Servicing

Credit card giant Capital One Financial, McLean, Va., has agreed to buy Hibernia Corp., New Orleans, a top-50-ranked residential servicer, for $5.3 billion in stock and cash.Hibernia National Bank is the largest residential lender in the New Orleans metropolitan area, according to National Mortgage News' Home Mortgage Disclosure Act database. However, in the fourth quarter Hibernia's residential loan production fell dramatically, to $150 million, compared with $911 million a year earlier. At year-end, Hibernia serviced $11.5 billion in home loans, ranking 44th nationwide. Capital One services $79.9 billion in receivables -- most of it credit cards or auto loans. The purchase, once completed, will give Capital One 293 branches in Louisiana and Texas, and a foothold in the mortgage industry. As MortgageWire neared its deadline Monday afternoon, Hibernia's shares were trading up 21%, to $32.20.

Will County, Ill.'s student housing revenue bonds (Joliet Junior College project), series 2002A, and taxable series 2002B, have been downgraded from C to D by Fitch Ratings.The downgrade to default status was attributed to a March 2 disclosure filing indicating that the scheduled March 1 interest payment on the bonds was not made. Fitch said the filing reported that First Midwest Bank "did not make the payment in response to a direction by the holders of 69% of the outstanding bonds." The filing indicated that the bondholders are replacing First Midwest as trustee with Manufacturers and Traders Trust Co., Baltimore. Fitch can be found online at http://www.fitchratings.com.

Saxon Capital Inc., a residential mortgage lender and servicer based in Glen Allen, Va., has announced that it expects to transfer its common stock from the NASDAQ National Market to the New York Stock Exchange on March 18.Saxon, a real estate investment trust, said its management is slated to ring the bell to open the NYSE on that morning. The REIT's production subsidiaries, Saxon Mortgage and America's MoneyLine, originate and purchase loans through wholesale, correspondent, and retail channels. Saxon can be found on the Web at http://www.saxoncapitalinc.com.

Mortgage servicers should maintain criteria for selecting and dismissing outsource providers and vendors, ensure fee disclosure, and maintain a quality control program to monitor performance, according to Standard & Poor's Ratings Services.Servicers who want to achieve or maintain S&P's Select Servicer status will be expected to "adhere to certain basic guidelines with respect to outsourcing vendor management and fee disclosure," S&P said. Their selection and dismissal criteria should be objective and transparent and should include "minimum key performance indicators," the rating agency said. In addition, they should establish procedures to ensure that any fees presented for reimbursement to a guarantor "represent a true and accurate rendering of actual monies expended," net of certain cost reductions, S&P said. Quality control should measure performance as well as compliance with state and federal statutes, the rating agency said. S&P can be found online at http://www.standardandpoors.com.

The risk of default on newly originated nonprime mortgage loans remains steady, but the risk level has increased by 25% since 2003, according to University Financial Associates.The UFA's default risk index for the winter of 2005 registered 96 this quarter, up one point from the previous quarter. A reading of 100 means that the risk of default is equal to the average for the decade of the 1990s, and lower readings indicate a lower level of risk. "House price appreciation remains well above trend, but the prospects for future increases are eroding," said Dennis Capozza, professor of finance at the University of Michigan and a principal in UFA. The "constant quality" index measures the impact of the economy on the default prospects for new loans with the same borrower, loan, and collateral characteristics from quarter to quarter.

Employment in the overall mortgage industry hit a record 489,400 full-time positions in January, but broker jobs appear to be slipping.According to figures compiled by the Bureau of Labor Statistics, the number of "real estate credit" employees reached a record 366,300, but "mortgage and non-mortgage broker" jobs came in at 123,100 positions, the lowest reading since September of last year. (Added together, real estate credit employees and mortgage and non-mortgage brokers account for total industry employment.) In 2004 mortgage lenders funded $2.7 trillion in loans, according to National Mortgage News, the industry's second-best year ever. Employment in the industry is expected to remain strong as long as mortgage rates do not rise significantly. However, in the refinancing market -- where loan brokers play a more prominent role -- applications are continuing to decline. Two years ago the mortgage industry employed 421,000 full-timers.

Hanover Capital Mortgage Holdings, Edison, N.J., has announced plans for a private placement of $20 million of trust preferred securities.The company said the securities will require quarterly distributions and bear a fixed interest rate of 8.55% for the first five years and will reset quarterly thereafter at the prevailing three-month London interbank offered rate plus 4.25%. Hanover Capital plans to use the net proceeds for general corporate purposes and to invest in subordinated mortgage-backed securities. The company, a mortgage real estate investment trust, can be found online at http://www.hanovercapitalholdings.com.

Six certificates from two Residential Asset Securities Corp. subprime deals issued in 2001 have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2001-KS2, class M-I-1, from Aa2 to A2, class M-I-2, from A2 to Baa2, and class M-I-3, from Baa2 to Ba3; and series 2001-KS3, class M-I-1, from Aa2 to A2, class M-I-2, from A2 to Baa2, and class M-I-3, from Baa2 to Ba3. The downgrades were attributed to a belief that credit enhancement levels may be low given projected losses on the underlying pools. The transactions are backed by fixed-rate and adjustable-rate subprime mortgage loans originated by various originators. The master servicer is Residential Funding Corp.

Five certificates from three Residential Asset Mortgage Products Inc. Trust asset-backed securitization deals have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2002-RS1, class M-I-3, from Baa2 to Ba3, and class M-II-3, from Baa2 to Ba3; series 2002-RS2, class M-I-3, from Ba2 to B3, and class M-II-3, from Ba3 to B3; and series 2002-RS3, class M-II-3, from Baa2 to Ba3. Moody's attributed the downgrades to credit enhancement levels that "may be low given the current projected losses on the underlying pools." The transactions consist of a fixed-rate pool and an adjustable-rate pool made up of mortgages that are not eligible for inclusion in Residential Funding Corp.'s specific loan program securitization. The mortgage loans were originated by different sellers and are serviced by HomeComings Financial Network Inc., a wholly owned subsidiary of RFC. Moody's can be found online at http://www.moodys.com.

Washington Mutual, Seattle, the nation's third-largest home lender, has confirmed that it's looking for a new mortgage chief.Industry sources told MortgageWire that the company has hired an executive recruiting firm to assist WaMu in its search. National Mortgage News broke the news about the thrift's search for a mortgage chief in its Feb. 21 issue. In the third quarter of last year, WaMu named Craig Chapman president of commercial and mortgage banking -- but the move was considered temporary. In a statement released late Monday night, WaMu said it wants Mr. Chapman "to focus exclusively on growing the company's commercial lines of business." The thrift also named three new senior leaders to its mortgage unit: John Berens, service delivery; Youyi Chen, portfolio management and research; and Bill Murray, division finance/servicing.