Servicing

Issuance of second-lien mortgage-backed securities reached more than $6.5 billion in the first quarter, putting this segment of the market on track for a record-breaking year, according to Moody's Investors Service."The higher issuance volume is mainly driven by the popularity of second-lien products for both borrowers and lenders," Moody's said in a report written by Marjan Riggi, a vice president and senior analyst. "Given property price appreciation and low interest rates, the increased equity in the borrowers' homes has provided them the opportunity to take out a second loan on considerably better terms than credit cards or other consumer loans." Moody's can be found online at http://www.moodys.com.

Mortgage lenders added over 10,000 employees to their payrolls in May as the refinancing boom and record home sales continued to stretch industry capacity, according to an estimate based on data from the U.S. Bureau of Labor Statistics.Using BLS data released July 2, MortgageWire estimates that employment in the mortgage banker/broker sector jumped from 398,100 in April to 409,000 in May. Owing to changes announced last month, the BLS no longer provides an official estimate of employment in the mortgage industry. MW's estimate uses two BLS data series from the June employment report to approximate the employment numbers for May. The BLS can be found online at http://stats.bls.gov.

David S. Loeb, co-founder of Countrywide Credit Industries and IndyMac Bancorp Inc., died June 30 in Sparks, Nev., at the age of 79, IndyMac has reported.Mr. Loeb, who was also chairman emeritus of IndyMac, co-founded Countrywide (now Countrywide Financial Corp.) with Angelo Mozilo in 1969 and served as its president and chairman from March 1969 through February 2000. In 1985, Messrs. Loeb and Mozilo founded Countrywide Mortgage Investments Inc., a real estate investment trust, which evolved into IndyMac Bancorp, IndyMac said. "David was a giant in the mortgage industry," said Michael W. Perry, IndyMac's chairman and chief executive officer. ".... His wisdom and industry experience, coupled with his strategic vision, strongly influenced IndyMac's foundation and helped us become what we are today. He was also a great mentor and friend, and we will miss him."

Matrix Bancorp Inc., Denver, has announced the renaming of its subsidiary Matrix Capital Markets Inc. to Matrix Bancorp Trading Inc.Richard V. Schmitz, co-chief executive officer of Matrix Bancorp and chairman of the subsidiary, said the name change "will allow the subsidiary's customers to more readily identify the company as a subsidiary of Matrix Bancorp." The subsidiary provides consulting services to financial institutions and financial services companies in the mortgage banking industry. The parent company can be found on the Web at http://www.matrixbancorp.com.

New Century Financial Corp., Irvine, Calif., has announced plans for a private placement of $175 million of convertible senior notes due 2008.An additional $35 million of the notes may be issued at the option of the initial purchasers, New Century said. The company plans to use the net proceeds of the offering for a variety of purposes, including securitizations, stock repurchases, and the purchase of call options on its common stock from an affiliate of one of the initial purchasers. New Century can be found on the Web at http://www.ncen.com.

Foreclosure rates remain high in the San Francisco Bay area and are rising in the Chicago metropolitan area, according to an online seller of foreclosed property.Foreclosures.com says the pace of foreclosures in Chicago "continues at near epidemic levels." In any given week, 1,300 to 1,500 foreclosure cases are pending in the six-county Chicagoland area. Alexis McGee, president of Foreclosures.com, said a troubling trend in Chicago is a steady increase in subprime loans going into foreclosure, in both the inner city and the suburbs. "The Chicago area has been a prime hunting ground for predatory lenders for several years, and now we're seeing the fallout," she said. The Fair Oaks, Calif.-based company also says job losses and protracted unemployment in some Northern California markets portend additional foreclosures in that region in the second half of this year.

Fitch Ratings will not rate residential mortgage-backed securities containing high-cost loans from Kentucky, the rating agency has announced.Fitch cited the uncapped assignee liability on high-cost loans as the reason for its decision, which came several days after Kentucky's anti-predatory lending law took effect June 24. Kentucky’s law does have a safe-harbor provision, saying that purchasers of loan pools are liable only if the violation is apparent on the face of the disclosure and promissory note. But Fitch said the process for determining the standard is too vague. Rival rating agency Standard & Poor's recently announced that the safe harbor allowed it to continue rating RMBS transactions with high-cost loans from Kentucky. Fitch can be found online at http://www.fitchratings.com.

A Freddie Mac portfolio manager told conference attendees Wednesday that he believes interest rate or credit-related market dislocations may lie ahead in the mortgage-backed securities sector and said the company will be able to help support dislocated markets if their liquidity dries up."We view ourselves as providing liquidity to the Street," Byron L. Boston, vice president of mortgage portfolio management, told attendees at the American Securitization Forum's first annual meeting in New York. He noted that in the past the government-sponsored enterprises have stayed in the market to support it when others have not. He also said Freddie Mac has concerns about the subprime sector but invests in it despite these concerns because that investment allows the GSE to help serve areas that would otherwise be underserved. The American Securitization Forum can be found on the Web at http://www.americansecuritization.com.

Conseco Finance Corp., St. Paul, Minn., has announced the completion of an $850 million asset sale to Green Tree Investment Holdings LLC.The sale followed the bankruptcy court's conditional approval of CFC's third amended plan of reorganization on June 19. Conseco said the assets include the servicing businesses for manufactured housing, home equity, and home improvement loans; the agency business; securities; and loan receivables. The assets will be operated under the name Green Tree, which was the name of CFC before it was acquired by Conseco Inc., Carmel, Ind. Green Tree Investment Holdings is a joint venture among affiliates of Fortress Investment Group LLC, Cerberus Capital Management, and JC Flowers & Co.

Freddie Mac is promising to release the "principal findings" of an internal investigation into the company's accounting mess later this summer, which could shed more light on the firing of its former president David Glenn.Freddie Mac's board of directors hired an outside counsel, James Doty, to conduct an inquiry into the accounting decisions that resulted in an underreporting of the secondary mortgage giant's earnings. Mr. Doty is a partner at Baker Botts in Washington. The board allegedly fired Mr. Glenn for not cooperating with Mr. Doty's inquiry. The board's counsel also is expected to address the issue of whether Freddie Mac officials deliberately adopted certain accounting interpretations involving derivatives and investment classifications to smooth out earnings over time. Mr. Doty plans to present an interim report to the board of directors in July and a final report before the end of September. "Freddie Mac expects to make public Board Counsel's principal findings following those presentations," the company said.