Servicing

The delinquency rate on home equity loans held by banks declined sharply in the first quarter, according to the American Bankers Association.Home equity loan delinquencies declined to 2.37% from 2.50% in the last quarter of 2003, according to the ABA's consumer credit delinquency bulletin. Past-due payments on home equity lines of credit also fell to 0.29% from 0.43%, remaining the lowest delinquency rate among the consumer credit categories tracked by the ABA. One weak spot was manufactured housing loans, where the delinquency rate increased to 5.93% from 5.56%. The ABA also reported that credit card late payments declined.

USFN, a network of mortgage banking attorneys, honored Department of Housing and Urban Development executive Leslie Bromer with its inaugural 2004 Mortgage Servicing Leadership Award during the group’s recent conference in San Antonio, Texas.The Mortgage Servicing Leadership Award was given to Ms. Bromer in recognition of her outstanding contributions to the mortgage servicing industry during a career that has spanned more than 28 years at HUD. The USFN said Ms. Bromer has been instrumental in opening and expanding lines of communication between her agency and the mortgage servicing industry. The honor will be awarded annually to one outstanding individual who best exemplifies the highest standards of service and dedication to the mortgage servicing industry.

A House committee-approved bill to create a federally insured zero-downpayment mortgage program would need $125 million appropriations each year to cover losses from defaults and foreclosures, according to an estimate by the Congressional Budget Office.The bill (H.R. 3755) approved by the House Financial Services Committee would eliminate the traditional 3% downpayment on Federal Housing Administration-insured loans and even allow first-time homebuyers to roll closing costs into the loan amount. However, the CBO found that the higher costs of offering these risky "zero-down" loans would not be offset by higher insurance premiums. "CBO estimates that implementing this legislation would have a net cost of about $500 million over the 2006-2009 period, assuming future appropriation actions consistent with the bill," the CBO says.

Delinquencies in California declined in the first quarter, and so did the percentage of loans in foreclosure, according to the California Mortgage Bankers Association.The CMBA reported that the delinquency rate for mortgage loans on one- to four-unit residential properties fell 55 basis points to 2.13% in the first quarter. The percentage of loans in which foreclosure was started fell 1 bp to 0.17%, while the percentage of loans in the foreclosure process fell 4 bps to 0.33%. The association can be found online at http://www.cmba.com.

New York Mortgage Trust Inc., a real estate investment trust, has announced the pricing of a $135 million initial public offering of its common stock at $9 per share.The shares began trading June 24 on the New York Stock Exchange under the symbol NTR. The company said it will acquire its predecessor, The New York Mortgage Co. LLC, a residential mortgage banking firm licensed (or exempt from licensing) in 38 states and based in New York City. The REIT said it plans to build a portfolio of residential mortgage loans consisting largely of prime adjustable-rate mortgage loans originated by NYMC, and also intends to invest in residential adjustable-rate mortgage-backed securities on a leveraged basis. The underwriters have been granted an option to purchase up to 2,225,000 additional shares of common stock to cover any overallotments. Friedman, Billings, Ramsey & Co. acted as the sole book-runner and joint lead manager, and J.P. Morgan Securities Inc. acted as the other joint lead manager.

Standard & Poor's has downgraded its ratings outlook on the Federal Home Loan Bank of Des Moines from stable to negative, citing its investment in mortgage partnership finance assets.S&P said the downgrade is due, in part, to the "longer-dated" residential loans that make up MPF. The rating agency also cited "the degree of hedging required to facilitate the growth of MPF loans versus advances to its members." At the end of March, the Des Moines FHLBank's MPF portfolio totaled $16.1 billion. Its allowance for credit losses was $6 million, compared with $3.3 million a year earlier, and its earnings declined by 28% in the first quarter. The Des Moines FHLBank downplayed the rating change, noting that, despite the downgrade, S&P reaffirmed its overall triple-A credit rating.

The First American Corp., Santa Ana, Calif., has announced the acquisition of the real-estate-owned segment of Burrow Closing Management Corp., a provider of REO services to mortgage lenders and asset management companies.The terms of the transaction were not disclosed. First American said the acquired operations will be organized as a wholly owned subsidiary named National Default REO Services LLC, but it will do business under the name Burrow REO. Scott Brooks, who has managed the business since its inception, has joined First American and will serve as chief executive officer of Burrow REO. First American said it will retain about 50 REO professionals now located in Mission Viejo, Calif., and transfer them to its Santa Ana headquarters. The company can be found on the Web at http://www.firstam.com.

Two classes of notes issued by Bristol CDO I Ltd. have been downgraded by Fitch Ratings.Class B was downgraded from AA to A-plus, and class C was downgraded from BBB to B. In addition, the ratings on classes A-1 and A-2 in the deal were affirmed. The collateralized debt obligation is secured by a static pool of asset-backed securities, of which 41.9% are residential mortgage-backed securities, Fitch said. The rating agency attributed the downgrades to a deterioration in collateral, reporting that the overcollateralization ratio of class C has fallen below its minimum threshold of 102% since November 2003. "There have been two assets that have defaulted, totaling $11 million in par value," Fitch said. "In addition, Bristol has exposure to volatile ABS sectors such as manufactured housing (11%) and aircraft lease pools (7.7%)." Fitch can be found online at http://www.fitchratings.com.

Wachovia Corp., Charlotte, N.C., is continuing its buying spree, having signed a merger agreement to acquire SouthTrust Corp., Birmingham, Ala., in a stock-for-stock transaction valued at $14.3 billion.Both companies are active in the mortgage market, with combined first-quarter production of $5.0 billion (on a pro forma basis) and a servicing portfolio of $10.3 billion, according to data compiled by National Mortgage News and the Quarterly Data Report. However Wachovia's first-quarter year-to-year mortgage activity is down some 47%, from $6.4 billion in the first quarter of 2003 to $3.4 billion for this year. SouthTrust had $1.7 billion in production in the past quarter. On the servicing side, SouthTrust has the larger portfolio, at $5.7 billion, versus Wachovia's $4.6 billion. Among the more recent acquisitions by Wachovia was First Union Corp.

GCC Servicing Systems, Southfield, Mich., is currently developing GServ, which will be a Web-based solution that will allow bank tellers and loan officers access to a customer's mortgage loan information.The new servicing product will make it possible for banks to use the core processing system of their choice and at the same time giving tellers and loan officers access to customer mortgage information via an Intranet setup to the bank's servicing information on the GCC platform. GServ has an anticipated release date of October of 2004. GCC is a mortgage service bureau, mortgage servicing technology and service provider that can found on the Web at http://www.gccservicing.com.