Servicing

In the fourth quarter, 45% of the homeowners who refinanced their homes got a mortgage at least 5% larger than the original loan, up from 34% in the previous quarter, according to Freddie Mac.The percentage was also higher than the 40% level recorded a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "The atmosphere around refinancing changed in the fourth quarter as mortgage rates started rising from the 45-year lows of the summer," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "Since most of those who could refinance for lower rates have already done so, the later-year market became more attractive primarily to those who want or need to take equity out of their homes."

Nine classes of Deutsche Financial Capital manufactured housing transactions have been downgraded by Fitch Ratings.The downgrades were as follows: series 1997-I, class M, from AA to A-minus, and class B-1, from CCC to CC; and series 1998-I, classes A-2 through A-7, from AAA to AA-minus, and class M, from A-plus to BB-minus. In addition, the ratings on four classes of series 1997-I were affirmed. DFC was a joint venture of Deutsche Financial Services Corp. and Oakwood Acceptance Corp. Contracts included in the deals are serviced by OAC, a wholly owned subsidiary of Oakwood Homes Corp., which filed for Chapter 11 bankruptcy in 2002, Fitch said. The rating agency said Oakwood announced late last year that "substantially all" its assets would be acquired by Clayton Homes Inc.

Fannie Mae and Deutsche Bank Securities Inc. are bringing to market a five-year, $500 million inflation-linked debt security with coupons linked to the changes in the Consumer Price Index, Fannie Mae has reported."While Fannie Mae has no current plans to issue inflation-linked debt on a programmatic basis, the company would consider future issuances on a case-by-case basis in context of the market's demand and our funding needs," said Linda Knight, Fannie Mae senior vice president and treasurer.

Three classes of Lehman Manufactured Housing 1998-1 have been downgraded by Fitch Ratings.Class I-A-1 of series 1998-1 group I was downgraded from AA-plus to AA, and classes II-A-1 and II-A-2 of series 1998-1 group II was downgraded from A to BBB-minus. The transaction is collateralized with classes from 10 Green Tree manufactured housing transactions, the rating agency said. "Due to the lack of additional credit enhancement, the credit risk of the transaction is directly tied to the credit risk of the underlying Green Tree classes," Fitch said. "The credit risk on some of the underlying classes has recently increased...."

Thirteen classes of IndyMac Manufactured Housing Contract pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 1997-1, classes A-2 to A-6, from AAA to AA, and class M, from B to CCC; series 1998-1, classes A-3 to A-5, from AAA to A, and class M, from B to CCC; and series 1998-2, classes A-2 to A-4, from AAA to AA. In addition, the ratings on two classes from series 1998-2 were affirmed. Fitch attributed the downgrades to higher-than-expected losses that have led to "the complete depletion of overcollateralization" on all three transactions. The rating agency noted that IndyMac exited the manufactured housing lending business in mid-1999, although it still services its loans. "In 2001, the servicing was centralized in Pasadena in an effort to leverage the mortgage platform and improve performance," Fitch said. "However, performance has remained poor since the centralization. Additionally, the lack of dealer relationships (as a result of exiting the origination business) coupled with the oversupply of repossessed homes in the marketplace, continues to put significant pressure on recovery rates."

Twenty-six classes from six Bombardier Capital Mortgage Inc. manufactured housing transactions have been downgraded by Fitch Ratings.In addition, the ratings on five classes were affirmed. Bombardier exited the manufactured housing retail lending industry in September 2001, but continues to service the loans from a center in Jacksonville, Fla., Fitch said. "A combination of underwriting and servicing problems have resulted in the highest cumulative losses of any MH issuer," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Ocwen Financial Corp., West Palm Beach, Fla., has reported net income of $4.8 million ($0.07 per share) for 2003, compared with a loss of $68.8 million ($1.02 per share) in 2002.For the fourth quarter, the company reported net income of $4.5 million ($0.07 per share), compared with a loss of $10.1 million ($0.15 per share) a year earlier. William C. Erbey, Ocwen's chairman and chief executive officer, noted the company's return to profitability, but said its servicing business faces "continuing challenges" from rising prepayment rates. "Prepayment speeds in the subprime sector that comprises the vast majority of our servicing portfolio continue at high levels, resulting in significant costs for this business," Mr. Erbey said. "During 2003, the combined cost of mortgage servicing rights amortization expense and interest on prepayments, which are reported as reductions of fee income, rose by $48 million, or 62%, over 2002 levels." As of Dec. 31, Ocwen serviced approximately $37.7 billion of loans, up 23% from $30.7 billion at year-end 2002, Ocwen said. The company can be found online at http://www.ocwen.com.

First Republic Bank, San Francisco, has priced a $65 million offering of depositary shares representing interests in preferred stock.Each depositary share has a liquidation preference of $25 and represents 1/40th of a share of 6.70% noncumulative perpetual series A preferred stock. First Republic, which specializes in real estate lending and certain other financial services, can be found on the Web at http://www.firstrepublic.com.

The ratings on three classes of Vanderbilt Mortgage and Finance Manufactured Housing securitizations have been placed on Rating Watch Negative by Fitch Ratings.The affected classes are class B-1 of series 2000-C, class 1B-1 of series 2000-D, and class 1B-1 of series 2001-B. In addition, 17 classes were upgraded and the ratings on 55 classes were affirmed. "Although losses allocated to the trust have been low due to Vanderbilt's practice of repurchasing defaulted loans out of the trust at par, the performance of the company's loans has been worse than initially expected," Fitch said. The rating agency can be found online at http://www.fitchratings.com.

IndyMac Bancorp Inc., Pasadena, Calif., the holding company for IndyMac Bank, has reported record net earnings of $171.3 million ($3.01 per share) for 2003, up 19% from earnings in 2002.Mortgage loan production totaled a record $30 billion, up 44% from the volume recorded the year before, IndyMac said. For the fourth quarter, the company reported earnings of $43.3 million ($0.75 per share), up 22% from the earnings recorded a year earlier. Mortgage loan production totaled $6.3 billion. "In line with our expectations, in this quarter alone we increased our share of the single-family residential mortgage market by 44% and grew our earning assets 13% with strong adjustable-rate, single-family mortgage production," said Michael W. Perry, IndyMac's chairman and chief executive officer. IndyMac declared a quarterly cash dividend of $0.25 per share, up from $0.20 per share in the previous quarter. The company can be found online at http://www.indymacbank.com.