Servicing

Moody's Investors Service has announced that, unlike Standard & Poor's Ratings Services and Fitch Ratings, it will continue to rate some residential mortgage-backed securities containing home loans defined as high-cost by the New Jersey Home Ownership Act.Moody's said, however, that the way it assesses the risk of high-cost home loan refinances will likely "eliminate their inclusion in future deals." The rating agency also said it will generally accept loan pools where no more than 2% of loans are high-cost New Jersey home loans, as long as those loans are purchase loans that "fit neatly within clear, objective standards for compliance." It set less strict requirements for covered home loans, a category defined by the law as being between high-cost home loans and home loans. For home loans that are not high-cost or covered loans, Moody's said it would only require appropriate due diligence for inclusion in RMBS transactions.

The high rate of residential foreclosures in Arizona is likely to continue as rising interest rates "cool briefly resurgent home price appreciation" in the Phoenix-Mesa metropolitan area, according to Foreclosures.com.Alexis McGee, president of the Sacramento, Calif.-based property investment advisory firm, said the market was nearly flat in the Phoenix-Mesa area in the first quarter, with price appreciation registering 3.4%. "We saw that move up to 6.8% year over year at the end of June," Ms. McGee said. "Then interest rates took off in July. That will knock home prices back down, and we expect defaults to increase again in coming months." Ms. McGee said many homeowners have been using their homes like ATM machines to pay off credit cards and buy expensive items like automobiles. "When rates go up and the price curve flattens out or declines, they find themselves trapped with more debt than they can handle," she said. The firm can be found on the Web at http://www.foreclosures.com.

Three classes of Structured Finance Advisors Collateralized Asset Backed Securities Trust II have been downgraded by Fitch Ratings.The downgrades were as follows: class B notes, from AA-minus to BBB-plus; class C notes, from BBB to B; and preference shares, from BB-minus to CCC. Class C and the preference shares were also removed from Rating Watch Negative, and the triple-A rating on class A was affirmed. SFA CABS II is a collateralized debt obligation supported by residential and commercial mortgage-backed securities, general asset-backed securities, and CDOs, Fitch said. The downgrades "reflect the ongoing downward migration in the credit quality of the portfolio," the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

Saxon Capital Inc., a residential mortgage lender and servicer based in Glen Allen, Va., has announced a $980.5 million securitization of nonconforming mortgage loans by a subsidiary.The securitization, Saxon Asset Securities Trust 2003-3, consists of 14 classes of fixed- and variable-rate certificates ranging in size from $8.5 million to $421.1 million, the company said. The lead manager of the deal was RBS Greenwich Capital, and the co-managers were Credit Suisse First Boston, J.P. Morgan, and Merrill Lynch & Co. The company can be found on the Web at http://www.saxoncapitalinc.com.

Fannie Mae has priced a $200 million offering of 5.5% fixed-rate, noncumulative preferred stock.The 4 million shares of Series N stock have a stated value of $50 per share, the government-sponsored enterprise said. Goldman, Sachs & Co. (the bookrunner) and Bear, Stearns & Co. served as co-lead manager for the issue. The co-managers were FTN Financial Capital Markets, Loop Capital Markets, Sandler O'Neill & Partners LP, Vining-Sparks IBG LP, and Wachovia Securities. Fannie Mae can be found online at http://www.fanniemae.com.

The rating on class F of Merrill Lynch Mortgage Investors Inc.'s mortgage pass-through certificates, series 1995-C3, has been lowered from B to B-minus by Standard & Poor's Ratings Services.S&P also raised the ratings on three classes in the deal and affirmed the ratings on two others. The rating agency said the actions reflect an increase in credit support levels from a 62% paydown of the loan pool and improved performance from the remaining properties, offset by potential losses associated with three real estate owned properties and three loans that have been delinquent for more than 90 days. S&P can be found online at http://www.standardandpoors.com.

Wells Fargo Home Mortgage has announced the activation of a toll-free telephone number for customers who have been affected by Hurricane Isabel and the related flooding.The number of the disaster call center is 1-888-818-9147. The company said the number can be dialed in Delaware, the District of Columbia, Maryland, New Jersey, North Carolina, Pennsylvania, Virginia, and West Virginia, and will be available as long as it is needed. The disaster call center team will be the lead contact for customers with mortgage questions related to the storm, Wells Fargo said. The company can be found online at http://www.wellsfargo.com.

Anworth Mortgage Asset Corp., Santa Monica, Calif., has indicated that it expects net income for the third quarter to be in the range of $0.29 to $0.32 per share, citing the high level of home mortgage prepayment activity in recent months.The real estate investment trust's net income and dividend per share for the second quarter both stood at $0.45. Lloyd McAdams, Anworth's chairman and chief executive officer, said that based on the prepayment reports released so far in September, the mortgage REIT expects a third-quarter prepayment rate of 46% CPR. This has called for increased premium amortization on the portfolio of the mortgage backed-securities investor and will affect earnings for the third quarter. However, considering the increase in mortgage rates and the "significant decline" in the Mortgage Bankers Association of America's refinancing index for the quarter to date, Anworth said it expects refi levels to decline in the fourth quarter and early 2004. Annaly Mortgage, Capstead Mortgage, and MFA Mortgage -- three other mortgage REITs whose primary business is MBS investments -- have made similar announcements recently.

Freddie Mac has announced a $100,000 donation for hurricane relief assistance and said it has asked mortgage servicers to extend payment relief to qualified borrowers in areas affected by Hurricane Isabel.The donation to the American Red Cross will go directly to support victims of Hurricane Isabel, the government-sponsored enterprise said. "We want to ensure that affected families keep their homes and that they receive services they need to get back on their feet," said Paul Peterson, Freddie Mac's chief operating officer.

Bank One Corp., Chicago, has announced an agreement to acquire Security Capital Research & Management Inc., an investment adviser and manager of real estate securities for institutional investors, from GE Real Estate.The terms of the agreement were not disclosed. The Chicago-based Security Capital, which manages approximately $3.5 billion in real estate investments, will become a wholly owned subsidiary of Banc One Investment Advisors, but will operate as a "distinct investment team," Bank One said. David J. Kundert, chief executive officer of Bank One's investment management group, said the acquisition "expands our growing asset management capabilities and bolsters our strategy to provide institutional clients with a wide range of high-performing products." The company can be found online at http://www.bankone.com.