Servicing

Mortgage refinancings and debt consolidation loans will help stop the rise in personal bankruptcies this year, according to SMR Research Corp., Hackettstown, N.J. SMR projects that the number of personal bankruptcy filings will be flat this year after hitting a record 1.33 million in 1997 and decline slightly in 1999, largely because of low interest rates that make refinancing possible."Refinancing reduces their debt service payments and it frees up that money for other uses -- auto loans and credit cards," said Leigh Smith, SMR vice president for data products. Lower interest rates also help consumers with adjustable-rate mortgages, he said. However, the consumer finance research group believes that bankruptcies will hit record levels again once interest rates go up. "Other than interest rates, all the other basic drivers behind bankruptcy look worse," SMR president Stuart Feldstein said.

Standard & Poor's, New York, has placed seven tranches of Merrill Lynch Mortgage Investors Inc. Commercial Mortgage Pass-Through Certificates, Series 1998-C1-CTL on CreditWatch with negative implications.Classes A-1, A-2, A-3, B, C, D, and E are affected by the action. (Moody's Investors Service has placed nine classes from the series under review for possible downgrade.) The action followed the downgrade of Allegheny General Hospital in Pennsylvania from A to B and Graduate Health Systems Obligated Group (now Allegheny Centennial Hospital) from BB to CCC, both of which remain on CreditWatch with negative implications. The affected pass-through certificates total $570.3 million and are secured by credit tenant leases from 105 mortgage loans, S&P said. Allegheny General is a lease guarantor for two mortgages totaling $102.5 million, about 15.9% of the pool. S&P said it is evaluating the status of the construction, the escrow account balance, the implication of the credit downgrades, and the possibility of a lease default. S&P's website address is http://www.ratings.standardpoor.com.

New Century Mortgage Corp., Irvine, Calif., has completed the assumption of all servicing functions previously performed by Comerica, New Century Financial Corp. has announced.As of June 30, New Century Mortgage's servicing portfolio totaled $2.3 billion, including $281 million in interim servicing and $581 million in loans that continue to be serviced by Advanta. New Century Financial, a subprime lender and servicer, is the parent of New Century Mortgage. Brad Morrice, vice chairman and president of New Century Financial, said the company believes the conversion "will enable us to better control the performance of our residual assets as well as improve servicing profitability in future periods."

Moody's Investors Service, New York, has placed nine tranches of Merrill Lynch Mortgage Investors Inc. Commercial Mortgage Pass-Through Certificates, Series 1998-C1-CTL under review for possible downgrade.Classes A-1, A-2, A-3, A-PO, B, C, D, E, and IO are affected by the action. Two mortgage loans in the pool totaling approximately $102.5 million are secured by properties leased to Allegheny General Hospital, whose debt rating was lowered from Baa2 to B1 on July 21. That action was prompted by the decision of Allegheny Health and Education Research Foundation, the hospital's parent, to seek Chapter 11 bankruptcy protection, Moody's said. The rating agency's website address is http://www.moodys.com.

Duff & Phelps Credit Rating Co., Chicago, has downgraded four public classes of residential mortgage pass-through certificates and placed a fifth on Rating Watch-Down.Three of the downgraded securities are from transactions issued by DLJ Mortgage Acceptance Corp.: DLJ 1995-Q3 P1, Class IB-1, downgraded from B to CCC and left on Rating Watch-Down; DLJ 1994-Q1 P1, Class IB-1, downgraded from CCC to DD and removed from Rating Watch-Down; and DLJ 1996-Q2, Class B-2, downgraded from CCC to DD and removed from Rating Watch-Down. The fourth downgraded security was issued by MDC Mortgage Funding Corp.: MDC 1994-LB7 G2, Class IIB-1, downgraded from B to CCC and left on Rating Watch-Down. The security placed on Rating Watch-Down was DLJ 1996-Q2, Class B-1, which is now rated A. The downgrades stemmed from "a continued decrease in credit enhancement, in combination with high levels of delinquent loans, foreclosure properties, and REO properties," the rating agency said. The securities are all backed by pools of subprime mortgage loans, originated by Quality Mortgage USA Inc. in the case of the DLJ transactions and by Long Beach Bank FSB in the MDC transaction. Duff & Phelps's website address is http://www.dcrco.com.

PNC Bank has been talking to AccuBanc Mortgage, Houston, about buying the firm's $12 billion servicing portfolio, sources have told MortgageWire.At least two investment banking sources went so far as to say that PNC had been awarded the portfolio. However, PNC and AccuBanc officials could not be reached for comment. One advisor noted that "not too long ago" the two parties "were far apart on price." AccuBanc, which is owned by a company called InterAmericas, is one of the nation's largest remaining conventional non-depositories. It was widely known that William Starkey, AccuBanc's chief executive, had been trying to buy the independent mortgage banker. It was unclear whether PNC had bought only the servicing. "It is possible," said one investment banker, that Mr. Starkey "may have worked out a deal to buy the production network while selling the servicing to PNC." PNC is based in Pittsburgh. Its mortgage subsidiary, PNC Mortgage, is headquartered in Vernon Hills, Ill. In the first quarter, AccuBanc ranked 21st among all residential lenders, and 43rd among all servicers. If PNC winds up with AccuBanc's servicing portfolio it will control $53.5 billion in residential receivables, ranking 15th or 16th, according to first-quarter figures compiled by the Database Products Group, a MortgageWire affiliate.

Southern Pacific Funding Corp., Lake Oswego, Ore., has announced record net earnings of $14.5 million ($0.60 per share) for the second quarter, compared with $13.4 million ($0.56 per share) a year ago.Total nonconforming loan origination and purchase volume increased to $800.2 million for the quarter, up 82% from $439.6 million a year ago, SPFC reported. Wholesale originations totaled $425.1 million, up from $269.9 million a year earlier, and nonconforming mortgage loans originated through SPFC's operations in the United Kingdom totaled $44.6 million, up from $27.9 million. Nonconforming home equity loans acquired through strategic alliances rose to $218.9 million from $46.9 million a year earlier. The company experienced net losses of $4.8 million on its servicing portfolio, compared with $2.6 million in the first quarter of 1998. SPFC's website address is http://www.sp-funding.com.

HomeGold Financial Inc.'s 10.75% senior unsecured notes due 2004 have been downgraded from B-minus to CCC-plus and removed from RatingAlert by Fitch IBCA.The Greenville, S.C.-based home equity lender and servicer reported a net loss of $20.6 million in the first quarter as a result of several one-time charges, prompting the rating agency to place the $125 million of senior debt on RatingAlert on May 7. The latest rating action reflects HomeGold's "limited financial flexibility," uncertainty about the company's ability to execute a whole loan strategy to improve cash flow, heightened competition, and HomeGold's "limited equity base," Fitch IBCA said.

Fitch IBCA Inc. has downgraded Residential Funding Mortgage Securities Inc.'s Series 1993-S30, Class B2 mortgage pass-through certificates from B to D and placed the series's Class B1 certificates on RatingAlert negative.The rating agency cited losses and high delinquencies in relation to available credit support as the reasons for the actions, noting that 1.4% of the pool was over 90 days past due and losses totaled $1.4 million (0.43% of the initial pool) as of the June 25 distribution. Fitch IBCA's website address is http://www.fitchibca.com.

Standard & Poor's has revised its outlook on Delta Financial Corp. to negative from stable, while affirming the company's senior debt and long- and short-term counterparty ratings.The actions followed the subprime lender's announcement of a $4.9 million net loss for the second quarter due to a change in prepayment assumptions for earlier securitizations. S&P said it believes Delta's current rating "adequately incorporates prepayment risks, which are felt to be the company's primary vulnerability." Delta's "key strength continues to be its underwriting ability that should provide better protection relative to other subprime lenders in a recessionary environment," S&P said. However, the outlook revision reflects the rating agency's concern that liquidity pressures "could increase over time, especially if capital and debt market sentiment remains negative against the company and the sector for an extended time period." S&P's website address is http://www.ratings.standardpoor.com.