Servicing

PremierWest Bancorp, Medford, Ore., has announced the selection of PHH Mortgage as a strategic partner in providing mortgage services to the bank's customers.Jim Ford, president of PremierWest Bancorp and PremierWest Bank, said the alliance will enable customers to apply for a loan "via their channel of choice, including personal loan officers in PremierWest branches, through the Internet 24 hours a day, or by telephone." All loans will be serviced by PHH Mortgage, Mt. Laurel, N.J. The companies can be found on the Web at http://www.premierwestbank.com and http://www.phh.com.

Anne V. Lee has been named acting president and chief executive officer of Coast Financial Holdings Inc., Bradenton, Fla., to replace Brian F. Grimes, who was fired in part because of a federal and state cease-and-desist order involving its residential construction loan program.Coast Bank, a subsidiary, recently agreed to the entry of the C&D order from the Federal Deposit Insurance Corp. and the Florida Office of Financial Regulation relating to the bank's residential construction-to-permanent loan portfolio. James K. Toomey, chairman of Coast Federal, said the company has "already addressed a large number of the corrective actions outlined in the C&D, and several of these issues have already been resolved." The FDIC order directs Coast Bank to take measures regarding board oversight, management planning and auditing, equity management, loan-loss allowance, loan portfolio review, liquidity management, and information technology, Coast Financial reported. Ms. Lee will be the company's chief liaison with state and federal regulators regarding the residential construction loan program. The company can be found online at http://www.coastfl.com.

A contraction in subprime lending is well under way, and it is "not unusual for financial markets to overreact following losses," according to a study commissioned by the American Financial Services Association.However, there is a "real danger" that aggressive legislation or regulation could "exacerbate the effect this contraction has on the availability of credit, leaving huge numbers of Americans out in the cold," said George Wallace, executive director of the Center for Statistical Research, which conducted the study. The CSR study shows that a 10% contraction in subprime lending could cut off mortgage credit to 580,000 American families, and a 20% contraction could affect 1.1 million borrowers. The Alexandria, Va., research firm points out that subprime foreclosure rates are rising but are not unusually high by historical standards. "The increases in foreclosure rates are not an indication that the mortgage marketplace is structurally flawed or requires regulatory intervention," the CSR study says.

The Center for Responsible Lending says the worst of the subprime foreclosure wave is not over and that its research shows that well over one million borrowers (possibly up to 1.5 million) will lose their homes over the next few years."A closer look shows that subprime loans originated in 2005 and 2006 alone will account for over a million projected foreclosures," CRL president Michael Calhoun said. In a recent speech, Mortgage Bankers Association chairman John Robbins took issue with the CRL's research and said it showed that there have been 1.6 million subprime foreclosures since 1998 and that the CRL is projecting another 600,000 foreclosures in the near future. "It's still a lot of people, but out of 75 million homeowners and 50 million mortgage holders, it's not an eyebrow-raising number when looked at over that period of years," Mr. Robbins said in a speech at the National Press Club. The MBA apparently misread the CRL's data and "reversed our estimate" of the number of foreclosures that have occurred and future foreclosures, Mr. Calhoun said. "Mr. Robbins suggested that the worst is over for subprime foreclosures," he said. "That is simply not the case."

Class II-B-5 of Luminent Mortgage Loan Trust series 2006-3 has been placed on Rating Watch Negative by Fitch Ratings.In addition, the ratings on five other classes in the transaction were affirmed. The negative rating action was attributed to "signs of increasing credit risk." The collateral consists of adjustable-rate mortgage loans.

Two classes of Asset Backed Securities Corp. subprime mortgage pass-through certificates have been placed on Rating Watch Negative by Fitch Ratings.The affected securities were class M-11 of series 2006-HE2 and class M-10 of series 2006-HE4. In addition, Fitch affirmed the ratings on 55 classes in five ABSC deals. Fitch attributed the negative rating actions to a deterioration in the relationship between loss expectations and credit enhancement. The transactions consist chiefly of fixed- and adjustable-rate subprime residential mortgage loans.

Class B-1F of Amresco Residential Securities Corp. mortgage loan pass-through certificates, series 1997-3 group 1, has been downgraded from CCC/DR2 to CC/DR4 by Fitch Ratings.In addition, the Distressed Recovery rating of class B-2F was lowered from DR3 to DR6, and the ratings on 38 classes in seven Amresco transactions were affirmed. The downgrade was due to a deterioration in the relationship of credit enhancement to loss expectations, Fitch said. The pools consist of fixed- and adjustable-rate conventional mortgages.

MERS, the electronic registry for tracking ownership of mortgage loans and servicing rights, has registered its 50 millionth loan.The milestone comes nine years after MERS pioneered its "MERS as original mortgagee" process, enhancing the registry by eliminating the need for an initial assignment to MERS. R.K. Arnold, president and chief executive officer of MERS, said the MOM process has allowed lenders and servicers to streamline their operations and reduce costs. "Having 50 million loans registered since then is gratifying, especially when we realize that reducing lender costs to originate loans benefits borrowers, especially first-time homeowners," he said. MERS eliminates the need to prepare and record paper assignments when mortgage companies sell loans or servicing rights. MERS estimates that lenders save at least $25 for each loan that is registered on the system. Currently, some 3,000 participating lenders register an average of 25,000 loans on MERS each day, the company said. MERS can be found on the Web at http://www.mersinc.org.

Fitch Ratings has affirmed the long-term issuer default and short-term issuer ratings (BBB-plus and F2, respectively) for Astoria Financial Corp. and Astoria Savings and Loan, but the rating outlook has been revised from stable to negative.Fitch said the negative outlook reflects the "profitability pressure" on the Lake Success, N.Y.-based mortgage lender stemming from an adverse interest rate environment that has caused "significant net interest margin compression" over the past three years. "Capital levels have declined as a result of fairly aggressive stock repurchases, while equity generation remains modest," Fitch said. "Although capital measures are sound from a regulatory perspective, Fitch views negatively the decline in capitalization, particularly in light of [Astoria Financial's] increased mix of reduced- and no-documentation loans." Astoria can be found on the Web at http://www.astoriafederal.com.

First National Bank of Arizona has turned to Phoenix-based Accenture for post-closing business process outsourcing.The Accenture service combines personnel, process, and technology to fully automate this part of mortgage fulfillment. Financial terms of the two-year contract were not disclosed. Accenture said it will provide the bank with file-room services, including imaging to convert paper documents into electronic form, indexing to capture relevant information in digital form, workflow services to speed processing, and performance metrics spanning the process. It will also offer data and document review to confirm that loans have met underwriting, servicing, and secondary-market salability requirements. Accenture will deliver the service both onsite and through its Global Delivery Network, which includes more than 40 centers in 30 cities around the world. The company can be found on the Web at http://www.accenture.com.