Servicing

There was a total of $36.7 billion of primary new mortgage insurance written in September by the members of the Mortgage Insurance Cos. of America, up some 5% from August's $34.9 billion.Since July, the industry data has not included information from Radian Guaranty, Philadelphia, which dropped out of MICA in a policy dispute. The number of applications, which declined by 25,886 between July and August, fell another 10% or 26,624 between August and September, from 265,792 to 239,168. New pool risk written was $601.5 million, with $17.1 billion of pool risk in force. The cure/default ratio declined slightly between August and September from 91.2% down to 87.2%. New cures totaled 39,990, while defaults were at 42,432.

San Jose, Calif. is the most likely metropolitan area to see a decline in home prices in the United States, according to The PMI Risk Index.PMI Mortgage Insurance Co., the Walnut Creek, Calif.-based mortgage insurer that created the index, uses it as one of its tools to assess and manage risk levels in its own portfolio. As of October, the index value of the top 50 largest metropolitan areas was 162, meaning these cities have on average a 16.2% probability of experiencing a home price decline in the next two years. The index for San Jose is 437. The other cities at the top of the scale are Portland Ore.-Vancouver, Wash. at 370; Detroit, 306; Seattle-Bellevue, Everett, Wash., 297; and Dallas, 297. At the other end of the scale are Riverside-San Bernardino, Calif., 63; Nassau-Suffolk (Long Island), N.Y., 74; Baltimore, 74; Las Vegas, 79; and Miami, 83.

IndyMac Bancorp Inc., Pasadena, Calif., the holding company for IndyMac Bank, has reported record net earnings of $49.7 million ($0.87 per share) for the third quarter, up 34% from earnings in the third quarter of 2002.Mortgage loan production totaled a record $8.5 billion in the third quarter, up 64% from the volume recorded a year earlier, IndyMac said. "Based on our ratelocks and pipeline at the end of the third quarter, our forecast for fourth-quarter production ranges from $5.8 billion to $6.6 billion, which represents a decline of 23% to 32% from the third quarter," said Michael W. Perry, IndyMac's chairman and chief executive officer. This would be significantly better than the 52% decline projected for the industry as a whole by the Mortgage Bankers Association of America, he noted. IndyMac declared a cash dividend of $0.20 per share, up from $0.15 per share in the previous quarter. The company can be found online at http://www.indymacbank.com.

The ratings on 128 classes from 43 manufactured housing deals by Conseco Finance Corp. (formerly Green Tree Financial Corp.) have been placed on review for possible downgrade by Moody's Investors Service.The actions were prompted by high levels of cumulative repossessions and losses, Moody's said. The repossessions were triggered by the company's suspension of its repossessed refinancing and default transfer-of-equity programs as well as poor industry conditions, the rating agency said. The suspension of the DTOE program "caused repossessions to spike because loans previously eligible for this program had to be reclassified as repossessions," Moody's said. "In addition, since Conseco's exit from the MH origination business, the company has been forced to liquidate repossessed units through wholesale channels rather than retail channels," Moody's said. This led to lower recovery rates and higher loss severities. The rating agency can be found online at http://www.moodys.com.

A little less than a third of the homeowners who refinanced their homes in the third quarter got a mortgage at least 5% larger than the original loan, unchanged from the 32% figure recorded in the previous quarter, according to Freddie Mac.The figure was down from 44% in the third quarter of 2002, the government-sponsored enterprise said in its quarterly refinance review. "Over the past three months, mortgage rates began to rise slightly," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "Not surprisingly, we then started to see overall refinancing begin to fall off somewhat from previously high record levels earlier in the year." Freddie Mac can be found online at http://www.freddiemac.com.

NovaStar Mortgage Inc., Kansas City, Mo., has announced that it will cease doing business in New Jersey on Nov. 27 until a new state law imposing unlimited assignee liability is amended.NMI said rating agencies have indicated that, as of Nov. 27 (when the New Jersey Home Ownership Security Act of 2002 takes effect), they will not rate structured finance deals that include all forms of cash-out refinancing. The agencies have cited a lack of clarity about potential damages under the new law, NMI said, and the company wants the law's uncapped assignee liability to be limited. NMI noted that its parent company, NovaStar Financial Inc., is a real estate investment trust that invests in mortgage securities backed by mortgage loans originated by NMI. "A large percentage of mortgage securities with collateral in New Jersey will be unrated and, therefore, will not be marketable, resulting in NovaStar's decision to cease doing business in the state," NMI said.

Freddie Mac has decided to become a more active buyer of its newly issued mortgage-backed securities to prop up the pricing of its MBS, which are called participation certificates.The secondary market agency also announced that it plans to sell its holdings of Fannie Mae MBS to fund the purchases. At the beginning of this year, Freddie Mac held $77.0 billion in Fannie Mae MBS, according to the Office of Federal Housing Enterprise Oversight. "The sale of Fannie Mae securities will facilitate the funding of TBA PC purchases...," according to an information supplement dated Oct. 29. In recent weeks, Freddie Mac signaled that it will lower its guarantee fee to ensure that its bids for whole loans is competitive with Fannie's. This temporary policy is designed to make Freddie more competitive and to improve the pricing of its PCs. "If Freddie Mac's price performance strategies are not successful over the long term, this could have a material adverse effect on the profitability of Freddie Mac's securitization business," the information supplement says.

The common shares of Neuberger Berman Real Estate Securities Income Fund, a new closed-end management investment company, have begun trading on the American Stock Exchange under the ticker symbol NRO.Amex said the fund is issuing 29 million common shares at an initial price of $15 per share. The lead manager of the underwriting syndicate is Citigroup Global Markets, and the specialist for the fund is LaBranche & Co. The fund will normally invest at least 90% of its total assets in income-producing common equity securities, preferred securities, securities convertible into equity securities, and nonconvertible equity securities issued by real estate companies, Amex said. Amex can be found online at http://www.amex.com.

Freddie Mac has announced that it is encouraging its servicers to help borrowers affected by the wildfires in Southern California.The company's disaster relief guidelines, which are designed to allow victims to avoid further financial damage, allow affected Freddie Mac borrowers to reduce or suspend mortgage payments for up to one year. The company is also asking servicers to waive assessments of penalties or late fees to victims of the fires, not to report forbearance or delinquencies caused by the fires, and to expedite the release of insurance claims.

The PMI Group, Walnut Creek, Calif., has priced an offering of 5 million shares of common stock at $38.20 per share and a concurrent offering of 12 million 5.875% equity units at $25 per share.The gross proceeds of the stock sale are expected to total $191 million, and the gross proceeds of the equity unit sale are projected at $300 million. PMI said it plans to use the net proceeds of the offerings to fund a portion of its previously announced investment in Financial Guaranty Insurance Co. as well as for general corporate purposes. PMI Group can be found online at http://www.pmigroup.com.