Trust.The real estate investment trust proposes to offer two million shares of series A perpetual cumulative preferred shares, bearing a liquidation preference of $25 per share. The managers of the offering are Bear, Stearns & Co. and Friedman, Billings, Ramsey & Co. Accredited can be found online at http://www.accredhome.com.

The Prestwick Group, Alexandria, Va., is brokering the sale of loan servicing rights on a $24 million portfolio of two commercial loans from a Federal Housing Administration private investor.Characteristics of the portfolio, which consists of two multifamily loans, include a weighted average note rate of 7.8% and weighted average seasoning of 67 months. Both loans are secured by property in Ohio. The seller of the servicing rights is an independent commercial mortgage company. The bid deadline is Aug. 17.

In the second quarter, 39% of the homeowners who refinanced their homes got a mortgage at least 5% larger than the original loan, down from a revised 42% in the previous quarter, according to Freddie Mac.However, the percentage was higher than the 33% level recorded a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "The very low interest rates that we saw in March, when 30-year fixed-rate mortgage rates averaged 5.4%, caused an increase in overall refinancing activity for the loans that closed in the second quarter," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "When we see regular rate-and-term refinancing increase, the share of cash-out refis drops. Most homeowners are happy to reduce their monthly payments and don't feel a need to withdraw equity; however, lower mortgage rates make home-equity conversion an affordable option for financing other investments such as home improvements or paying for college."

The Bond Market Association has begun providing a report on mortgage-backed security dealers' consensus prepayment expectations.The association plans to release the free report on the business day closest to the first and the 15th of every month. The association can be found online at http://www.bondmarkets.com.

HomeBanc Corp., Atlanta, has announced the completion of a nearly $1 billion securitization of adjustable-rate mortgage loans, its first securitization since going public as a real estate investment trust on July 19.The approximately $989.2 million of notes were issued by HomeBanc Mortgage Trust, series 2004-1. The notes sold to the public included approximately $880.8 million of class A notes in two classes and $84.3 million of class M notes in four classes. HMB Acceptance Corp., a HomeBanc subsidiary, purchased $24.1 million of class B notes in two classes, together with the certificates representing the equity interest in the trust, HomeBanc said. The trust includes $992.7 million of ARMs originated by HomeBanc's subsidiary HomeBanc Mortgage Corp. The initial floating interest rates on the various classes of notes are based on the one-month London interbank offered rate. HomeBanc can be found online at http://www.homebanc.com.

IndyMac Bancorp Inc., Pasadena, Calif., has reported record pro forma net earnings of $54.6 million ($0.90 per share) for the second quarter, but the numbers exclude a one-time deferral of $31.6 million of net income in connection with a change in accounting for rate locks.The pro forma net earnings were up 34% from those of a year earlier. The accounting change was made in compliance with a Securities and Exchange Commission staff accounting bulletin that took effect April 1, IndyMac said. The company said there is "no economic or business impact" from the accounting change, which affects only the timing of revenue recognition. IndyMac's mortgage loan production totaled a record $9.4 billion of loans in the second quarter, up 18% from that of a year earlier, the company said. "Our mortgage market share was up 66% over the second quarter of 2003 in a period where many of our peers declined both in volumes and market share this quarter over the same quarter last year," said Michael W. Perry, IndyMac's chairman and chief executive officer. Mr. Perry said the company has revised its earnings forecast for the year from $3.10-3.30 per share to $3.35-3.55 per share. IndyMac, the holding company for IndyMac Bank, can be found online at http://www.indymacbank.com.

MortgageIT Holdings Inc., a New York-based real estate investment trust, has priced an initial public offering of 14.6 million shares of common stock at $12 per share.The company said the proceeds of the IPO (gross proceeds totaled $175.2 million) will be used to fund and retain in portfolio high-quality single-family and hybrid adjustable-rate mortgage loans, as well as for general corporate purposes. The offering was led by UBS Investment Bank and Merrill Lynch & Co., and the underwriters were granted an option to buy up to 2.19 million additional shares to cover any overallotments. The shares will trade on the New York Stock Exchange under the symbol MHL.