Chase Has Been Buying B&C Bulk Deals

Chase Home Finance here has been a buyer of subprime "bulk" servicing packages but has been avoiding - for the most part - "A" paper bulk acquisitions, said company co-chief executive Tom Wind.

In an interview with Mortgage Servicing News, Mr. Wind noted that Chase has been buying "A" paper servicing on a "flow" basis and continues to review bulk deals.

He said that over the past six to seven months Chase has not made any significant purchases in the "A" paper bulk market. "The values are better in the flow market," he said. "The bulk deals don't meet our parameters."

Chase also has been a buyer of subprime flow deals. Mr. Wind declined to quantify how much subprime bulk product his company has been buying but said, "It's significant. It's in the billions."

According to figures compiled by Mortgage Servicing News and its affiliate the Quarterly Data Report, Chase is the nation's fifth-largest subprime residential servicer.

At the end of June it serviced $53 billion in subprime, a 46% increase from the same period a year ago.

The "A" paper bulk market has seen better days. The refinancing boom that commenced in 2003 and consolidation among servicers have greatly reduced the number of pure "A" paper bulk deals.

Mr. Wind said he believes servicing consolidation will continue in the years ahead. "The trend will not reverse itself," he said, adding that Chase is committed to being a major player in servicing as well as production.

The Chase executive also cautioned against the growing use of payment option ARMs. "We have a lot of concern with that product," he said. "I'm very worried about it."

Chase is not currently funding payment-options ARMs.

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