Servicing

Impac Mortgage Holdings Inc., Newport Beach, Calif., has announced that it will correct and restate its financial statements for 2001, 2002, and 2003, as well as unaudited statements for the first quarters of 2003 and 2004.The real estate investment trust said the corrections will change its revenue recognition policy regarding the sale of mortgage loans from its subsidiary Impac Funding Corp. to the parent company and the subsequent cash sale of the associated mortgage servicing rights. The mortgage REIT said it has previously recognized the cash gains in the period in which the MSRs were sold and the cash proceeds were received. Its new policy will amortize the gains over the life of the related loans retained by the REIT. "This correction does not constitute a writeoff of previous earnings, but is rather a timing difference, which results in a redistribution of cash gains over the life of the related mortgage loans (generally, on average, 2-3 years)," Impac said. The change affects net earnings under generally accepted accounting principles. The company's estimates of the amount of net earnings that will be redistributed are: $7.3 million for 2001; $14.3 million for 2002; $14.2 million for 2003; $4.3 million for the first quarter of 2003; and $12.1 million for the first quarter of 2004. Impac can be found online at http://www.impaccompanies.com.

In an effort to revamp its cost structure, Washington Mutual has announced that it will eliminate an additional 2,500 mortgage-related positions from its workforce by the end of the year.That will bring WaMu's total job cuts in 2004 to approximately 8,500 positions, including cuts that have already been made or announced by the company. WaMu said it will close about 100 retail lending and loan processing offices in 17 markets where it does not have a retail banking footprint, though it will maintain wholesale and correspondent lending relationships in those markets. WaMu also said it is closing its loan servicing facility in San Antonio in a move that will account for 660 of the job cuts. Separately, the company announced that Craig Chapman, president of Washington Mutual Commercial Group, will now head the company's mortgage unit. His previous duties as chief administrative officer for WaMu will be dispersed to other executives, chairman and chief executive officer Kerry Killinger said during the company's July 22 quarterly earnings conference call.

Class B-1 of Metropolitan Mortgage series 2000-B has been downgraded from BB to B by Fitch Ratings.In addition, Fitch affirmed the ratings on four other classes in the deal. The rating agency attributed the downgrade to "significantly" increased losses that have depleted the overcollateralization.

Three classes of Saxon Asset Securities Trust issues have been downgraded by Fitch Ratings.The downgrades were as follows: class BF-1, series 2000-1 group 1, from BBB to BB; class BF-1, series 2000-4 group 1, from BBB to BB and removed from Rating Watch Negative; and class BF-1, series 2001-1 group 1, from B to CCC. In addition, Fitch affirmed the ratings on 21 classes from several deals. The downgrades were attributed to loss levels and high delinquencies in relation to the applicable credit support. Fitch can be found online at http://www.fitchratings.com.

Washington Mutual Inc., Seattle, has reported earnings of $489 million ($0.55 per share) for the second quarter, down from $995 million ($1.07 per share) a year earlier, a decline that it attributed chiefly to a net loss of $63 million in its mortgage banking segment.The mortgage banking segment had recorded net income of $489 million a year earlier, WaMu said. "The principal drivers of the year-to-year difference were the results of the company's mortgage servicing rights hedging program, a high cost structure in the mortgage banking segment, and declining loan volumes," the company said. Originations of home loans totaled $59.49 billion for the quarter, down from $106.68 billion a year earlier. "While second-quarter results were affected by the volatility of our mortgage servicing rights, the root of our problem is the unacceptably high cost structure in our mortgage banking business," said Kerry Killinger, WaMu's chairman, president, and chief executive officer. "We know what we need to do, our efforts are well under way, and we will not be satisfied until we have fixed it." WaMu can be found online at http://www.wamu.com.

Countrywide Financial Corp., Calabasas, Calif., has reported consolidated net earnings of $699.6 million ($2.24 per share) for the second quarter, up 83% from $382.9 million ($1.37 per share) in the second quarter of last year.The earnings per share represented the company's second-best quarter on record, Countrywide said. Pretax earnings by the company's mortgage banking operations were 118% higher than those recorded a year earlier, and contributed 77% of the company's consolidated pretax earnings. "Based on recent financial data released by our major competitors, Countrywide appears to have maintained the No. 1 market position in originations during the second quarter," said Angelo R. Mozilo, Countrywide's chairman and chief executive officer. ".... This surge in production helped us maintain an excellent trend in our servicing portfolio, with growth of $43 billion during the quarter, which equates to an annualized growth rate of 25%." Countrywide's mortgage servicing rights appreciated in value by $2.2 billion, which enabled the company to recover a previously recorded MSR impairment of $1.4 billion. The difference between the two numbers represents an unrecognized increase in MSR value of $810 million, Mr. Mozilo said. The company can be found online at http://www.countrywide.com.

Delta Financial Corp., Woodbury, N.Y., has priced a public offering of 4.375 million shares of common stock at $6.50 per share.Of the total, approximately 3.14 million will be sold by the company and the remainder will be sold be selling stockholders, Delta said. The underwriters have been granted an option to buy an additional 656,250 shares of common stock to cover any overallotments. The managers of the offering are JMP Securities LLC, SunTrust Robinson Humphrey, and Roth Capital Partners LLC. Delta can be found online at http://www.deltafinancial.com.

The Performance Group, a mortgage consulting firm based in Concord, N.H., and Equinox Corp., a provider of business process outsourcing for the mortgage industry based in Irvine, Calif., have formed an alliance to offer both outsourcing and consulting services.TPG assists clients through each phase of the outsourcing process, and helps them establish the metrics and controls necessary to monitor and manage the outsourcing relationship, the company said. "With the end of the refinance boom, many of our clients are seeking ways to gain better control over their variable costs, while improving service to customers," said Larry Bonifant, founder and president of TPG. "Outsourcing ... offers a viable alternative for originators and servicers to effectively resolve the issues of escalating salaries, employee training, workload leveling and, in many situations, quality improvement." The companies can be found online at http://www.tpgltd.com and http://www.equinoxco.com.

Fitch Ratings has downgraded 132 classes from 52 Conseco Finance/Green Tree Finance manufactured housing transactions.Fitch also affirmed the ratings on 96 classes from the deals. The total dollar amount of all rated classes is approximately $13 billion. Fitch said the downgrades reflect expectations of reduced credit enhancement combined with high losses and delinquencies. "While Fitch's rating actions reflect the deteriorating performance of the MH pools as well as the limitation of capital, changes in servicing fees from 125 basis points to 115 bps (as of July 2004) may be a source of future capital," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Wells Fargo & Co., the nation's second-largest mortgage servicer, reported net income of $1.71 billion ($1.00 per share) in the second quarter, up 12% from $1.53 billion ($0.90 per share) a year earlier.Mortgage originations in its community banking segment totaled $96 billion in the second quarter, an increase of $31 billion from the level recorded in the first quarter, the company said. "With higher interest rates during the quarter, application activity dropped to $100 billion," said Mark Oman, group executive vice president for home and consumer finance. "Reflecting the decline in applications, the mortgage application pipeline ended the quarter at $57 billion, down $15 billion from March 31, 2004, although purchase-mortgage volume remained at or above expectations." The company owned a portfolio of mortgage servicing rights on $749 billion of home loans as of June 30, up 18% from that of a year earlier. Wells Fargo valued its MSR portfolio at $8.5 billion, up from $6.9 billion at the end of 2003. The San Francisco-based company can be found online at http://www.wellsfargo.com.