Servicing

The Office of Thrift Supervision is proposing to charge institutions with large servicing operations an additional assessment next year.The OTS wants to bring thrift assessments in line with the actual costs of examination and regulation. And institutions with complex off-balance-sheet activities, such as servicing and trust activities, would have to pay more. As proposed, thrifts with more than $1 billion in loans serviced for others would pay an additional assessment of 0.0015% on their servicing portfolio -- pushing up their costs. America's Community Bankers estimates that 40 thrifts would be affected by the proposal. Assessments on thrifts engaged in traditional thrift activities would see their assessments decline, however. "While there are many positive aspects to the proposal, we will have to see if institutions with very high amounts of these complex categories, particularly loan servicing, are inordinately burdened by this proposal," said ACB regulatory specialist Gary Gilbert. The comment period on the proposal ends Oct. 13.

Two classes of CWMBS (IndyMac) Inc.'s mortgage pass-through certificates have been downgraded by Fitch IBCA Inc. Class B4 of Series 1994-X, with approximately $1.5 million outstanding, was downgraded from BB to B, and Class B5 of that series, with approximately $460,000 outstanding, was downgraded from B to D, the rating agency said.Class B3 of the series was placed on RatingAlert Negative. Fitch IBCA attributed the rating actions to loss levels and high delinquencies relative to available credit support. As of the July 25 distribution, 15.64% of the pool was more than 90 days past due, and losses totaled about $2.6 million, 1.65% of the initial pool. Class B3 had 4.10% of credit support remaining, and class B4 had 0.96%. Fitch IBCA's website address is http://www.fitchibca.com.

Bingham Financial Services Corp., Farmington Hills, Mich., has terminated negotiations with two companies that had been potential acquisition targets, Bingham has announced.On July 8, Bingham announced it had entered into nonbinding letters of intent to acquire an originator and servicer of commercial loans and to purchase an unnamed Midwest-based conventional and subprime residential mortgage lender. The two deals had a combined $71 million purchase price. Jeffrey Jorrisen, chief executive of Bingham, said in a statement that "we continue to review a number of excellent acquisition opportunities." Bingham's primary businesses are the origination of installment contracts to manufactured home purchasers and the origination and servicing of commercial real estate loans.

Long Beach Financial Corp., Orange, Calif., has made a $1 billion forward sale of its mortgage production for the rest of this year and into the first quarter of 1999 to an unnamed Wall Street investment banking firm.The company is making the sale on a servicing-retained basis. By keeping the servicing rights, Long Beach said it is looking to "significantly enhance and jump-start the development of the company's new servicing platform." This is the first sale between Long Beach and the investment bank involved, said M. Jack Mayesh, chairman and chief executive of the subprime originator. "We are doubly pleased that our strategy of forward sales for cash minimizes our need for dilutive capital-raising, and delivers what we believe are superior returns to our shareholders," he added.

Richard Gillen, president and CEO of one of the nation's largest residential mortgage originators, FirstCity Financial Mortgage Corp., has resigned.No reason was given for Mr. Gillen's sudden departure. However, he will continue to serve on the company's board of directors. Rick Hagelstein, currently executive vice president and director of subsidiary operations, has been named as Mr. Gillen's replacement. Previously, Mr. Gillen served as president and CEO of Harbor Financial, Houston, which he helped found in 1983. Harbor merged with FCFM in July 1997. Shortly after the merger, Mr. Gillen rose to the position of president and CEO of FirstCity and held the position until his recent retirement announcement. Data compiled in the 1999 Mortgage Industry Directory show that FirstCity Financial originated $3.5 billion in single-family, residential product last year, ranking 50th overall in the nation. The Houston-based lender was servicing $4.3 billion in residential mortgages at year-end 1997, according to the MID. FirstCity is also one of the nation's top subservicers. The company's subservicing volume totaled $707 million as of Dec. 31. In addition, FirstCity owns Hamilton Carter, Beverly Hills, Calif., a servicing brokerage firm.

Paul Bognanno, president and chief executive of Principal Residential Mortgage, Des Moines, Iowa, has been promoted to senior vice president of its parent company, The Principal Financial Group, also based in Des Moines.J. Barry Griswell, president of Principal Financial, pointed to the growing significance of the mortgage banking unit when he announced Mr. Bognanno's promotion. Mr. Bognanno will continue to run Principal Residential Mortgage, which will have a servicing portfolio of nearly $40 billion with the addition of the portfolio of ReliaStar Mortgage, Des Moines.

The rating on CWMBS Inc.'s mortgage pass-through certificates Series 1995-M, Class B5 has been lowered from B to CCC by Standard & Poor's.The rating agency attributed the action to "the continuing erosion of subordinated loss protection," which it said increases the likelihood of principal losses in the class. S&P cited a July 25 trustee remittance statement indicating that credit support for the class had declined to approximately 42 basis points, 28 bp less than S&P's original requirement of 70 bp for a B rating. S&P said its projections suggest that the loss protection for Class B5 could drop to 15 bp once foreclosure properties and real estate owned have been liquidated. If that occurs, the rating could be lowered again, the rating agency said. S&P's website address is http://www.ratings.standardpoor.com.

J.G. Wentworth, Philadelphia, has announced the sale of its fifth package of whole-loan private mortgage notes into the secondary market. Wentworth chairman Gary Veloric said the company is finding "a strong appetite among banks and other financial institutions for this product, which is gaining a ready market as a securitized asset with strong credit quality and predictable cash flows." He said the growing market segment "allows many consumers to eliminate the uncertainty of holding a private, uninsured note while getting the cash now to invest in a business, pay for an education, or meet one of life's emergencies." J. G. Wentworth is the largest buyer of structured settlements arising from personal injury litigation and the largest originator and servicer of securitized deferred obligations in the U.S., the company said. Further information is available from Michael Goodman at mgoodman@jgwfunding.com.

The B ratings on classes F-1 and F-2 of CS First Boston Mortgage Securities Corp.'s multifamily mortgage pass-through certificates, Series 1995-M1 have been placed on RatingAlert Negative by Fitch IBCA Inc. The ratings on five other classes in the series were affirmed.The rating agency said the actions resulted from deteriorating performance by the pool and Fitch IBCA's concern about five delinquent loans that are being specially serviced by GE Capital Realty Group. The pool consists of 26 multifamily mortgage loans that have been allocated low-income housing tax credits, 15 of which have performed poorly, Fitch IBCA said. Based on discussions with GE Capital and the master servicer, GMAC Commercial Mortgage Corp., the rating agency attributed the poor performance to several factors, including the limited number of qualifying tenants and above-average turnover and maintenance expenses. Fitch IBCA's website address is http://www.fitchibca.com.

Aames Financial Corp., Los Angeles, has reported record earnings of $40.3 million ($1.23 per share) for the fiscal year ended June 30, up 136% from the previous year's $17.1 million ($0.60 per share).Revenues for the year totaled a record $325 million, up 19% from $273 million the year before. Net income for the quarter ended June 30 was $9.8 million, compared with a net loss of $14.1 million a year earlier (mainly attributable to a revaluation of the company's interest-only strip), Aames said. Cary Thompson, the company's chief executive officer, said Aames took advantage of positive market conditions for subprime loans in the past quarter by selling $697 million in loans, of which $625 million were securitized. The quarter's gain on sale totaled $63.3 million. Mr. Thompson said the company's loan servicing portfolio had grown to $4.1 billion as of June 30, up 28% from $3.2 billion a year earlier. "More important to Aames is that loans serviced in house increased to $3.9 billion from $1.5 billion, a 162 percent increase year-over-year," he said. "By calendar year end we plan to eliminate our use of third-party servicers and by fiscal year end we expect to begin subservicing for others."