Servicing

Countrywide Credit Industries, Calabasas, Calif., has announced that its name has been changed to Countrywide Financial Corp. to reflect the company's evolution into a provider of diversified financial services.To commemorate the event, Angelo R. Mozilo, Countrywide's chairman, chief executive officer, and president, and Stanford L. Kurland, its chief operating officer, will ring the opening bell at the New York Stock Exchange on Nov. 13, when the company's new ticker symbol (CFC) will be introduced. In addition to Countrywide's mortgage banking operations via its Countrywide Home Loans subsidiary, the company now includes five other business segments: loan closing services through its LandSafe companies; insurance services through several subsidiaries; capital markets services via Countrywide Securities Corp.; banking services via Countrywide Bank, a division of Treasury Bank NA; and global mortgage processing and servicing via Global Home Loans. The company can be found on the Web at http://www.countrywide.com.

If you think the refinancing boom is close to being over, think again. A new report issued by Morgan Stanley & Co. says that 90.6% of outstanding mortgage-backed securities ($2.5 trillion) are refinanceable.In an interview with MortgageWire Nov. 11, Morgan analyst Ken Posner said he thinks the industry could produce $2 trillion in loans next year. Morgan Stanley bases its refi estimate "on the assumption that current spreads between mortgage rates and 10-year Treasuries are 200 bps and that mortgage rates are 50 bps above MBS coupons," the report says. "The size of the refi market will depend on how long rates stay at these levels." Mr. Posner made it clear that his refi estimate applies to MBS and not necessarily all outstanding mortgage debt, which, according to the Quarterly Data Report, totals about $6.1 trillion. Morgan Stanley says in its report, "Though it may look like cash-out refis dropped from Q2, that is not the case... The incentive to take cash out may increase as mortgage rates level off."

Nearly all the residential mortgage-backed securities deals downgraded in the third quarter related to a limited guarantee from Conseco Finance rather than the performance of the transactions, according to Standard & Poor's Ratings Services.Only two downgrades resulted from poor collateral performance, while the other 73 occurred on Aug. 9 and Sept. 19 as a result of two downgrades involving Conseco Finance, which provides the limited guarantee for the deals. "Standard & Poor's believes the uncertainty created by Conseco Inc.'s difficulties, and the fact that Conseco Finance does not enjoy regulatory protection, leaves its creditors significantly vulnerable," said Ernestine Warner, a director in S&P's Structured Finance Surveillance group. "Additionally, without the use of the limited guarantee, the monthly excess spread may be insufficient to protect against losses during the life of the transactions."

Ginnie Mae has announced a new policy for repurchasing delinquent loans from Ginnie Mae mortgage pools, allowing buyouts only when no payments have been made for three consecutive months.The new policy will take effect with loans placed in pools with an issue date of Jan. 1, 2003, according to the Bear Stearns Prepayment Commentary. Previously, Ginnie Mae allowed rolling 30-day delinquent repurchases (loans with at least one delinquent payment over four consecutive months), which the publication said probably represent "the bulk of the buyout product." The Bear Stearns analysts termed the change "long overdue" and predicted that it will substantially reduce the amount of new Ginnie Mae securities that are susceptible to servicer buyouts. Ginnie Mae can be found online at http://www.ginniemae.gov.

Prepayment rates for virtually all agency mortgage-backed securities shot up in the October reporting period, "substantiat[ing] the magnitude and breadth of the current refinancing wave," according to the Bear Stearns Prepayment Commentary.Speeds of Fannie Mae and Freddie Mac 6.0%-7.0% coupons rose by constant prepayment rates of 9-15 CPR, said analysts Dale Westhoff and Bruce Kramer. "Overall, there was little evidence of burnout in the numbers in coupons below 8%, with seasoned 7.0s (pools seasoned at least 30 months) paying an average of 63 CPR and seasoned 7.5s paying 59 CPR," the analysts said. Among Ginnie Mae securities the speed-up was similar, as CPR gains at and above the 6.5% coupon level were "nearly identical" to those for conventional MBS, they said. Bear Stearns can be found online at http://www.bearstearns.com.

The Federal Reserve Board surprised the market late Wednesday, cutting short-term rates by 50 basis points -- instead of the anticipated 25.The yield on the 10-year Treasury (which mortgages are pegged to) fell to 4.035%, down 0.04%. The target federal funds rate now stands at 1.25%, a four-decade low. Douglas Duncan, senior economist for the Mortgage Bankers Association of America, had originally forecast a 50 bp cut, but recently trimmed it to 25 bp. Before the Fed made its decision, Mr. Duncan told MortgageWire that, "It's not like our members need a rate cut." In cutting rates, the Fed also shifted to a "neutral" stance on rates. The MBA says refinancings are running at about 70% of applications. The trade group is forecasting residential production of $2.4 trillion this year and $1.7 trillion next year.

Fitch Ratings has upgraded the residential primary servicer rating of Ameriquest Mortgage Co. from RPS2-minus to RPS2 for subprime loans.At the same time, Fitch assigned AMC a special servicer rating of RSS2-minus. As of July 31, AMC serviced nearly 120,000 subprime mortgage loans with a total balance of nearly $14 billion. About $50 million of the total were in special servicing.

Two classes of Deutsche Mortgage & Asset Receiving Corp.'s commercial mortgage pass-through certificates, series 1998-C1, have been downgraded by Fitch Ratings.Class L was downgraded from B to B-minus, and class L was downgraded from CCC to CC. The ratings on 11 other classes in the deal were affirmed. Fitch attributed the downgrades to continuing deterioration in the pool's collateral performance and expected losses for many loans. As of the October 2002 distribution date, 22 loans representing 7.8% of the pool were in special servicing, the rating agency said. Of those, three were more than 30 days delinquent, six were more than 90 days delinquent, and nine had reached the status of real estate owned, Fitch said.

Washington Mutual, Seattle, which has been on an intense "buy-and-build" spree the past three years, is now officially taking a respite from any major acquisitions.During a speech this week at the annual convention of America's Community Bankers, WaMu chief executive Kerry Killinger indicated that WaMu will build its base of branches de novo instead of through acquisitions. For the past nine months, WaMu watchers have been saying that the mega-thrift -- the nation's largest residential servicer -- has been on the sidelines when it comes to buying other firms. Then again, the mortgage-related mergers-and-acquisitions market has been slow the past half-year, with few exceptions. (In August, WaMu agreed to buy HomeSide's huge servicing portfolio, but that deal had been anticipated for a year.) In fact, the top 10 residential servicers combined saw their market share slip in the third quarter, the third consecutive decline for the group. (See the Nov. 11 issue of National Mortgage News for full details.)

Though the new chairman of America's Community Bankers, Russell Taylor of Rahway Savings Institution, heads a Fannie Mae seller/servicer that sells the lion's share of its fixed-rate loans to Fannie, he says ACB remains supportive of the Federal Home Loan Bank System's effort to provide an alternative to Fannie and Freddie.In his address to the ACB convention in San Francisco, outgoing chairman Curtis L. Hage stressed that ACB is a strong advocate of the FHLBank system and the possibility of securitizing the FHLBanks' Acquired Member Assets program to expand it beyond its modest $50 billion level. An FHLBank panel following Mr. Hage's address explored the possibility of the FHLBanks' employing securitization as a way to expand the Mortgage Partnership Finance Program and the Mortgage Purchase Program as alternatives to Fannie and Freddie dominance in the secondary market. No FHLBank securitization initiatives have been mounted to date.