Servicing

Class B of Residential Asset Mortgage Products Inc. home equity mortgage asset-backed pass-through certificates, series 2001-RZ3, has been downgraded from BB to B by Fitch Ratings.In addition, the ratings on four other classes in the deal were affirmed. The downgrade was attributed to a decline in enhancement relative to the applicable credit support.

Cendant Corp.'s announcement that it will consider selling its mortgage business represents "a positive development" for the credit profiles of Cendant and its PHH Corp. subsidiary, according to Fitch Ratings.The rating agency said a divestiture of the mortgage origination platform and mortgage servicing business would help the companies "by removing an interest-rate-sensitive business involving complex hedging strategies." (Cendant's mortgage business is a unit of PHH Corp.) Divestiture would also represent another step by Cendant toward simplifying its business model, Fitch said. "A divestiture of the mortgage business would not necessarily reduce Cendant's corporate debt unless proceeds from the sale are applied to debt reduction," the rating agency observed. "However, a divestiture would eliminate risks associated with mortgage servicing rights" and securitizations of residential mortgages, Fitch said, adding that the main credit risk is the MSRs. Fitch can be found online at http://www.fitchratings.com.

Three classes of certificates issued by Bear Stearns Structured Securities Inc. mortgage pass-through certificates, series 1997-2, have been downgraded by Moody's Investors Service.The downgrades were as follows: class 1-B-3, from Baa2 to Caa1; class 1-B-4, from Ba2 to C; and class 1-B-5, from B2 to C. Moody's also upgraded four classes in the transaction. The deal is a senior/subordinated structure with a fixed-rate and an adjustable-rate group that are not cross-collateralized. The downgrades were attributed to cumulative losses that have exceeded expectations for Pool 1. The 1-B-6, 1-B-5, and 1-B-4 tranches have been completely written down and the 1-B-3 tranche has taken $378,482 of writedowns.

Prepayment rates for Fannie Mae and Freddie Mac mortgage-backed securities slowed significantly among 5.5%-6.5% coupons during the June reporting period, while Ginnie Mae MBS speeds held steady or slowed only "modestly," according to the Bear Stearns Prepayment Commentary."In contrast to conventional speeds that were down 20%-25% in the largest issues, [Ginnie Mae] prepayments for the June reporting period were flat to very modestly slower across the entire coupon stack -- well above most expectations," Bear Stearns analysts Dale Westhoff and Bruce Kramer reported. They attributed the disparities between Fannie/Freddie speeds and Ginnie speeds -- which "have almost become the norm in recent years," the analysts said -- to several factors. The factors include the ability of many Ginnie borrowers to qualify for conventional financing, "more aggressive pricing and competition" for subprime loans, expansion by the government-sponsored enterprises into the alternative-A sector, and servicer buyouts, Mr. Westhoff and Mr. Kramer said. Bear Stearns can be found online at http://www.bearstearns.com.

Cendant Corp., New York, has announced that it will consider strategic options that include the sale of its mortgage origination platform and its mortgage servicing business.However, the company said any transaction would be aimed at preserving "the cross-selling benefits of a 'value circle' that exists between the mortgage business and the company's residential real estate brands and relocation and resettlement services businesses." Henry R. Silverman, chairman, chief executive officer, and president of Cendant, said the company's mortgage business, which is expected to represent "only a fraction" of the company's income this year, "continues to perform in line with our expectations. However, our mortgage banking activities can produce volatility in Cendant's earnings inconsistent with our business model and the remainder of our portfolio." Cendant also announced that it now expects to exceed the high end of its recently announced earnings projection of $0.42-$0.44 per share from continuing operations by $0.02 to $0.03. Cendant can be found online at http://www.cendant.com.

Standard & Poor's Ratings Services has announced that it is eliminating its previously published criteria for New Jersey "covered home loans" for loans originated on or after July 6.The criteria applied to home loans defined by New Jersey state law as covered home loans and that were included in S&P-rated securitizations. S&P said the reason for the move is a recently enacted amendment to the New Jersey Home Ownership Security Act of 2002 that eliminates the category of covered home loans. Because the amended act is not retroactive, the rating agency said it will continue to apply the previously published criteria for covered home loans originated on or after Nov. 27, 2003, and before July 6, 2004. The rating agency can be found online at http://www.standardandpoors.com.

The inventory of foreclosed residential properties declined in June for the first time this year, according to Foreclosure.com, an online foreclosure listing service based in Boca Raton, Fla.There were 22,132 new foreclosed residential properties listed in the United States in June, and such properties totaled 72,962 overall, the company reported. In May, the overall figure stood at 82,991, according to Foreclosure.com. "A number of factors contribute to the short-term drop in foreclosure activity," said Greg Sullivan, vice president and co-founder of Foreclosure.com. "Pricing remains stable due to a vibrant market, low interest rates, and limited housing inventory, and the economy has now begun to recover rapidly. This means that sellers in financial difficulty are able to 'sell out' of their ownership position and avoid foreclosure." Mr. Sullivan added, however, that rising rates will eventually affect demand and borrowers with adjustable-rate mortgages will be unable to liquidate, causing a rise in foreclosures nationwide. The company can be found online at http://www.foreclosure.com.

Sunset Financial Resources Inc., a real estate investment trust based in Jacksonville, Fla., has reported the securitization of $219.4 million of residential mortgage loans.Sunset contributed the loans to J.P. Morgan Trust 2004-A3 and received a like amount of investment securities. "This securitization represents a significant milestone in the execution of our business plan," said Byron Boston, Sunset's chief investment officer. "To successfully convert our whole-loan purchases to mortgage-backed securities in the first full quarter of our operating history is a solid accomplishment." Sunset also reported the execution of an amendment to its $250 million senior secured credit agreement with J.P. Morgan that creates an $18.75 million sub-limit relating to commercial mortgage bridge loans that meet certain criteria. The REIT can be found on the Web at http://www.sunsetfinancial.net.

Thornburg Mortgage Inc., Santa Fe, N.M., has reported the establishment of a new, $5 billion asset-backed commercial paper facility.The company said the facility provides it with another way to finance its adjustable-rate mortgage securities portfolio. Thornburg Mortgage Capital Resources LLC, a special-purpose bankruptcy-remote entity created especially for the transaction, will act as the financing vehicle by issuing commercial paper in the form of secured liquidity notes, Thornburg said. Lehman Brothers Inc. is the structuring agent and lead dealer for the transaction. Thornburg can be found online at http://www.thornburg.com.

Fidelity National Financial Inc., Jacksonville, Fla., has acquired Geotrac Inc., a provider of flood determination and life-of-loan monitoring services, for an undisclosed price."Geotrac provides additional critical mass and improved scale to our flood information business, and its strength in the Midwest provides additional geographic coverage that augments our current market penetration," said William P. Foley II, FNF's chairman and chief executive officer. Mr. Foley said the addition of Geotrac's digitized flood plain maps will enable FNF to increase the percentage of automatic determinations and reduce manual exception processing. FNF can be found online at http://www.fnf.com.