Servicing

Seven classes of notes issued by Prudential Structured Finance CBO I, which are supported in part by residential and commercial mortgage-backed securities, have been downgraded by Fitch Ratings.The downgrades were as follows: class A-1L floating rate notes and class A-1 fixed-rate notes, from AAA to AA-plus; class A-2L floating-rate notes, from A-minus to BBB-plus; class B-1L floating-rate notes and class B-1 fixed-rate notes, from BBB-minus to BB-plus; and class B-2L floating-rate notes and class B-2 fixed-rate notes, from BB-minus to B. Classes A-2L, B-1L, B-1, B-2L, and B-2 were also removed from Rating Watch Negative. The rating agency attributed the downgrades to various factors, including "substantial downward rating migration in the credit quality of the portfolio and a reduction in excess spread." The transaction, a collateralized bond obligation, is supported by a diversified portfolio of RMBS, CMBS, and asset-backed securities. Fitch can be found online at http://www.fitchratings.com.

Fannie Mae has named four new vice presidents, including two who have worked at the Department of Justice and another who was involved in developing Mexico's mortgage industry.The four are: Gabriel Galvan, vice president for emerging markets; Joseph Grassi III, vice president and deputy general counsel for multifamily legal services; Monica Medina, vice president and deputy general counsel for corporate governance; and Jon Seward, vice president and deputy general counsel for fair lending. Mr. Galvan has worked for several technology-related firms during his career, including IBM, and he was assigned to Mexico in 1995 and "was heavily involved in the development of the mortgage industry in that country," according to Fannie Mae. Mr. Grassi joined Fannie in 1994 -- from Freddie Mac. Ms. Medina was a partner in a private law firm and was previously deputy associate attorney general at the DOJ. Mr. Seward was a deputy chief at the DOJ and also a trial attorney in the fair housing division of the Department of Housing and Urban Development. Fannie Mae can be found online at http://www.fanniemae.com.

Standard & Poor's Ratings Services has withdrawn its Strong residential servicer ranking on First Nationwide Mortgage Corp., Frederick, Md., as a result of First Nationwide's recent name change to CitiMortgage Inc.S&P said First Nationwide has also been removed from its Select Servicer List. The name change followed the acquisition of First Nationwide's parent, Golden State Bancorp Inc., by Citigroup Inc., which operates its prime servicing platform under the CitiMortgage banner. CitiMortgage has indicated that it is not planning to close the Frederick servicing platform, S&P said. The rating agency can be found online at http://www.standardandpoors.com.

Wells Fargo & Co., San Francisco, has reported record net income of $1.49 billion ($0.88 per share) in the first quarter, up 8% from $1.38 billion ($0.80 per share) a year earlier.Wells Fargo's mortgage origination volume totaled $103 billion in the first quarter, the second-highest level in the company's history, and the mortgage pipeline ended the quarter at $89 billion, up 29% from the year-end level, the company said. The owned servicing portfolio totaled $552 billion at March 31. "Since March 31, 2002, the owned servicing portfolio is up $95 billion, the weighted average note for the portfolio has declined 62 basis points to 6.45%, and the value of the residential and commercial mortgage servicing rights has been reduced by over $2.9 billion to $4.2 billion," said Mark Oman, Wells Fargo's group executive vice president for home and consumer finance. The company can be found online at http://www.wellsfargo.com.

Standard & Poor's Rating Services, New York, has affirmed its Strong rating on Midland Loan Services Inc., a servicer, master servicer, and special servicer of commercial mortgages.The rating agency said the affirmation "reflects Midland's extensive track record of handling high volume of CMBS and other portfolio types with excellent procedures, demonstrated expertise, and appropriate controls." In another action, S&P assigned preliminary credit ratings to the class A and class B floating-rate notes to be issued by Vindex S.r.l., a special-purpose entity. The notes will be backed by a pool of residential and commercial nonperforming and performing loans originated in Italy. S&P can be found on the Web at http://www.standardandpoors.com.

Fannie Mae beat analysts' estimates for the first quarter, reporting net income of $1.94 billion, up 60.5% from the earnings recorded a year earlier.Earnings per share in the first quarter were $1.93, up from $1.17 in the first quarter of 2002. Fannie Mae said its core business earnings totaled $1.85 billion, up 22% from the first quarter of last year, or $1.84 per share. That's 11 cents higher than the consensus estimate of Wall Street analysts. Core earnings, an internal measure used by Fannie Mae, largely exclude the effect of changes to the accounting for interest rate hedging activities.

After evaluating a new technique employed by GMAC-RFC's servicer that originally appeared to pose new risks, Fitch determined that it was not necessary to increase credit enhancement levels for the company's March transactions, the rating agency said in a report released April 10.The ratings company pointed out that the new practice -- loan modification as an alternatives to foreclosures -- can be "a useful loss mitigation technique," the ability of the servicer to administer and report modifications within the parameters of the deal could present additional risks to the transaction. Fitch had been reviewing GMAC-RFC's process for selecting loans that could qualify for capitalization since before the new modification standards were finalized. Fitch can be found on the Web at http://www.fitchratings.com.

Fairbanks Capital Corp. -- the subject of a Federal investigation into its servicing practices -- has hired Valorie Kacherian of HomEq Servicing, Sacramento, Calif., to serve as its chief compliance officer, MortgageWire has learned.Moreover, a spokeswoman for Fairbanks confirmed to MW that the company, up until a year ago, didn't have a compliance department. The spokeswoman noted that even though the servicer did not establish an official compliance department until the first quarter of 2002, "there were always compliance people working at the company. They worked under the legal department." Ms. Kacherian joined the company April 1 to head the non-depository's compliance effort. Fairbanks is based in Salt Lake City. (See National Mortgage News issue of April 14 for full details.)

Six months ago at its annual convention, the Mortgage Bankers Association was looking for $1.8 trillion in loan originations in 2003.Two months ago, the MBA raised its forecast to $2 trillion. Now, Chief Economist Doug Duncan expects this year's volume to reach a "best ever" $2.6 trillion. "Half of that is already in the pipeline, so it's not too much a stretch" to believe loan production this year will top last year's record of $2.5 billion, Mr. Duncan said at the MBA's National Secondary Market Conference in New York. The economist expects 58% of this year's total to be refinancings, just about the same as the 59% recorded in 2002. But he thinks home sales will remain flat. Mr. Duncan also predicted "only a modest uptick" in mortgage rates over the year, to 6.1% in the third quarter and 6.3% in the fourth. "Rates will rise through the end of the year, but only modestly," the economist said. As for the overall economy, Mr. Duncan said jobs remain key. "War is on everyone's mind, but at the end of the day, jobs are what is going to make the difference," he said. Unfortunately, he is looking for the unemployment rate to rise. Over 400,000 jobs have been lost of the payroll side in the last two months, he pointed out.

In February, mortgage insurers underwrote $26 billion of new, primary MI coverage and the performance of existing policies improved, according to the Mortgage Insurance Cos. of America.The new insurance volume is down 6.5% from January's $27.8 billion. By category, February volume breaks down to $22.7 billion traditional and $3.3 billion bulk. Application volume declined by nearly 5% from January, from 247,955 to 236,050. For the first time in nearly a year, there are more primary insurance cures than there are defaults. There were 52,288 cures compared with 49,334 defaults for a ratio of 106%. The last time the ratio was over 100% was in March 2002. In January, the ratio hit a recent low of 75.9%.