Servicing

Freddie Mac has appointed three new vice presidents, two of whom have been serving in the posts on an interim basis.Margaret A. Colon was named vice president of corporate finance operations in the Corporate Finance Division; Charles Foster was named vice president for the Securities Sales & Trading Group in Freddie Mac's Single Family Securitization Group; and Jesse Abraham was promoted to vice president for servicer analytics and risk management in the Servicer Division. Ms. Colon, who has been serving in her post since November 1997, is responsible for all operational risk, information management, strategic engineering, and portfolio administration processes for Freddie Mac's $200 billion retained portfolio and provides treasury services for cash and security transactions. A 15-year veteran of Freddie Mac, she was previously vice president and assistant to the president. Mr. Foster, who has also been serving in the appointed post on an interim basis, oversees the daily operation of Freddie Mac's broker/dealer function, including securities trading and underwriting, repo funding, credit and interest rate risk management, institutional sales, and research. He was previously national sales director of the Securities Sales & Trading Group. Mr. Abraham's new post, vice president for servicer analytics and risk management, is a newly created position in the Servicer Division. "The creation of a new senior position in this area recognizes the importance of information management and analytical tools to the division's future success," said Paul Peterson, senior vice president of the Servicer Division. Mr. Abraham was previously the division's director of credit loss forecasting. Freddie Mac's website address is http://www.freddiemac.com.

Resource Bancshares Mortgage Group Inc., Columbia, S.C., has reported net income of $13.1 million ($0.56 per share) for the second quarter.Excluding a $1.5 million pretax gain from the sale of the retail production, the company's operating earnings were a record $12.2 million ($0.52 per share), compared with $7.4 million ($0.35 per share) a year ago. The company's total agency-eligible mortgage loan pipeline was $1.8 billion at June 30, compared with $1.5 billion a year earlier, and its agency-eligible servicing portfolio totaled $9.4 billion, up from $7.2 billion a year earlier. The earnings increase for the second quarter was mainly attributable to a $19.2 million increase in net gain on sale of loans and a $1.5 million gain on sale of the retail production platform. The company said the gain-on-sale increase for loans "are primarily due to increased production and gains derived from the growing subprime and commercial mortgage operations, neither of which contributed significantly to the comparable periods of the prior year."

Delta Financial Corp., Woodbury, N.Y., has reported a net loss of $4.9 million ($0.32 per share) for the second quarter, compared with a net income of $7.2 million ($0.47 per share) a year ago.The net loss is "the direct result of fair value adjustments the company made to its residual...and servicing assets by increasing the prepayment assumptions it uses in valuing these assets," Delta said. The assumptions were changed from a 12-month ramp to "a vector curve with a peak speed of 31% for fixed-rate mortgages and 50% for adjustable-rate mortgages," the company reported. Hugh Miller, Delta's president and CEO, attributed the increase in prepayments to low interest rates and a flattened yield curve. "While we are not convinced that the current interest rate environment will continue unabated and believe that the spike in prepayments may only be a short-term event," Delta decided it was "prudent" to adjust its prepayment assumptions, he said. "It is important to note that the recent spike in prepayments...has occurred predominantly in our older pools and mostly for our adjustable-rate mortgages, neither of which represent a significant portion of our residual asset," Mr. Miller said. Delta's website address is http://www.deltafinancial.com.

The ratings on United Companies Financial Corp., Baton Rouge, La., have been placed under review by Standard & Poor's and Duff & Phelps Credit Rating Co. in the wake of the subprime lender's announcement that it has retained Salomon Smith Barney to "seek a potential strategic partnership."S&P placed UCFC's ratings on Credit Watch with developing implications, which means the ratings could be raised, lowered, or affirmed depending on the outcome of the review. Duff & Phelps placed its UCFC ratings on Rating Watch--Uncertain. S&P said its action reflects concerns about UCFC's announcement that second-quarter earnings will be about $10 million lower than expected as a result of charges related to a writedown in its interest-only strip, and about "heightened competition in the subprime home equity markets as well as the declining trend in the company's profitability and asset quality measures in selective pools." Duff & Phelps also cited "the fundamentals of the subprime home equity lending business," higher prepayment levels in relation to prepayment assumptions, and "pressure on capital measures" stemming from declining profitability.

The subordinate classes from all of Green Tree Financial Corp.'s 1994 manufactured housing deals and from 13 Green Tree home improvement loan deals have been downgraded by Moody's Investors Service.The actions stemmed from the recent confirmation at Baa3 (with a negative outlook) of the rating on Green Tree's long-term senior-debt securities, Moody's said. The subordinated classes are supported by a 100% guarantee from Green Tree. "Given the relatively low absolute levels of excess spread, limited seasoning, and limited spread to cover expected future losses, the ratings on these subordinated classes rely primarily on Green Tree's corporate guarantee for credit support," the rating agency said of the downgrades on the manufactured housing deals. Similar factors were cited in home improvement loan deal downgrades. In addition to the downgrades, Moody's confirmed the ratings on 34 classes of manufactured housing deals and one class of home improvement loan deal.

Amresco Inc., Dallas, has agreed to purchase Mortgage Investors Corp. of St. Petersburg, Fla. for an upfront price of $70 million.MIC is the nation's 15th largest originator of FHA/VA loans, specializing in VA streamlined refinance loans (also known as interest rate reduction refinance loans). For the first six months of this year, MIC's production volume totaled $1.3 billion. To originate loans, MIC has a network of 30 retail branches. MIC sells all of its VA originations on a servicing-released basis. In addition to the $70 million payment (of which 82% will be in Amresco common stock), Amresco will pay the former owners of privately held MIC an earnout premium over a three-year period not to exceed $105 million. When the deal is completed, MIC will be Amresco's fifth line of business and will be called Residential Mortgage Banking. The existing residential business at Amresco will be renamed Home Equity Lending.

Links Securities Inc., a New York-based broker/dealer specializing in mortgage-backed securities and structured finance, has announced the appointment of three new managing directors.David Brindley and Jonathan Davis will be responsible for developing residential mortgage whole loan business, including origination, securitization, and settlement. Cameron A. Lochhead will be responsible for sales and general business development. Mr. Brindley was previously a senior vice president at Donaldson, Lufkin & Jenrette Securities Corp., specializing in mortgage and mortgage derivative products, servicing hedge strategies, and subprime mortgage originations. Mr. Davis was also a senior vice president at DLJ, where he was responsible for the structuring and settlement of new-issue whole loan collateralized mortgage obligations. Mr. Lochhead was formerly senior vice president for worldwide sales and marketing at Internet Securities, Boston.

Two classes of IndyMac Inc. mortgage-backed securities have been downgraded by Fitch IBCA Inc. The rating on IndyMac Inc.(CWMBS) Series 1994-L, Class B3 was lowered from BBB to BB and remains on RatingAlert with negative implications. The rating on Class B5 of the same series was lowered from CCC to D. Class B4 was downgraded to CCC on June 2. The actions stemmed from loss levels and high delinquencies in relation to available credit support, Fitch IBCA said. As of June 25, 1.10% of the pool was more than 90 days past due, and losses totaled $915,543, 0.46% of the initial 1994-L pool. Classes B3 and B4 have 0.75% and 0.01% of credit support, respectively, the rating agency said. Fitch IBCA's website address is http://www.fitchibca.com.

Amresco Inc., Dallas, has announced that it does not expect to make writedowns in the value of its retained interests from securitizations in the foreseeable future.Citing its "conservative" valuation and accounting practices, Amresco "reiterated its confidence" in the value of its retained interests despite increased prepayments in its securitized residential pools in the second quarter. A similar pre-earnings statement on prepayments has been issued by Southern Pacific Funding Corp., Oswego, Ore.

New Century Mortgage Corp., Irvine, Calif., has completed a $474 million securitization, its largest to date.New Century Fixed-Rate Certificates, Series 1998-NC3, consisted of nine classes with pass-through rates ranging from 6.00% to 6.93%, according to the company's parent, New Century Financial Corp. Mortgage properties are located in 46 states, with the heaviest concentrations in California, Texas, and Florida. The deal was underwritten by Salomon Smith Barney. New Century Mortgage will act as master servicer, with Comerica Mortgage Corp. as subservicer.