Servicing

A subsidiary of Capital Automotive REIT, McLean, Va., has issued $228 million of triple-net-lease mortgage notes, series 2003-1.CARS, a real estate investment trust that acquires real property and improvements used by operators of multifranchised automotive dealerships, said the fixed-rate notes are collateralized by 50 automotive retail properties subject to long-term, triple-net leases. The $109 million of class A-1 notes mature on Sept. 25, 2015 and are fully amortizing, while the $119 million of class A-2 notes mature on March 25, 2019 and are based on a 20-year amortization schedule, the REIT said. Credit Suisse First Boston acted as the lead manager of the transaction, which was privately placed, and Salomon Smith Barney was co-manager. The REIT can be found online at http://www.capitalautomotive.com.

Standard & Poor's Ratings Services has announced that it will rate structured finance transactions that include New York loans governed by the state's predatory lending law (which takes effect April 1), provided that any potential assignee liability is covered in full under S&P criteria.S&P said the law sets forth calculations and thresholds for determining what constitutes a high-cost loan, so lenders who wish to avoid making them should be able to do so. "For lenders that choose to make high-cost loans, the law prohibits certain practices and sets forth certain tests that must be adhered to," S&P said. ".... [V]iolations could result in liability for the originator of the high-cost loans as well as for purchasers and assignees." The liability -- in the form of a set-off or counterclaim to foreclosure actions or other actions to collect on delinquent loans -- is capped, but it may exceed the unpaid principal balance of the loan, S&P said. For deals that do not include high-cost loans, S&P will require the issuer to provide a representation and warranty to that effect. For other deals, the issuer must warrant that the high-cost loans comply with the law. S&P can be found online at http://www.standardandpoors.com.

The delinquency rate on credit card and home equity loans rose late last year, suggesting that consumer debt remains soft, according to the American Bankers Association.The ABA's quarterly Consumer Credit Delinquency Bulletin showed that the delinquency rate on closed-end home equity loans rose to 1.64% in the fourth quarter from 1.38% in the third. However, the delinquency rate on home equity lines of credit inched down 2 basis points to 0.56%. Home equity lines have the lowest delinquency rate of any consumer loan category tracked by the ABA. Meanwhile, credit card delinquencies, sometimes considered a harbinger of overall consumer credit quality, rose to a record 4.07%, the ABA said. The trade group can be found online at http://www.aba.com.

Alex J. Pollock, president and chief executive officer of the Federal Home Loan Bank of Chicago, has been named to the board of directors of Allied Capital, Washington.Allied Capital noted that Mr. Pollock is the architect of the Chicago FHLBank's Mortgage Partnership Finance Program. Although he and another newly appointed independent director, consultant Ann Torre Grant, will serve on the board effective immediately, they must stand for election in May at Allied Capital's annual stockholders' meeting. Allied Capital is a business development company, and it invests in non-investment-grade commercial mortgage-backed securities. It can be found online at http://www.alliedcapital.com.

Moody's Investors Service has announced that New York State home loans originated after April 1, 2003 -- the effective date of the state's predatory lending act -- may be included in residential mortgage-backed securitizations without increasing risk to investors as long as they are not "high-cost" loans.Moody's said the inclusion of small amounts of high-cost loans in RMBS would be considered on a case-by-case basis because of increased risk. Christine Lachnicht, a Moody's vice president and senior analyst, said the New York law provides clear standards that define the threshold between home loans and high-cost loans that should enable lenders to establish effective compliance procedures. Moreover, the act limits assignee liability for noncompliant high-cost loans. The rating agency said New York home loans may be included in securitizations without adverse credit impact if the issuer demonstrates adequate procedures to ensure compliance with the act. "Generally speaking, a high-cost loan transaction could pass muster if 2% of the pool or less consists of New York high-cost loans that fit neatly within clear, objective standards for compliance," Ms. Lachnicht said. Moody's can be found online at http://www.moodys.com.

The risk to federally insured depository institutions of holding large concentrations of Fannie Mae and Freddie Mac mortgage-backed and corporate debt securities is being monitored by the Treasury Department, according to a Treasury official."Concentration is your enemy -- you want to be careful," said Wayne Abernathy, assistant secretary of the Treasury for financial institutions, in a question-and-answer session following his speech at a Ginnie Mae investor symposium. Mr. Abernathy said the department is awaiting the results of a study requested by Rep. Richard Baker, R-La., that is designed to size up GSE security concentration risk at depositories.

Fitch Ratings has announced that it is undertaking a comprehensive review of subprime mortgage securitizations that it plans to complete by the end of the year.The review, beginning with the earliest transactions, will cover all the more than 875 subprime securitizations rated by Fitch, as well as nearly 150 manufactured housing deals and more than 150 net-interest-margin deals, the rating agency said. The performance review will consider factors such as: valuing excess spread by making assumptions about prepayments and the timing of loss allocations; working with servicers to determine loss severity and cure rates and to assess the timing of delinquencies and foreclosures; and examining the quality of remaining collateral and the nature of unusual structural features. "In addition, as part of its ongoing analysis, Fitch identifies transactions which are performing outside of original expectations through an internal screening process which monitors numerous performance variables," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Freddie Mac has announced that it will delay the release of its first-quarter earnings until previously announced financial restatements are completed so the results can be reported on a consistent basis with the restated periods.The government-sponsored enterprise said the restatement process is on track and is expected to be completed by the end of the second quarter. The restatements will include annual financial results for 2002, 2001, and 2000 and quarterly financial results for 2002 and 2001. Freddie Mac said it will publish other information about the corporation’s first-quarter performance in late April, including business volume and the results for credit and interest-rate risk management. The restatements and related re-audit stem from the GSE's re-evaluation, in conjunction with its new auditor, PricewaterhouseCoopers, of certain accounting policies previously used by Freddie Mac and concurred with by its prior auditor, Freddie Mac said. The GSE can be found online at http://www.freddiemac.com.

The market for residential mortgage-backed securities is "well protected" from the potential economic impact of the war in Iraq, according to Fitch Ratings.The rating agency said the economy will probably suffer "slightly" from the war in the form of reduced travel and tourism, but that this would affect certain areas -- such as Orlando, Fla. -- more than others. "The geographic diversity and credit enhancement structured into RMBS deals should adequately address the economic impacts of the war and the possibility of terrorism," Fitch said. "However, the war will push some borrowers, already teetering on the edge of default as a result of the prewar economic malaise, over the edge." The rating agency said the effect of any terrorism on RMBS pools would likely be "very limited" as long as the pool is "reasonably" diverse geographically and borrowers do not depend on a few localized industries or military bases. Fitch can be found online at http://www.fitchratings.com.

The percentage of homeowners who were delinquent on their mortgage payments dropped late last year despite a modest increase in the share of loans that were in foreclosure, according to the Mortgage Bankers Association of America.Doug Duncan, chief economist of the MBA, said delinquencies likely peaked in the second quarter of last year, while foreclosures are still working their way through the system. Overall, 4.53% of home loans were delinquent at the end of 2002, down 13 basis points from the level of three months earlier. The percentage of loans in the foreclosure process was 1.18% in the fourth quarter, up 3 bps from that of the third quarter. However, the number of loans entering the foreclosure process fell in the fourth quarter, providing further evidence that late-payment problems may have peaked, though Mr. Duncan said he remains cautious about the employment situation. The MBA can be found online at http://www.mbaa.org.