Servicing

Cohane Rafferty Securities Inc., White Plains, N.Y., is offering a $600 million to $1.2 billion "flow" package of mortgage servicing rights, MortgageWire has learned.The bid deadline on the package is March 16. The product includes receivables on Fannie Mae and Freddie Mac loans. Meanwhile, servicing brokers are saying bid prices have fallen since March 5, when the yield on the 10-year Treasury took a dive. "Buyers are being skittish," said one investment banker. (For complete details, see the March 15 issue of National Mortgage News.)

While the overall delinquency rate on home loans fell in the fourth quarter, the number of loans in foreclosure increased 5 basis points to 1.29% of outstanding loans, according to the quarterly delinquency survey compiled by the Mortgage Bankers Association.The number of loans entering the foreclosure process also rose slightly, by 1 bp, to 0.45% in the fourth quarter. The MBA reported that 4.49% of loans were 30 days or more past due in the fourth quarter, down 16 bps from the level recorded in the third quarter. The MBA, which has revised its database to reflect the growing number of subprime loans, said the overall delinquency rate is now at its lowest level since the second quarter of 2000, when the delinquency rate was 5.51%. MBA chief economist Doug Duncan said delinquency rates are "declining from their post-recession peaks" and that the housing market remains "fundamentally sound." The MBA can be found online at http://www.mortgagebankers.org.

The primary, master, and special servicer ratings of Orix Capital Markets, Dallas, have been downgraded by Fitch Ratings.The primary servicer rating was lowered from CPS1 to CPS2, the master servicer rating was lowered from CMS1 to CMS2, and the special servicer rating has been lowered from CSS1 to CSS3 and removed from Rating Watch Negative. Fitch said the primary and master servicer rating downgrades were based on "a decline in overall servicing performance," citing concerns that its performance regarding the processing and approval of borrower requests for assumptions, lease approvals and terminations, and other lender consents "is not as timely as it needs to be and is inconsistent with the performance expected of Fitch's highest-rated servicers." The special servicer rating downgrade was based partly on a high annual employee turnover rate in the special servicing group over the past two years (29% in 2003 and 41% in 2002) and partly on the company's heavy use of litigation as a loan resolution strategy, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

ABN Amro Capital Markets, Boca Raton, Fla., has started offering master servicing in the market and was recently added to the Standard & Poor's Select Servicer List.As a master servicer, AMCAP monitors the sellers of mortgage loans who retain the servicing rights and obligations. AMCAP supports mortgage-backed securities deals by collecting payments from one or more of its underlying servicers and remitting that payment to a trustee for distribution to bondholders. Maria Fregosi, ABN Amro Mortgage Group's group vice president and capital markets manager, said master servicing will allow AAMG to diversify its origination sources beyond its traditional wholesale channel and facilitate bulk acquisitions that will give AAMG additional economies of scale to sell and securitize nonconforming mortgage products.

Green Courte Partners LLC, Lake Forest, Ill., has announced the closing of its first investment fund, Green Courte Real Estate Partners LLC, a $120 million private equity fund.The company said the fund will use "institutional levels" of leverage to invest $350 million in niche real estate sectors such as manufactured housing communities and parking assets. "We believe that focused niche strategies, which include partnership with strong local operators, will generate superior risk-adjusted long-term returns," said Randall K. Rowe, chairman of Green Courte Partners. The company can be found on the Web at http://www.greencourtepartners.com.

Residential Funding Corp., Minneapolis, has reported a record $50.1 billion issuance of mortgage-backed securities and mortgage-related asset-backed securities in 2003, up 45.1% from its issuance the year before.The total included: $14.3 billion in residential subprime securities; $8.7 billion of alternative-A securities; $6.8 billion in jumbo A-quality loan securities; $3.2 billion in securities backed by open-end lines and second-lien closed-end loans with high loan-to-value ratios; and approximately $16.5 billion in securities backed by high-LTV loans, program-variance mortgages, and others. GMAC-RFC said it was the largest issuer of mortgage-related ABS in 2003 and the second-largest U.S. mortgage conduit. The company can be found online at http://www.gmacrfc.com.

New Century Financial Corp., Irvine, Calif., has reported that its secondary marketing subsidiary has entered into six forward commitments for the sale of $6 billion in mortgage loans through June.The forward commitments were entered into by the subsidiary, NC Capital Corp., with two undisclosed institutional investors at "attractive" prices, New Century said. "Due to the demand for our product in the secondary market, we have elected to delay completing our first-quarter 2004 on-balance-sheet securitization of mortgage loans until April," said Kevin Cloyd, president of NC Capital. "We remain on track to sell 80% of our mortgage loans in the whole-loan market and securitize the remaining 20% on balance sheet in 2004." New Century can be found online at http://www.ncen.com.

Standard & Poor's has revised its criteria for structured finance transactions that include New Mexico loans governed by the Home Loan Protection Act, eliminating the requirement that issuers identify which loans constitute home improvement loans and manufactured housing loans.The move comes after Senate Bill 228, which repeals Section 7 of the act, was signed into law. By repealing Section 7, the bill removed the possibility of an additional layer of liability for purchasers and assignees of home loans based on the acts, errors, or omissions of a manufactured home seller or home improvement contractor, S&P said. The rating agency said it will continue to require issuers to identify home loans and high-cost home loans under the act. S&P can be found online at http://www.standardandpoors.com.

Two classes of Impac SAC mortgage pass-through certificates, series 1999-2, have been downgraded by Fitch Ratings.Class B-1 was downgraded from B-minus to CCC, and class B-2 was downgraded from C to D. In addition, Fitch upgraded one class in the deal and affirmed the ratings on three other classes. The downgrades were attributed to incurred losses, loss expectations, and high delinquencies relative to the applicable credit support. Class B-1 was also downgraded because recoveries were used to increase the class B-2 certificate balance to which realized losses had been allocated, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Prepayment rates for Fannie Mae mortgage-backed securities rose broadly in February, prompting the Bear Stearns Prepayment Commentary to caution that the increases may adversely affect MBS pricing for 5.5% and 6.0% coupons, where the speed-up was the greatest.Bear Stearns analysts Dale Westhoff and Bruce Kramer attributed the strong showing to three factors: excess capacity in the mortgage pipeline; a doubling of application volume since early January; and "attractive" hybrid mortgage alternatives. The excess capacity "has compressed the lag between interest rates and reported prepayments to just four weeks," the analysts said. Citing the shorter lag time and the larger number of business days in March, the analysts predicted that prepayments would rise again in the next report, by about 15%, but added a caveat. "It is important to note that despite the sharp increases in today's report, the numbers are still well below where they were the first time mortgage rates hit 5.65% in March 2003," they said. Bear Stearns can be found online at http://www.bearstearns.com.