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Census Fakers?

Safeguard Properties Inc., which looks after repossessed real estate across the country for lenders, has been inundated with calls from people claiming to be Census Bureau employees, seeking information on vacant homes.

In a matter of days the Valley View, Ohio, company has received 2,500 such calls, said Robert Klein, its founder and chairman.

Using the emergency 800 number that is advertised on the stickers Safeguard places on vacant homes, the callers have been asking for the mortgage company's name, the date the property became vacant and who lived there previously, Klein said.

Wanting to comply with the Census Bureau, but uneasy about sharing private information, Klein and his executive team created a separate 800 line to which callers claiming to be Census employees are referred. A recorded message prompts them to send Safeguard an official request for information.

There are "all kinds of frauds and schemes," Klein said. "We cannot just give that information to anybody that calls."

Two other property management companies contacted by American Banker said they've received few, if any, calls from people claiming to be Census employees.

Klein, who founded Safeguard in 1990, doesn't remember receiving Census-related calls before this year. But he said he takes the matter seriously. The Census is conducted every 10 years to help determine how federal funding is allocated to communities. "There are critical areas in the country that are relying on the Census," Klein said.

Timing Is Everything

Standard & Poor's Corp. rocked the boat last month when it offered an unsolicited take on Redwood Trust Inc.'s private mortgage bond deal.

For a rating agency to weigh in on a deal without officially rating it — and to assert that the bonds would not have received the agency's highest mark — was unusual.

(Moody's Investors Services Inc. had given the senior bonds in the securitization — the first of its kind in two years — a triple-A rating, noting the high credit scores and incomes of the borrowers and the substantial documentation obtained in the underwriting of the loans.)

At the time, S&P would not say whether or not it had been approached about rating the securitization. And neither Redwood nor Citigroup Inc., which made the loans and underwrote the deal, would discuss the matter. This week, however, investors got more clarity. Turns out, it was a matter of timing.

"We wanted to have S&P involved in the transaction, and in order to get the transaction to close last month, they could not meet our deadlines," Brett Nicholas, chief investment officer and co-chief operating officer of Redwood, said in an investor presentation Tuesday. "But we want S&P involved. We will continue to work with them, because we need more rating agency involvement here."

S&P spokesman Edward Sweeney did not dispute or corroborate Redwood's account, but he said S&P is "committed to serving the market with timely opinions on credit risk."

Its move to weigh in on the transaction without rating it could become more the norm as agencies refine their ratings requirements and implement stricter standards to avoid conflicts of interest.

"Standard & Poor's may, from time to time, choose to provide our views on structured finance transactions across various asset types and geographies, even if we did not rate the transaction, if we deem the transaction important to the market and we believe that our opinions would provide value to investors," the company said in its note on the Redwood deal.

Ultimately, that's good for the market, said Michael Youngblood, founder and principal of Five Bridges Advisors LLC, noting that an overreliance on ratings agencies got investors into trouble in the past. "Institutional investors must be able to make their own credit decisions about ABS securities," he said. "One hopes that greater disagreements by ratings agencies will illuminate this necessity."

Cleanup Crew

C12 Capital Management LP, a hedge fund spun off from Barclays PLC last year, has started a "component" servicer to work out a portion of its $1.8 billion home loan portfolio.

In the 10 states where it is licensed, DHM Mortgage Servicing LLC will handle loss mitigation whenever one of these loans falls more than 60 days behind. All other tasks related to this chunk of the portfolio — such as processing of monthly payments — will be performed by a subservicer that C12 has yet to hire.

HomEq Servicing Corp., which Barclays bought from Wachovia Corp. in 2006, will continue to service the majority of C12's 15,000 loans.

"The servicing business is so inundated with negative overhang that finding the optimal solution is difficult," said Darryl Herrick, a portfolio manager at C12. "It's a little difficult to find one [servicer] that can do it all."

DHM will take a "cradle-to-grave" approach, where the borrower will speak to one loss-mitigation agent throughout the process to ensure a lower risk of default, he said.

C12 has created a proprietary modification program with "a heavy focus on principal forgiveness," Herrick said. The New York firm intends to refinance as many borrowers as possible into government-insured loans in the next year or two, he said.

It is also looking to expand its portfolio. C12's executives — Herrick and fellow Barclays veterans Stephen King and Michael Keeley — oversee due diligence of loan acquisitions.

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