Servicing

Freddie Mac has followed Fannie Mae in tightening its underwriting guidelines on manufactured housing loans by cutting off existing owners from refinancing into 30-year loans.Under Freddie's new seller/servicer guidelines, MH owners can only refinance into a 20-year loan with a loan-to-value ratio no higher than 65%. "We have grave concerns about the impact of that change by both Freddie and Fannie on existing manufactured housing markets and the ability of existing homeowners to tap their equity," said Michael O'Brien, executive vice president of the Manufactured Housing Institute. Freddie also capped the LTV on 30-year purchase loans at 95%, but did not go to a 90% cap like Fannie. "We are pleased -- on the biggest issue, Freddie did not follow Fannie," Mr. O'Brien said. Freddie Mac's new MH guidelines go into effect Jan. 2, along with a new 50-basis-point delivery fee on MH loans. Freddie Mac can be found online at http://www.freddiemac.com.

Class III-B-5 of First Nationwide Trust mortgage pass-through certificates, series 1999-3 group 3, has been placed on Rating Watch Negative by Fitch Ratings.Fitch also upgraded two classes in the deal and affirmed the ratings on three others. The placement on Rating Watch Negative was attributed to loss levels and high delinquencies in relation to applicable credit support as of the September 2003 distribution date.

Fitch Ratings has lowered its minimum servicing fee requirement from 25 to 20 basis points for mortgage-backed securities backed by fixed-rate, prime jumbo mortgages.Fitch said that, because there is a move in the marketplace to reduce fees further, it is holding discussions with several third-party industry participants to get a better understanding of the cost of servicing for different portfolio sizes. "While Fitch believes that the cost to service is very low in today's prime jumbo environment, determining the appropriate cost for securitized jumbo residential MBS is difficult, as each servicer calculates its costs differently," the rating agency said. "Thus, a comparison between servicer costs cannot be made easily." Fitch said servicing fees should be a multiple of actual costs to take into account the possibility of economic stress. Fitch can be found online at http://www.fitchratings.com.

Five classes of senior and subordinate certificates of the Merit Securities Corp. Series 13 manufactured housing securitization are being reviewed for possible downgrade by Moody's Investors Service.The affected securities are classes A3, A4, M1, M2, and B1. Moody's said the review was prompted by weaker-than-anticipated performance by the manufactured housing loans in the collateral pool. "Because of the high cumulative losses and insufficient excess spread, overcollateralization in the transaction has dropped from 10% to 3% of the original pool balance," the rating agency said. Merit is a wholly owned subsidiary of Dynex Capital Inc., a financial services company based in Glen Allen, Va. Moody's can be found online at http://www.moodys.com.

Standard & Poor's Ratings Services has announced that it is evaluating its ratings on various residential mortgage-backed securities insured by General Electric Mortgage Insurance Corp. as a result of the recent lowering of GEMICO's counterparty credit and financial strength ratings.The ratings were lowered from AAA to AA after GEMICO said it would operate its domestic business at capital levels consistent with double-A ratings (which are prevalent in the industry) to free up excess capital. The RMBS transactions under review by S&P have been seasoned seven to 17 years, except for one that was issued in 2000, the rating agency said. The amortized loan-to-value ratios for many of the pools are below 60%. "In addition to current pool performance, Standard & Poor's will also take into consideration the market value appreciation, especially its impact on the underlying collateral during the past five years," said S&P credit analyst Ernestine Warner. "The amortized LTVs and credit enhancement structures will also be analyzed to determine if rating actions are warranted." S&P can be found online at http://www.standardandpoors.com.

The ratings on 16 classes in three Oakwood Mortgage Investors Inc. manufactured housing transactions have been lowered by Standard & Poor's and removed from CreditWatch with negative implications.The downgrades in OMI Trust 2002-A are as follows: classes A-2 to A-4, from AAA to AA-minus; class M-1, from AA to A-minus; class M-2, from A to BB-plus; and class B-1, from BBB to B. The downgrades in OMI Trust 2002-B are: classes A-2 to A-4, from AAA to AA-minus; class M-1, from AA to A-minus; class M-2, from A to BBB-minus; and class B-1, from BBB to BB-minus. The downgrades in OMI Trust 2002-C are: class A-1, from AAA to A-plus; class M-1, from AA to BBB-plus; class M-2, from A to BB-plus; and class B-1, from BBB to B-plus. In addition, S&P affirmed its ratings on four other classes from two of the deals and removed them from CreditWatch negative, the rating agency said. "The lowered ratings reflect the continued poor performance of the underlying pools of manufactured housing contracts and the resulting deterioration of credit enhancement," S&P said. Oakwood announced last November that it was filing for Chapter 11 bankruptcy protection.

In a new letter to shareholders, New York Federal Home Loan Bank president Alfred DelliBovi has revealed that losses on the FHLBank's portfolio sales will reduce its retained earnings to $90 million in the third quarter, down from $240 million at the end of the second quarter.The NY FHLBank sold over $1 billion in downgraded manufactured housing bonds for a loss of $183 million, and the new letter discloses another sale, involving $944 million in residential and business securities, which resulted in a $6.6 million loss. "We are nearing the completion of the review of our investment portfolio and expect no further significant issues," the Sept. 30 letter says. The remaining portfolio of mortgage-backed securities and residential asset-backed securities are rated AAA, he added. Following the MH bond sale, Standard & Poor's downgraded the NY bank's AAA credit rating to AA-plus -- but Moody's Investors Service reaffirmed its Aaa rating. "While we are disappointed with S&P's action, we believe Moody's decision to affirm our rating was a positive response to the sale of our uninsured manufactured housing bonds," Mr. DelliBovi said.

Washington Mutual, Seattle, the largest servicer of home mortgages in the United States, said late Tuesday that it has realigned its business units, and announced the retirement of its mortgage chief, Craig Davis. The sudden retirement of the 52-year-old Mr. Davis, effective immediately, comes three weeks after the company disclosed that it would book a loss in the third quarter in regard to mortgage loan sales because of problems in tracking loan commitments. Asked whether Mr. Davis' retirement is related to the anticipated loss on loan sales, a WaMu spokesman said the company's realignment "makes it less likely that operational difficulties will occur in the future." The spokesman added, "Craig chose to retire." Mr. Davis will remain as an adviser to WaMu until year-end. WaMu said it will realign its businesses around two groups: retail customers and commercial clients. Deanna Oppenheimer, president of WaMu's banking and financial services group, will be in charge of residential lending. In trading at midday Wednesday, WaMu's shares were down 1.27% to $38.87. (For more details, see the Oct. 6 issue of National Mortgage News.)

Delta Financial Corp., Woodbury, N.Y., has announced plans to redeem at par all outstanding 9.5% senior notes due 2004 on Oct. 30.Delta said the aggregate redemption price, including principal and accrued interest, is expected to be approximately $11 million. The company said it will have no unsecured long-term debt on its balance sheet after the redemption. Delta can be found online at http://www.deltafinancial.com.

Fitch Ratings has announced the addition of the alternative-A market sector to its Web-based RMBS Market Sector Performance Indices.The indices present mortgage delinquency statistics for the prime, alt-A, and subprime sectors by period of security issuance, and facilitates the comparison of performance over time, the rating agency said. The residential mortgage-backed securities indices include 60-day and 90-day delinquencies, foreclosures, real estate owned, a combined 60-day-plus status, and a short commentary on each sector's performance. The statistics and commentary are updated monthly. Fitch said the alt-A indices include Fitch-rated transactions, of all product types, for which the rating agency has a complete performance history, beginning with 1994 originations.