Servicing

Thornburg Mortgage Inc., Santa Fe, N.M., has priced an offering of 3.2 million shares of common stock at $20 per share.Net proceeds from the transaction, which are estimated at $60.7 million, will be used mainly to fund loans originated by the company and to buy additional adjustable-rate mortgage securities, Thornburg said. UBS Warburg acted as the book-running lead manager for the transaction. A.G. Edwards & Sons Inc. was the co-lead manager, and U.S. Bancorp Piper Jaffray and Wachovia Securities Inc. acted as co-managers. The underwriters have been granted a 30-day option to buy up to an additional 480,000 shares of common stock to cover any overallotments. Thornburg can be found online at http://www.thornburg.com.

Municipal Mortgage & Equity LLC, Baltimore, has completed an offering of 2.8 million shares of common stock at $23.60 per share.Net proceeds from the transaction are estimated at $62.3 million, MuniMae said. The offering was managed by RBC Capital Markets, Merrill Lynch & Co., UBS Warburg, Legg Mason Wood Walker Inc. and Wachovia Securities. The underwriters have been granted an option to buy up to an additional 420,000 shares of common stock to cover any overallotments. MuniMae can be found on the Web at http://www.munimaemidland.com.

More community banks and thrifts sold residential mortgage loans into the secondary market last year, but the sales still represented only 45% of their loan production, according to an annual survey by America's Community Bankers.The ACB survey found that 72% of the respondents sold loans to secondary market agencies and private wholesalers in the first nine months of 2002, up from 55% in 2001. The 315 respondents sold $22.5 billion in residential mortgage loans, including $9.5 billion to Fannie Mae, $7.6 billion to private wholesalers/conduits, and $3.2 billion to Freddie Mac. However, they still retained $22.5 billion in originations on their books. The author of the survey, ACB senior financial economist Steven Davidson, pointed out that the smaller community banks tend to do more business with Freddie Mac, while the larger banks (with more than $1 billion in assets) tend to do more business with Fannie Mae. Only 9% of the banks and thrifts in the survey participate in the Federal Home Loan Banks' Mortgage Partnership Finance program and the Mortgage Purchase Program, and they sold $888,000 in loans to the FHLBanks. ACB can be found online at http://www.acbankers.org.

Freddie Mac has priced $3 billion of 2.375% three-year Reference Notes due April 15, 2006.The issue (CUSIP 3134A4SX3) was priced at 99.673 to yield 2.483%, 81 basis points over that of two-year Treasury notes. The issue is scheduled to settle Feb. 7. Freddie Mac's website address is http://www.freddiemac.com.

GMAC Commercial Mortgage Corp., Horsham, Pa., tops the Mortgage Bankers Association of America's annual ranking of commercial loan servicers.At the end of 2002, GMAC was administering nearly $133.8 billion in master and primary servicing. Runner-up Wachovia Securities, Charlotte, N.C., handled $83.6 billion. In terms of loans, GMAC services nearly 50,900 mortgages, almost three times as many as the 13,876 loans handled by Wachovia, according to the MBA's tally, which was released at the group's annual Commercial Real Estate Finance/Multi-Family Housing Convention in San Diego. GMAC, GEMSA Loan Services, CapMark, and Prudential Asset Resources are the largest servicers for life companies and other private investors. The largest administrators of apartment loans by Fannie Mae and Freddie Mac are Berkshire Mortgage Finance, ARCS Commercial Mortgage, GMAC, and Prudential. GMAC, Reilly Mortgage, Prudential, Midland, and Greystone Servicing Corp. are the largest servicers of multifamily loans insured by the Federal Housing Administration.

Fitch Ratings has announced that it will not rate mortgage-backed securities deals containing mortgage loans covered by the Georgia Fair Lending Act, but said it would, under certain circumstances, rate deals with loans covered by predatory lending laws in other states.The unlimited assignee liability imposed by GFLA, which affects "high-cost" loans and subprime lending, has "caused significant disruption" in the residential MBS market, Fitch said, because it could result in losses to securitization trusts that "cannot be determined or estimated in advance." Predatory lending laws that place a cap on possible losses -- such as the soon-to-be-effective New York State Lending Act and pending amendments to the New Jersey State Lending Act -- do not present as great a problem for MBS deals containing loans covered by those laws, Fitch said. The rating agency said it would analyze each situation based on the provisions of each law. Fitch's announcement followed a recent decision by Standard & Poor's not to rate any structured finance deal that contains conforming-balance mortgage loans or manufactured housing loans covered by the Georgia law. More recently, Moody's Investors Service reported that it will heighten its scrutiny of such loans. Fitch can be found online at http://www.fitchratings.com.

Moody's Investors Service has announced that it will give heightened scrutiny to investor liability for securitized residential mortgages as a result of the Georgia Fair Lending Act.The act, which affects "high-cost" loans and subprime lending, has made the risk of including such loans in mortgage-backed securities deals "prohibitively high," the rating agency said, because it allows "potentially unlimited punitive damages" and extends liability to loan assignees such as securitization trusts. Moody's added, however, that "contemplated revisions to the act could reduce risks to securitization trusts and eliminate burdens that have effectively precluded the origination of certain loans in the state." The announcement by Moody's followed a recent decision by Standard & Poor's not to rate any structured finance deal that contains conforming-balance mortgage loans or manufactured housing loans covered by the Georgia law. Many lenders have exited the state since enactment of the GFLA. The Office of Thrift Supervision recently decreed that federal law pre-empts certain provisions of the act, which means federally chartered thrifts operating in Georgia will not be subject to those provisions. Moody's can be found online at http://www.moodys.com.

Steven Chiou has been named executive vice president and head of secondary marketing at Market Street Mortgage, a retail residential mortgage banking firm based in Clearwater, Fla.Before joining Market Street, Mr. Chiou served as executive vice president for capital markets at CTX Mortgage Co., Dallas, and worked for Fannie Mae in Dallas in several key management positions, Market Street said. “Given the likelihood that interest rates will go up in 2003, hedging is going to be the number one challenge [for the secondary market], as the volatility of rates will be much greater,” Mr. Chiou said. Market Street Mortgage is a subsidiary of NetBank, which can be found online at http://www.netbank.com.

Washington Mutual Inc., Seattle, has announced that it will begin expensing employee stock options.WaMu estimated that adopting the prospective method of accounting for the expensing of stock options will have no material effect on earnings per share this year, and will affect EPS by less than $0.05 per share in 2004. Kerry Killinger, WaMu's chairman, president, and chief executive officer, said stock options "will remain an important component of our incentive compensation...." The company can be found on the Web at http://www.wamu.com.

Fannie Mae chairman Franklin Raines has told investors that he wants to move away from the view that mortgages are a commodity and toward the notion that loan products can be custom-made.During a webcast from Salomon Smith Barney's financial services conference, Mr. Raines said the government-sponsored enterprise has about $1.4 billion in guarantee fees from upfront payments Fannie charges to offset the higher risk of newer products the company is offering in pursuit of that customization goal. He characterized these loans as part of the alternative-A credit risk market. Fannie Mae can be found online at http://www.fanniemae.com.