Anworth Mortgage Asset Corp. (NYSE: ANH) shares plunged after investment bank Keefe Bruyette & Woods downgraded the Santa Monica, Calif.-based real estate investment trust to “market perform” from “outperform.” Keefe said the downgrade reflects concerns that Anworth will be forced to carry excess capital due to market uncertainty, which will hurt its growth potential.

In a note to investors, Keefe Bruyette said that widening spreads on agency mortgage-backed securities has made book values come down in 2008. In January, Anworth announced a plan to raise $90 million through a common stock offering of 11 million shares.

In afternoon trading, ANH shares are plummeting 25.2%, or $2.23, at $6.62. Over the last 52 weeks, shares have ranged from $3.05 to $10.29.

As of late, the subprime mess has made many investors run from any stocks having to do with real estate or mortgages, but before you head for the hills just yet, consider this: additional interest rate cuts by the Fed would likely encourage a new wave of mortgage refinancing. This would not only benefit Bankrate.com, Inc. (Nasdaq: RATE), and Move, Inc.’s (Nasdaq: MOVE) Realtor.com, but also the investors who roll the dice in the general direction of these two mortgage shopping websites.

Bankrate.com is the leading online website for mortgage shopping, and owns and operates several Internet-based consumer banking sites.

Its flagship site, Bankrate.com, aggregates information that allows consumers to compare mortgages, home equity loans, auto loans, credit cards, money market and CD rates and ATM fees. Bankrate.com gathers this information from approximately 4,800 financial institutions and 575 markets nationwide. 

Revenues are generated from selling advertising on its consumer finance websites, which include Bankrate.com, Interest.com, FastFind.com and Mortgage-cacl.com. In addition, the company sells advertising in its published mortgage, CD and deposit rate guides and through its subscription newsletters. It also generates fees from licensing its data to research organizations.

Recent acquisitions are enabling Bankrate.com to extending its reach into new consumer finance segments. In December and January, the company acquired Nationwide Card Services, a Web-based credit card marketer; SavingsforCollege.com, which specializes in 529 savings plans for college tuition; InsureMe, which operates a website where consumers can compare insurance rates; and Lower Fees, which operates Fee Disclosure, an online site for comparing mortgage transaction and closing fees. The combined purchase price of the four businesses was approximately $98 million, excluding potential cash earn-outs based on achieving certain financial performance metrics. 

Bankrate.com’s total revenues increased 20% in 2007 to $95.6 million from $79.6 million, driven by 31% year-over-year growth in on-line revenues, 26% improvement in graphic advertising revenues and a 38% gain in hyperlink revenues, which was partially offset by a 24% decline in print publishing and licensing revenues. Despite doubling net income in 2007 to $20 million, or $1.04 per share, from $10 million, or $0.56 per share last year, Bankrate.com’s shares fell due to lower-than-expected December quarter results. 

Downey Financial Corp. (NYSE: DSL) shares are declining after the mortgage lender said before the opening that it’s reclassified $99 million in loans as non-performing due to accounting changes.

“We initially did not consider these modifications of performing loans to be troubled debt restructurings, as the modification was only made to those borrowers who were current with their loan payments and the new interest rate was no less than those offered to new borrowers,” Rick McGill, Downey’s president, said in a statement.

The Newport Beach, Calif.-based firm said it initiated a borrower retention program allowing borrowers to change to less expensive financing options. The interest rates of these less expensive options were below the interest rates on the original loans. After a review of the retention program plan, Downey’s auditors reclassified the loans as non-performing.

Downey did not reveal whether the reclassification impacted the company’s financial results.
 
"Unlike other loans classified as non-performing assets, these loans are effectively performing at interest rates no less than those afforded to new borrowers," CFO Brian Cote said in a statement.

In morning trading, DSL shares are down 8.83%, or $2.48, at $25.60. Over the last 52 weeks, shares have ranged from $23 to $74.85.

Luminent Mortgage Capital, Inc. (NYSE: LUM) announced before the opening that its reported second-quarter earnings have been reduced by $0.10 to $0.20 per share, compared with $0.45 a year earlier.

Due to the deterioration of the mortgage market, the San Francisco-based firm said "significant losses" from the sale of assets at distressed prices and seizure of certain assets by creditors reduced its earnings for the three months ended June 30. Net income for the quarter fell 50% to $8.8 million, from $17.6 million during the same period of 2006.

In pre-market trading, LUM shares were up $0.11, or 8.21%, at $1.45. Over the last 52 weeks, shares have ranged between $0.36 and $10.84.