Servicing

Citing clarifications by the state of New Jersey, Standard & Poor's Ratings Services has announced that it will permit the inclusion of additional New Jersey mortgage loans in structured finance deals rated by S&P.S&P said loans that may now be included in such deals are those defined as Home Loans, Covered Home Loans, Home Improvement Loans, and Manufactured Housing Loans under the New Jersey Home Ownership Security Act of 2002, which is to take effect Nov. 27. However, it will continue to exclude loans defined as High-Cost Home Loans because of "the potential for uncapped statutory and punitive damages," the rating agency said. S&P had announced previously that certain Covered Home Loans, Home Improvement Loans, and Manufactured Housing Loans would be excluded from S&P-rated deals. To qualify for an S&P rating, deals including such loans must carry a representation and warranty that the loans were originated in compliance with all applicable laws, and issuers will be required to show that their compliance procedures can effectively identify such loans and determine that they don't violate the aforementioned act. The rating agency can be found online at http://www.standardandpoors.com.

The Pacific Exchange has announced the initiation of trading in options on Accredited Home Lenders Holding Co., a San Diego-based subprime lender and servicer.The options will trade on the March expiration cycle, with limits set at 31,500 contracts. The exchange can be found on the Web at http://www.pacificex.com.

Countrywide Financial Corp., Calabasas, Calif., will hold a special meeting of stockholders on Jan. 9 to seek approval of a proposal to more than double the number of shares of common stock the company has the authority to issue.The company plans to increase the authorized number of shares from 240 million to 500 million. The company recently announced a 4-for-3 stock split, effected as a stock dividend, to be payable Dec. 17 to shareholders of record on Dec. 2. Countrywide's management said the proposed amendment is in the best interest of stockholders, primarily because it will allow for additional stock splits in the future, as well as facilitate the potential issuance of shares to support future company growth and maintain the company's stock-based employee compensation programs. Countrywide's stock closed down 1.50% (at $99.75) on Nov. 20, the day the share proposal was announced.

Fannie Mae has announced the promotion of six company officers, including five vice presidents.Emmanuel Bailey, previously director of human resources, has been named vice president for human resources. Joy Cianci, formerly a principal in Fannie Mae's electronic business division, has been named managing director for lender management and operations in e-business. Amy Edwards, previously a director in the controller's office, has been named vice president for e-business financial and business services. Ann Eiler, formerly a director of accounting and audit, has been named vice president for audit. Thomas King, previously regional counsel for the Chicago office, has been named vice president and deputy general counsel for strategic business initiatives. And Charles Rumfola, formerly director of marketing, has been named vice president for manufactured housing. Fannie Mae can be found online at http://www.fanniemae.com.

Carlton Advisory Services, a New York-based loan sale adviser, has been selected by an undisclosed institutional seller to market $141 million of performing residential mortgages.The loans are backed by properties in the United States and are primarily jumbo fixed-rate first mortgages. Preliminary bids are due Dec. 2 and final bids are due Dec. 18. Carlton can be found online at http://www.carltongroup.com.

Freddie Mac on Monday fired its director of shareholder relations, Robert Weiss, Mortgage Wire has learned.Mr. Weiss, who joined Freddie from Fannie Mae a few years back, could not be reached for comment. A woman answering the telephone in Freddie's investor relations department declined to discuss Mr. Weiss or even to answer questions on how his name is spelled. She forwarded a message to the company's public relations department, which had not responded as of MW's deadline on Thursday. Back in October Freddie reorganized its shareholder (investor) relations department. The firing of Mr. Weiss came a few days before Freddie Mac's planned restatement of earnings for 2000, 2001, and 2002. One analyst opined that Freddie Mac's IR department has always paled in comparison to Fannie's. "Fannie has always had an ample staff, is always attentive, and returns your phone calls promptly," said Sandler O'Neill analyst Mike McMahon. "Freddie's IR department has been the polar opposite. They're hard to get ahold of." Despite Freddie's woes, Mr. McMahon rates the company a "buy."

Class B of Residential Asset Mortgage Products Inc. home equity mortgage asset-backed pass-through certificates, series 2001-RZ2 groups I and II, has been placed on Rating Watch Negative by Fitch Ratings.In addition, the ratings on four other classes in the deal were affirmed and one class was upgraded. The Rating Watch action was attributed to a decline in overcollateralization, which represents the sole credit enhancement for the class. Fitch said the overcollateralization will start to be replenished after the class A-IO certificate matures in November and interest starts rebuilding the O/C.

Fannie Mae's chief operating officer told investors Wednesday that the company's low loss rate on high-risk home loans suggests that the secondary giant can expand further into the market for riskier home loans.Pointing out that Fannie Mae's credit losses have recently averaged less than half a basis point, vice chairman and COO Timothy Howard said the credit loss rate on Fannie Mae's portfolio of riskier loans is "substantially less" than the loss rate on the rest of its book of business, reflecting strong underwriting, pricing, and risk-sharing on riskier loan products. He said that trend "points to our ability to expand further" into the subprime mortgage market. However, he said credit losses are unsustainably low, and that a normal credit loss rate is "probably more in the range of two or three basis points." Fannie Mae can be found online at http://www.fanniemae.com.

An analyst at Deutsche Bank Securities Inc. has initiated coverage of Countrywide Financial Corp., Golden West Financial Corp., and Washington Mutual Inc.Neil Abromavage said mortgage-related stocks have "significantly outperformed" the equity market over the past two years, and that "we believe current valuations reflect much of the solid fundamental performance delivered during that time period." He added, however, that Deutsche Bank Securities is "thinking more cautiously about interest rate risk and the ripple effect of potential political and regulatory issues for the housing-related U.S. government-sponsored enterprises in 2004." The parent company, Deutsche Bank AG, can be found online at http://www.deutsche-bank.com.

Standard & Poor's has announced that it will continue to rate structured finance deals containing mortgages from Oklahoma and Illinois that are governed by legislation that takes effect on Jan. 1.The rating agency said violations of Oklahoma House Bill 1574 (an amendment to the state's predatory lending law) and the Illinois High Risk Home Loan Act could result in liability for the originators of "subsection 10 mortgage loans" in Oklahoma and "high-risk home loans" in Illinois, and for purchasers and assignees as well. For purchasers and assignees, the liability is capped in Oklahoma but may exceed the unpaid principal balance of the loan, while in Illinois it is limited to the amount required to reduce or extinguish the borrower's liability plus recovery costs, S&P said. For deals that do not include subsection 10 or high-risk home loans, S&P will require the issuer to provide a representation and warranty to that effect. For other deals, the issuer must demonstrate that its compliance procedures can identify such loans and determine that they comply with the law. S&P can be found online at http://www.standardandpoors.com.