Servicing

The Chicago Federal Home Loan Bank, which is in the midst of a restatement, has declared a 5.5% dividend for the fourth quarter.The FHLBank paid a 6% dividend in the third quarter, but a 5.5% dividend is the maximum the bank can pay under its supervisory agreement with the Federal Housing Finance Board. The Chicago bank is still weeks away from filing its third-quarter financial statement and a restatement of 2003 earnings, according to spokesman David Feldhaus. The bank is also behind in reporting origination data for its Mortgage Partnership Finance program. The last report showed $7.6 billion in total MPF loan production for the second quarter.

Fidelity National Financial, Jacksonville, Fla., has announced that its mortgage and banking technology business, Fidelity National Information Services, has received commitments for $3.2 billion in credit facilities needed to bring about a previously announced recapitalization.The senior credit facilities consist of two term loans of $1 billion and $1.8 billion and a $400 million revolving credit facility. FNF said FNIS intends to fully draw upon the $2.8 billion in term loans at closing, at an expected interest rate of 200 basis points above the London interbank offered rate. Once the deal is closed, Fidelity will pay a $10-per-share dividend to its shareholders. The recapitalization plan was announced in December in connection with an agreement to sell a 25% stake in FNIS to Thomas H. Lee Partners LP and Texas Pacific Group for $500 million. FNF chairman and chief executive William P. Foley II said the recapitalization, the special dividend payment, and the closing of the 25% equity interest sale will all occur in late February or early March. Leading the lender consortium providing the credit facilities will be Bank of America, J.P. Morgan Chase, Wachovia, Deutsche Bank, and Bear, Stearns & Co. Fidelity can be found online at http://www.fnf.com.

SPS Holding Corp., the Salt Lake City-based servicer of nonprime mortgage loans, says its stockholders have signed a letter of intent with Credit Suisse First Boston and its affiliate, DLJ Mortgage Capital, that will likely lead to a sale of the servicer to CSFB.Describing the deal as a "strategic agreement," SPS said it expects (as part of the pact) to enter into a servicing rights purchase agreement with CSFB to acquire servicing rights related to mortgage loans totaling about $6 billion over the next 12 months. SPS said it expects to begin acquiring servicing rights from CSFB in the near future. "Any transaction related to the stock of SPS will be subject to the satisfaction of due diligence by all parties," SPS said. The company said it expects the transaction to close within six months if a definitive agreement is signed. SPS, formerly known as Fairbanks Capital, services about 270,000 nonprime residential mortgage loans from facilities in Salt Lake City and Jacksonville, Fla.

Arbor Realty Trust Inc., New York, has announced the closing of a collateralized debt obligation through two subsidiaries: the issuer, Arbor Realty Mortgage Securities Series 2004-1 Ltd., and the co-issuer, Arbor Realty Mortgage Securities Series 2004-1 LLC.Arbor said another subsidiary retained the equity interest in the issuer, with a value of approximately $164 million. The CDO, consisting of approximately $305 million of floating-rate notes, is secured by a portfolio of real-estate-related assets with a face value of approximately $441 million. The portfolio consists chiefly of bridge and mezzanine loans and junior participating interests in first mortgages, Arbor said. "Our cost of funds has been reduced and the term of the CDO is longer than the terms of our other credit facilities," said Ivan Kaufman, Arbor's chief executive officer. "In addition, the CDO structure provides us with greater flexibility in financing our future loans and investments."

CFN Liquidating Trust, the successor to ContiFinancial Corp. and affiliates pursuant to their confirmed Chapter 11 bankruptcy plan, has announced the termination of Soundview Home Equity Loan Trust 1999-1.The termination of the securitization was completed more than a year before the anticipated early redemption date for the Soundview Trust asset-backed notes, CFN Trust said. It was accomplished through the purchase and tender of notes with a principal balance of approximately $109 million. "The termination was concluded in connection with the sale by auction of the portfolio of real estate and promissory notes secured by residential mortgages owned by the Soundview Trust," CFN Trust said. The trust lauded the performance of its asset manager, Boston Portfolio Advisors Inc., and its business and tax counsel, Miller Nash LLP, for their handling of what it termed a "unique, complex transaction."

Washington Mutual Inc., Seattle, has reported earnings of $2.88 billion ($3.26 per share) for 2004, down from $3.88 billion ($4.21 per share) in 2003.WaMu cited lower mortgage origination volume and a one-time reverse of loan loss reserves in 2003 as factors behind the decline in earnings. Home loan origination volume totaled $41.59 billion, down from $51.50 billion in the fourth quarter of last year. But WaMu chairman and chief executive Kerry Killinger said the mortgage unit exceeded his expectations. Earlier this year, he had warned that the mortgage unit's earnings might be "negative or slightly positive" for 2004 as the company struggled to overhaul its expense structure and deal with lower volume. But in a conference call with analysts, he said operational improvements and other factors resulted in higher-than-expected mortgage earnings. WaMu's mortgage banking segment earned $570 million for 2004, down from $1.30 billion in 2003. Mortgage servicing rights, including amortization and the effect of hedges, contributed a net cost of $277 million in the fourth quarter. WaMu can be found online at http://www.wamu.com.

Fannie Mae could be moving closer to slashing its minimum servicing fee to as low as 13 basis points, industry executives have told MortgageWire.If Fannie does cut its servicing fee (currently set at a minimum of 25 bps), it's expected that Freddie Mac might follow suit. "Some of our customers have asked us to evaluate the current level of the required minimum mortgage servicing fee," a spokesman for Fannie Mae said. "Since any change in the minimum servicing fee may affect the market for delivery of Fannie Mae to-be-announced mortgage-backed securities -- one of the most liquid securities trading in the fixed-income markets today -- we are engaged in a process to gather information and input from a wide range of industry participants. That process is ongoing, and no decisions have been reached at this time." A Freddie Mac spokesman would say only that the company has talked to some of its customers "about their needs and the servicing fee." He would not elaborate. (See the full, exclusive story in the Jan. 24 issue of National Mortgage News.)

Bank of America Corp., Charlotte, N.C., has reported net income of $14.14 billion ($3.69 per share) for 2004, up from $10.81 billion ($3.57 per share) in 2003.Mortgage banking income declined an unspecified amount as a result of lower origination volume and adjustments to the value of mortgage servicing rights, BoA said. The company touted its commercial MBS underwriting operations, declaring that it had become the top U.S. deal manager in CMBS in 2004. For the fourth quarter, BoA reported net income of $3.85 billion ($0.94 per share), up from $2.73 billion ($0.92 per share) a year earlier. The company can be found online at http://www.bankofamerica.com.

Fannie Mae has announced a 50% reduction in its common stock dividend, from $0.52 per share to $0.26, for the first quarter to "accelerate an increase in the company's capital."The government-sponsored enterprise noted that its regulator, the Office of Federal Housing Enterprise Oversight, had classified Fannie Mae as "significantly undercapitalized," requiring approval by the OFHEO director before the payment of any dividends. (The announced dividends have been approved by OFHEO.) The common stock dividend will be paid Feb. 25 to registered stockholders as of the close of business on Jan. 31, 2005. Preferred stock dividends announced by Fannie Mae are as follows: $0.65625 per share of series D; $0.63750 per share of series E; $0.1713 per share of series F; $0.2938 per share of series G; $0.7263 per share of series H; $0.6719 per share of series I; $0.5895 per share of series J; $0.6406 per share of series L; $0.5938 per share of series M; $0.6875 per share of series N; $0.8847 per share of series O; and $1,358.68 per share of convertible series 2004-1. For series K preferred stock, the dividend rate will be replaced on March 18 by the applicable swap rate plus 1.33%. All the preferred dividends will be paid March 31 to registered stockholders as of the close of business on March 15, 2005. Fannie Mae can be found online at http://www.fanniemae.com.

Astoria Financial Corp., Lake Success, N.Y., has reported that it expects to record a nontemporary after-tax impairment charge of $9.6 million for the fourth quarter related to $120 million of perpetual preferred stock issued by Freddie Mac.The impairment was previously recorded as an unrealized mark-to-market loss on securities available for sale. (The Freddie Mac stock is held in the company's available-for-sale securities portfolio.) The decision to reclassify the impairment "is based on a very conservative interpretation of accounting literature and does not reflect the expected long-term value of these investment-grade securities," said George L. Engelke Jr., chairman, president, and chief executive officer of Astoria Financial. The company, which is the holding company for Astoria Federal Savings and Loan Association, can be found online at http://www.astoriafederal.com.