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Principal Sees MSR Loss

Principal Financial Group, Des Moines, will write down the value of its residential servicing assets in the fourth quarter, reducing net income and operating earnings by $70 million to $110 million.

Principal's president of insurance and financial services, John Aschenbrenner, told Mortgage Servicing News that this marks the first time the company has taken an impairment charge that has not been offset by production gains.

He noted that in previous quarters - before refinancings and production slowed - the company was making so much money on originations that servicing writedowns did not affect the bottom line.

He also said the company decided to take an impairment charge after it received a second opinion on the value of its servicing from MIAC Risk Management Services, New York.

Mr. Aschenbrenner said he is not sure if Principal, going forward, will obtain two appraisals on its servicing. Its normal appraiser is Phoenix Capital, Denver.

According to figures compiled by MSN, the insurance giant's mortgage affiliate, Principal Residential Mortgage, is the nation's 11th largest servicer with housing receivables of $117 billion.

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