Servicing

Safeguard Properties Inc., Brooklyn Heights, Ohio, has initiated a series of "industry awareness" conference calls on issues facing servicers, mortgage companies, governmental agencies, and the entire real estate industry in the wake of hurricanes Katrina and Rita.Safeguard said the first of six such calls occurred days after Hurricane Katrina devastated the Gulf Coast. They included more than 200 participants from all sectors of the industry, including servicers, field service providers, insurance carriers, and representatives of Freddie Mac, Fannie Mae, the Mortgage Bankers Association, the Department of Homeland Security, the Federal Emergency Management Agency, the Department of Veterans Affairs, the Department of Housing and Urban Development, and city code enforcement offices from across the nation, the company reported. "These calls aligned everyone in the industry to formulate a consensus on how to handle a crisis of this magnitude and develop an effective recovery plan," said Robert Klein, Safeguard's founder and chief executive officer. Safeguard, which offers field services to the mortgage servicing industry, can be found online at http://www.safeguardproperties.com.

Three classes of home equity loan pass-through certificates issued by GE Capital in 1996 and 1997 have been downgraded by Fitch Ratings.The downgrades were as follows: series 1996-HE4, class M, from A to BBB; series 1997-HE1, class M, from A to BBB; and series 1997-HE4, class B1, from CCC to CC. Fitch also upgraded two classes and affirmed the ratings on 26 other classes in 11 GE Capital deals. Fitch attributed the downgrades to the deterioration of credit enhancement relative to monthly losses that have risen or held steady.

Five classes in two issues of Salomon Brothers Mortgage Securities VII Inc. mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2000-UP1, class B-4, from B to CCC; series 2001-UP2 (group 1 pool 1), class BF-4, from BB-minus to B; and series 2001-UP2 (group 2), class BV-3, from BBB-minus to BB, class BV-4, from CCC to CC, and class BV-5, from CC to C. In addition, Fitch upgraded two classes and affirmed the ratings on 26 classes in five SBMS issues. The downgrades were attributed to poor collateral performance and the deterioration of asset quality beyond original expectations. The series 2000-UP1 transaction is collateralized by 30-year fixed-rate mortgage loans, and the series 2001-UP2 deal consists of 30-year fixed-rate and 15-year adjustable-rate loans. The group 1 pool is further subdivided into subgroups IA and IB, which are not fully cross-collateralized but do provide limited cross-support in certain cases, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

The Federal Home Loan Banks' Mortgage Partnership Finance program funded $2.6 billion of loans in the third quarter, up 41% from the total of the previous quarter.The FHLBank of Chicago, which coordinates the MPF program, also reported that 939 FHLBank member financial institutions are approved to fund such loans, a gain of 20 for the quarter. MPF assets funded since the program's inception totaled $158.5 billion in the third quarter, the bank reported. Under the MPF program, the risks of long-term, fixed-rate mortgage lending are shared between mortgage lenders and their regional FHLBank, with the former handling the credit risk and the customer relationship and the latter bearing the interest rate risk. The program can be found on the Web at http://www.fhlbmpf.com.

MacKenzie Patterson Fuller Inc., San Francisco, has announced that the company and its affiliates have offered to buy up to 85,000 shares of common stock of Palmetto Real Estate Trust.The offered price is $3 per share. The company said the acquisition of the shares would result in the ownership of approximately 4.8% of the outstanding shares of Palmetto by MPF. The company can be found on the Web at http://www.mpfi.com.

First Advantage Corp., St. Petersburg, Fla., has announced the acquisition of the mortgage credit reporting assets of Credit Data Services, Maitland, Fla., from Experian for an undisclosed amount.First Advantage said the transaction provides added Southeastern market share to its mortgage credit company, First American Credco. CDS was acquired by Experian earlier this year. First Advantage said its acquisition of CDS is connected to Experian's joint venture agreement with The First American Corp., which is the majority owner of First Advantage. The companies can be found on the Web at http://www.fadv.com and http://www.firstam.com.

Freddie Mac has reduced its profits for the first half of 2005 by $220 million, lowering reported net income to $1.4 billion from the $1.6 billion previously reported in the company's Aug. 31 financial release.Freddie Mac said the mistake, stemming from miscalculations since 2001 in a legacy computer system, caused interest income on certain mortgage securities to be accrued too early. The government-sponsored enterprise said management found and corrected the error in the course of internal control enhancements. Freddie Mac noted that the amount of the income reduction represents less than 1% of its $36.1 billion of reported regulatory core capital. Martin Baumann, Freddie Mac's chief financial officer, said Freddie continues to make progress in fixing its financial problems. "When we found this error, we corrected it immediately," he said. "We are continuing to move forward to complete the job of producing timely, accurate financial reports early in 2006." Freddie Mac can be found online at http://www.freddiemac.com.

Five classes from three Metropolitan Mortgage & Securities Co. Inc. securitizations have been downgraded by Fitch Ratings.The downgrades were as follows: series 1998-B, class B-1, from B-minus to CCC; series 2000-A, class M-1, from AA to A, and class M-2, from CCC to C; and series 2000-B, class M-2, from A to BBB, and class B-1, from CCC to C. In addition, Fitch upgraded 15 classes and affirmed the ratings on 15 others from eight Metro Mortgage issues. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations. The transactions "have failed their cumulative loss triggers, which has prevented the trusts from paying principal to the subordinate bonds," the rating agency said. The collateral for the deals consists chiefly of fixed- and adjustable-rate mortgage loans secured by first liens on residential properties or commercial real estate. The majority of the mortgage loans were originated or acquired by Metropolitan Mortgage, which filed for Chapter 11 bankruptcy protection in February 2004.

Irwin Financial Corp., a mortgage banker and home equity lender based in Columbus, Ind., has announced that it will correct its accounting treatment of incentive servicing fees, which will henceforth be regarded as servicing assets rather than derivative instruments.Irwin said that, under its ISF contracts, it receives cash payments from buyers of certain home equity loans if its servicing of the sold loans meets specific performance targets. The company has been accounting for ISFs as derivative instruments under Statement of Financial Accounting Standards No. 133. "However, upon further consideration of the nature of incentive servicing fees and additional interpretive input, the corporation believes ISFs should be treated as servicing assets under SFAS 140," Irwin said. The company can be found online at http://www.irwinfinancial.com.

PHH Mortgage, Mt. Laurel, N.J., has announced the purchase of the mortgage assets of CUNA Mutual Mortgage Corp., increasing PHH Mortgage's credit union servicing portfolio to approximately $16 billion.The financial terms of the transaction were not disclosed. Under the agreement, PHH Mortgage acquired certain mortgage-related assets and assumed origination, servicing, and subservicing contracts, the company reported. The majority of CUNA Mutual's originations come from wholesale and correspondent channels, and its servicing portfolio for credit unions totaled approximately $10 billion, PHH Mortgage said. The company said it was chosen by CUNA Mutual because its private-label business model enables CUs to customize mortgage products and services at competitive rates. "PHH Mortgage is able to say to all credit unions that we do not cross-sell any products and services that may compete with a credit union's product menu," said Terry Edwards, president and chief executive officer of PHH Mortgage. The company, a subsidiary of PHH Corp., can be found on the Web at http://www.phh.com.