Servicing

The overall delinquency rate for home loans declined by 11 basis points to 4.66% in the third quarter, according to the Mortgage Bankers Association of America.The MBA's quarterly delinquency survey, which now tracks subprime loans in addition to prime conventional loans and loans backed by the government, showed improved loan performance in all categories. The MBA survey found that 3.06% of conventional loans were 30 days or more late on repayment in the third quarter, down from 3.20% in the second quarter. The delinquency rate for loans backed by the Federal Housing Administration fell 19 bps, to 11.62%, and the rate for loans backed by the Department of Veterans Affairs also fell 19 bps, to 7.81%. While warning that its subprime database is not yet representative of the entire sector, the MBA said 14.28% of the subprime loans in its conventional loan category were late in the third quarter, also down from the previous quarter. MBA chief economist Doug Duncan told reporters that the subprime delinquency rate will likely move "much lower" as additional subprime lenders are recruited to participate in the survey, because the current database includes several lenders that specialize in servicing particularly high-risk and high-delinquency loans. The MBA can be found online at http://www.mbaa.org.

Analysts included in Zacks.com's All Star Analyst Survey have recommended the stocks of Fannie Mae, Freddie Mac, American Home Mortgage Holdings Inc., Federated Investors Inc., and Washington Mutual Inc.The five stocks were the analysts' top recommendations in the finance sector. The Zacks all-star survey, created with Fortune magazine, can be found online at http://allstarpickshome.zacks.com.

Twenty classes of mezzanine and subordinate bonds in six securitizations issued by GE Capital Mortgage Services Inc. from 1996 through 1999 have been downgraded by Moody's Investors Service.The affected transactions -- series 1996-HE3, 1997-HE2, 1997-HE3, 1997-HE4, 1998-HE1, and 1999-HE2 -- are securitizations of seasoned fixed-rate, first- and second-lien, subprime residential mortgage loans. Moody's attributed the downgrades to low credit enhancement levels, stemming from poor performance by the deals, compared with projected future losses. "The pool performance was originally expected to be stronger than an average subprime mortgage pool," the rating agency said. "However, the performance to date has been below expectations. As of the October 2002 reporting date, cumulative losses to date range from 1.50% for the 1998-HE1 transaction to 2.60% for the 1997-HE2 transaction." GE Capital Mortgage Services was the original master servicer for the transactions, but the company is no longer in the servicing business, Moody's noted. Wells Fargo Mortgage Minnesota NA has taken over the servicing. The rating agency can be found online at http://www.moodys.com.

Brookfield Properties Corp., has announced that it will proceed with the spin-out of its U.S. homebuilding subsidiary, Brookfield Homes Corp.Brookfield Properties said it had received a go-ahead from the Securities and Exchange Commission for the spin-out, which will be effective Jan. 6. The shares of the subsidiary will trade on the New York Stock Exchange under the symbol BHS. Brookfield Properties has dual headquarters in New York and Toronto. It can be found on the Web at http://www.brookfieldproperties.com.

The volume of primary new mortgage insurance written rose in November thanks to a surge in bulk insurance, according to data collected by the Mortgage Insurance Cos. of America.Mortgage insurance firms wrote $25.56 billion of traditional MI and $4.45 billion of bulk MI in November, for a total of $30.11 billion. The amount of traditional insurance written was off 0.3% from October's total, but bulk volume surged 133.7%. Applications decreased by 4% to 269,436 in November. New pool risk written totaled $668.1 million, a 184% increase from that of October. The cure/default ratio increased from 80.6% in October to 88.4% in November. MICA can be found on the Web at www.micadc.org.

Fitch Ratings has raised the residential primary servicer rating of CitiMortgage Inc., St. Louis, from RPS1-minus to RPS1 for prime loans.The upgrade was based on CitiMortgage's "experienced management team, solid collateral performance, state-of-the-art risk management tools, comprehensive training programs, and the financial strength of its parent Citigroup, which is rated AA-plus by Fitch," the rating agency said. Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating. The rating agency can be found online at http://www.fitchratings.com.

The stocks of Fannie Mae and Prudential Financial Inc. have made it onto the Brokerage Firm Buy List portfolio of Zacks.com, Chicago.Zacks said the portfolio consists of stocks that currently appear on the core recommended lists of at least three of the top 15 brokerage firms. Regarding Fannie Mae, Zacks noted that it has beaten Wall Street earnings-per-share estimates in three of the past four quarters. "Recently [Fannie Mae] went through a new risk-based capital test designed to test whether the mortgage finance companies have enough capital to weather a lengthy downturn in the U.S. economy," Zacks.com said. "The company passed with flying colors and renewed confidence with analysts." As for Prudential -- whose subsidiaries include Prudential Mortgage Capital Co. and Prudential Real Estate Investors -- Zacks said such investment companies normally see rising traffic in December and January "as investors rush to make retirement contributions and save year-end bonuses." Pru recently committed to achieve $300 million in cost savings in 2003 and 2004, which "sent several major brokerage firms scrambling to add Pru to their core recommendations list," the company said. Zacks can be found online at http://www.zacks.com.

Sales of existing single-family homes fell 3.5% in November -- the sixth-highest monthly rate ever -- while price appreciation nearly hit 10% last month.The National Association of Realtors reported that single-family resales fell from 5.76 million in October to a seasonally adjusted annual rate of 5.56 million in November. "For the last three months [September, October, and November] existing-home sales have averaged 5.59 million units -- an extraordinarily high level of activity," NAR chief economist David Lereah told reporters. Looking ahead, the NAR economist said he does not expect 30-year mortgage rates to move above 6.6% in 2003, but he does expect the housing market to cool somewhat while remaining relatively strong. "There should be some cooling of the housing markets entering 2003," Mr. Lereah said. "Price appreciation should cool as well." The median existing-home price was $161,400 in November, up 9.7% from that of a year earlier. The current record is 10.6%, set in July 1987. With one month to go, the NAR economist estimates that median home price appreciation will come in at 7% for calendar year 2002.

Twelve classes of Oakwood manufactured housing Transactions have been downgraded from CCC to C by Fitch Ratings.The downgrades were as follows: the B-2 classes of series 1996-A, 1996-B, and 1996-C, and the B-2 limited-guarantee classes of series 1997-A, 1997-B, 1997-C, 1997-D, 1998-B, 1998-C, 1999-A, 1999-B, and 1999-C. Fitch said Oakwood Homes did not make guarantee payments to the bonds after its Chapter 11 bankruptcy filing Nov. 15. Moreover, servicing of its manufactured housing portfolio was transferred to Oakwood Servicing Holdings Co., a newly created limited-purpose subsidiary of Oakwood Acceptance Corp. With that transfer, all servicing fees -- some of which had previously been subordinated to the bonds -- will now be paid first, reducing the available cash payable to the deals, Fitch said. If losses are greater than the excess spread, the B-2 classes will incur a principal writedown. The rating agency can be found on the Web at http://www.fitchratings.com.

Washington Mutual, Inc. is seeking release of an escrow account (valued at more than $700 million in stock and cash) it set up six years ago as part of its acquisition of a California thrift formerly know as American Savings Bank.This escrow account was designed to reimburse ASB investors for an estimated $500 million in "goodwill" claims against the U.S. government. If the escrow is released, those investors, including the Federal Deposit Insurance Corp, would lose any chance of receiving restitution from the government for the breach of a goodwill contract made to ASB in the 1980s by the former savings and loans deposit insurance fund. So far, the long-running goodwill litigation has yielded only a partial summary judgment and WAMU contends the six-year escrow agreement expired as of Dec. 20. But the FDIC wants a four-year extension of the escrow agreement to ensure it remains in line to share in any possible award. The two parties have entered into negotiations. Once the escrow account is released, all proceeds from the goodwill case would go to WaMu. The escrow account currently holds 18 million shares of WaMu common stock and $85 million in cash from dividends and interest.