Servicing

American Business Financial Services Inc., Bala Cynwyd, Pa., has closed a $376.2 million senior/subordinated mortgage loan securitization.Anthony J. Santilli, the company's chairman and chief executive officer, touted the fact that all the triple-A rated bonds in the deal (approximately 87% of the total) were purchased by an unnamed government-sponsored entity. "We have just completed our eighth year of securitizing mortgage loans, and have built a loan portfolio, which we manage and service for others, of more than $3.2 billion," Mr. Santilli said. The lead manager of the latest deal was Credit Suisse First Boston, and the co-manager was Bear, Stearns & Co. Inc. The company can be found on the Web at http://www.abfsonline.com.

Freddie Mac acquired $74.34 billion in mortgages during November, yet another record month for the secondary market giant.Moreover, its purchase commitments rose in November (from October), indicating that December will likely turn out to be another stellar month for the company. With one month left to report, Freddie Mac has purchased a record-breaking $551 billion in home mortgages in 2002. Its issuance of participation certificates totaled $473.8 billion through the first 11 months of the year. In November its portfolio grew to $549.38 billion, a 14% gain from a year earlier. Freddie's chief competitor in the secondary market, Fannie Mae, acquired $129.13 billion in home mortgages in November, a record for that company, too. Both government-sponsored enterprises have benefited from record production volumes in the primary market. It is anticipated that 2003 could be yet another $2 trillion-plus year for residential funders.

John D. Gellhausen has been appointed executive vice president of National City Corp., Cleveland.Mr. Gellhausen was recently named head of the company's National Consumer Finance business, which services, sells, and originates conforming mortgages and originates and services nonconforming mortgages. (The business includes National City Mortgage Co., First Franklin Financial Corp., National City Home Loan Services, and National Home Equity.) Mr. Gellhausen was previously president and chief operating officer of National City Mortgage, and senior vice president and corporate comptroller for National City Corp. The company can be found on the Internet at http://www.nationalcity.com.

The Bond Market Association has reported that a managing director at J.P. Morgan Securities will head its mortgage- and asset-backed securities division in 2003.The association said Kevin J. Finnerty of J.P. Morgan Securities will serve as chairman of the division and Patrick J. Augustine, managing director and head of sales, trading, and research at Bank of America, will serve as vice chairman. The association can be found on the Web at http://www.bondmarkets.com.

Twenty classes from five FMAC loan receivables transactions have been downgraded by Fitch Ratings.The downgrades in FMAC Loan Receivables Trust series were as follows: series 1997-B, classes A and A-X, from BBB to B, class B, from BB to CC, and class C, from CC to D; series 1997-C, classes A and A-X, from AA-minus to BBB; series 1998-A, classes A and A-X, from AA to BB, class B, from BBB to CCC, and class C, from B to C; series 1998-B, classes A and A-X, from A to B, and class B, from BB to CC; and series 1998-C, classes A-2 and A-3, from AAA to AA, class B, from AA to A-minus, class C, from A-minus to BBB-minus, class D, from BB-plus to CCC, class E, from B-minus to CC, and class F, from CCC to C. Classes A and B of series 1997-B, classes A, B, and C of series 1997-C, 1998-A, and 1998-B, and classes A-2 through F of series 1998-C will remain on Rating Watch Negative. The rating actions were based on projected recoveries on the cohort of loans that are more than 90 days delinquent or have defaulted, Fitch said. Fitch can be found online at http://www.fitchratings.com.

Eleven subordinate classes of home equity and home improvement deals issued by Conseco Finance Corp. (formerly Green Tree Financial Corp.) have been downgraded by Moody's Investors Service.The downgrades in Green Tree Home Improvement Loan Trust deals were as follows: series 1994-BI, class B-2, from Ba1 to B2; series 1994-CI, class B-2, from Ba1 to Caa2; series 1994-D, class B-2, from Ba3 to Caa3; series 1995-A, class B, from Ba1 to Caa2; series 1995-E, class Certificate, from Ba1 to B2; series 1995-F, class B-2, from Ba1 to Ba3; series 1996-A, class B-2, from Ba1 to Ba3; and series 1996-B, class A, from Ba1 to Ba3. The downgrades in Green Tree Home Improvement and Home Equity Loan Trust deals were: 1998-F, class B-2, from Ba2 to Caa2; and 1999-B, class B-2, from Ba2 to Caa3. In Conseco Finance Home Loan Trust 1999-G, class B-2 was downgraded from Ba2 to Caa2. The affected classes received a significant portion of their credit enhancement from a corporate guarantee from Conseco Finance Corp., which filed for bankruptcy Dec. 17. Moody's no longer relies on the corporate guarantee payments as credit enhancement, and the rating agency said excess spread alone may not be sufficient to cover expected losses for some of the transactions.

Early chargeoffs and serious delinquencies on home equity mortgage pools fell significantly after the first quarter, according to Moody's Investors Service, and the rating agency attributes the improvement to high issuance volume and improved subprime performance.In the latest update of the Moody's home equity index, analyst Henry Engelken said high issuance volume tends to "push down aggregate chargeoff and delinquency rates because newly securitized mortgage pools suffer few losses and serious delinquencies early in their lives." Because of refinancing and heavy issuance this year and last, subprime mortgage pools securitized in 2001 and 2002 now constitute more than half of the mortgages included in the Moody's Home Equity Index. Through August 2002, some $80.5 billion of subprime mortgage-backed securities had been issued this year. Moreover, this year's loans have "significantly outperformed previous vintage pools with the same seasoning," Moody's said. Pools securitized in the first quarter of 2002 have a serious delinquency rate that is only half the rate experienced on pools issued in the prior three quarters at a similar point in their life cycle. Moody's can be found online at http://www.moodys.com.

Delinquencies on home equity loans, home equity lines of credit, and mobile home loans all stayed flat or fell in the third quarter, according to the American Bankers Association.Mobile home loan delinquencies dropped to 5.38% from 5.81% in the second quarter. Delinquencies on home equity loans remained unchanged at 1.38% in the third quarter, while the delinquency rate on HELOCs fell to 0.58% from 0.64% the previous quarter, the ABA said. Overall, the ABA reported that the delinquency rate on a composite of all consumer loan types, including credit cards, declined in the third quarter, even as the dollar volume of delinquent accounts rose. The ABA can be found on the Web at http://www.aba.com.

Two classes of manufactured housing contract securitizations have been placed on Rating Watch Negative by Fitch Ratings.The affected securities are class B of FirstFed Corp. manufactured housing contracts, series 1997-2, and class B of Signal Securitization Corp. manufactured housing contracts, series 1997-3. The ratings on five other classes in three FirstFed deals and three other classes in three Signal deals were affirmed. The actions followed a review of FirstFed's and Signal's manufactured housing transactions. Fitch can be found on the Web at http://www.fitchratings.com.

The default risk on newly originated nonprime mortgage loans "remains at elevated levels," according to a quarterly report from University Financial Associates.The risk has risen by over 30% since 1998 as a result of a slowing economy, according to UFA's quarterly report. "The risk is rising because the accommodating interest rate policy of the Fed is not sufficient to offset the eroding prospects for both the consumer and the underlying housing collateral," said Dennis Capozza, professor of finance at the University of Michigan and a principal in UFA. The report analyzes the risk of future default for loans that are being originated today.