Servicing

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.

NovaStar Financial Inc.'s subsidiary NovaStar Mortgage has completed its second securitization of 2004, a deal with a face value of approximately $1.37 billion.Lead managers RBS Greenwich Capital and Wachovia Securities, along with co-managers Deutsche Bank Securities and Morgan Stanley, underwrote the transaction, NovaStar Mortgage Funding Trust, series 2004-2. NovaStar Mortgage can be found on the Web at http://www.novastarmortgage.com.

First Horizon Home Loans, Irving, Texas, has acquired the operations of The Equity Group Financial Inc., a mortgage banking company based in Livonia, Mich., for an undisclosed amount.Jay Bobel, EGF's president and founder, will become a senior vice president at First Horizon and will focus on recruiting more mortgage sales professionals, EGF reported. Licensed in Michigan and Ohio, EGF has grown from four associates to more than 100 over the past nine years, according to the company. It can be found online at http://www.egfloans.com.

The First American Corp., Santa Ana, Calif., has completed its acquisition of SNK Holdings Inc., a privately held provider of mortgage default services based in Northbrook, Ill., and its subsidiary operations for an undisclosed amount.First American said the acquisition -- including SNK's LOGS Financial Services -- has become First American National Default Outsourcing, which it termed "a growing component" of the company's Mortgage Information Services group. "The combination of default servicing operations, technology integration, process improvements, and other synergies will reduce First American National Default Outsourcing's annual operating expenses by $5 million within the first 12 months," First American said. "The acquisition will also strengthen First American's countercyclical revenue base, as the company will now service approximately 60% of the default outsourcing market." First American can be found online at http://www.firstam.com.

Four classes of Credit Suisse First Boston Mortgage Securities Corp. commercial mortgage pass-through certificates, series 2000-FL1, have been downgraded by Moody's Investors Service.The downgrades were as follows: class F, from Ba2 to B1; class G, floating-rate, from Ba3 to B3; class H, floating-rate, from B2 to Caa1; and class J, floating-rate, from B3 to Ca. In addition, the rating agency confirmed the ratings of three other classes in the deal. As of the May 17 distribution date, the transaction's aggregate certificate balance had decreased by approximately 63.4%, to $121.7 million, due to the payoff of 27 loans and realized losses of approximately $2.2 million, Moody's said. "Adverse selection has affected the credit quality of the pool, with four of the five remaining loans in special servicing," Moody's said. "Significant losses are anticipated on the San Tomas Loan, a $78.9 million pari passu loan." That loan, plus two others, are real estate owned. Moody's can be found online at http://www.moodys.com.

The Prestwick Mortgage Group, Alexandria, Va., is brokering the sale of servicing rights on a $140 million portfolio of Fannie Mae and Freddie Mac loans, all on properties in Michigan.The portfolio has a 5.570% weighted average note rate. The average loan balance is $105,495, and the weighted average seasoning is 25 months. The delinquency rate is 0.83%. Bids are due June 23.