Servicing

The residential mortgage-backed securities group of Fitch Ratings has introduced issuer securitization performance reports, citing investor interest in more comprehensive performance measures in the jumbo market.The reports focus on Fitch's view of the improvement in collateral composition and the comparative performance of an issuer's jumbo product from 1996 to 2001. They also compare the subordinate bond performance of an issuer with Fitch's rating expectations. In addition, Fitch briefly covers the issuer's securitization history -- including shelf registration designations, origination volumes, and Fitch rating history -- and provides a history of all rating changes that will support current credit enhancement levels. To date, Fitch has published two reports that cover the securitization performance of GMAC-RFC's RFMSI (dated July 30) and CitiMortgage's CMSI (dated Nov. 7).

Thirteen classes of Oakwood Manufactured Housing Transactions have been downgraded by Fitch Ratings.The rating agency also affirmed eight limited-guarantee bonds and 86 classes in Oakwood transactions. The downgrades were as follows: B-2 classes of series 1996-A, 1996-B, 1996-C, and 1998-C, from BB to CCC; B-1 classes of series 1997-D, 1998-B, 1999-E, and 2000-A, from BBB to BBB-minus; class B-2 of series 1998-C, from BB to CCC; B-1 classes of series 1999-A and 1999-B, from BBB to BB; class B-1 of series 1999-C, from BBB-minus to BB-plus; and B-2 classes of series 1999-E and 2000-D, from BB to B-minus. "The rating actions reflect the deteriorating performance of the manufactured housing pools as well as recent changes in Oakwood's servicing practices, which have caused losses to increase rapidly," Fitch said. Oakwood recently discontinued its Loan Assumption Program, under which it had avoided repossessing homes by finding other borrowers to assume monthly payments, and now its defaults and its repossession inventory have increased significantly, Fitch said. The rating agency can be found on the Web at http://www.fitchratings.com.

To celebrate the company's new name and ticker symbol, executives of Countrywide Financial Corporation rang the bell to open trading on the New York Stock Exchange Wednesday morning.The company, formerly Countrywide Credit Industries, now trades under the symbol CFC on the NYSE. Stanford Kurland, Countrywide's executive managing director and chief operating officer, told MortgageWire that the change reflects growth in Countrywide's diversification businesses, including its commercial bank, its securities operation, and the insurance segment of its business. "Certainly, we want to open the eyes of the investor community to our diversification," he said.

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.