Servicing

Citigroup, one of the most active buyers in the mortgage space over the past few years, has agreed to pay $1.26 billion for Principal Residential Mortgage, Des Moines, Iowa, the nation's 11th-largest residential servicer.The acquisition, which is expected to close by year-end, will make CitiMortgage, O'Fallon, Mo., the nation's fifth-largest residential funder and servicer. CitiMortgage currently ranks seventh in servicing, and eighth in production, according to figures compiled by National Mortgage News and the Quarterly Data Report. Once completed, the sale will leave Cendant Mortgage, Mt. Laurel, N.J., and GMAC Mortgage, Horsham, Pa., the lone nondepositories among the top 15. Cendant was almost sold to Countrywide Home Loans about a month ago, but the sale fell apart late in the negotiation process. In its May 10 issue, NMN broke the news that Citi was talking to Principal Financial Group, the insurance parent of PRM, about a deal.

Class B-1F of Amresco Residential Securities Corp. mortgage pass-through certificates series 1997-3, group 1, has been placed on Rating Watch Negative by Fitch Ratings.In addition, the ratings on 23 classes in several Amresco deals were affirmed, Fitch said. The Rating Watch Negative placement was attributed to loss levels and high delinquencies relative to the applicable credit support.

Two classes in two CWMBS (IndyMac) Inc. mortgage pass-through deals have been downgraded by Fitch Ratings.The downgrades were as follows: series 1995-C, class B4, from BB to B and removed from Rating Watch Negative; and series 1995-K A1, class B1D, from CCC to C. Fitch also affirmed the ratings on 20 residential MBS classes in six transactions and removed the following classes from Rating Watch Negative: series 1995-K A1, class B1C; series 1995-K A2, class B2D; series 1995-K A3, class B3C; series 1995-K A4, class B4C; and series 2000-E, class B3. The rating agency said the downgrades stemmed from loss levels and high delinquencies relative to the applicable credit support. Fitch can be found online at http://www.fitchratings.com.

Entrust Financial Services Inc., Denver, has announced a restructuring of a $2 million convertible promissory note.Entrust said the company and the noteholder agreed to amend and restate the terms of the note, which will bear interest at a rate of 12%. Its maturity date has been extended to May 1, 2006, and uncured events of default have been waived, Entrust said. Jeff Rudolph, the company's executive vice president and chief financial officer, said Entrust will reduce its annual interest charge by $640,000 per year as a result of the restructured debt. The company can be found online at http://www.entrustfs.com.

Class BF of Countrywide asset-backed securities series 2000-2, group 1, has been placed on Rating Watch Negative by Fitch Ratings.Fitch also affirmed the ratings on 12 CWABS classes and removed class BV of CWABS series 2000-2, group 2, from Rating Watch Negative. Fitch attributed the negative rating action to loss levels that exceeded the amount of group 1's excess spread in recent months.

Three classes of Conseco Home Equity 2000-B have been downgraded by Fitch Ratings.The downgrades were as follows: class MF-2, from A to BBB-minus; class BF-1, from BBB-plus to B and removed from Rating Watch Negative; and class BF-2, from BBB to CCC and removed from Rating Watch Negative. Fitch also affirmed the ratings on five other classes in the deal. The rating agency attributed the downgrades to high losses and high delinquencies relative to applicable credit support.

Applied Financial Technology, San Francisco, has entered into an agreement with McDash Analytics, Denver, that will provide McDash clients with AFT's short-term prepayment projections as well as housing turnover and refinancing scores.The strategic partnership combines scoring technology from AFT with McDash's database of nearly 20 million mortgages, about one half of the residential home loan market in the United States. Graham Williams, chief operating officer at AFT, told MortgageWire that the loan database will increase the "granularity" of AFT's scores and give McDash clients access to basic AFT prepayment scores and short-term prepayment projections. McDash provides prepayment and default management benchmarking services to the mortgage industry.

Prepayment rates for Fannie Mae mortgage-backed securities jumped during the April reporting period, especially among 2003 vintage 5.0% and 5.5% coupons, according to the Bear Stearns Prepayment Commentary.The constant prepayment rates of those coupons increased by over 50%, from 10.6 CPR and 24.4 CPR, respectively, in March to 16.0 CPR and 35.4 CPR in April, Bear Stearns analysts Dale Westhoff and Bruce Kramer reported. Speed-ups among higher coupons were "much more muted," they said, with 6.0s and 6.5s increasing by 15% and 5%, respectively. Speeds of 2003 and 2004 vintage Freddie Mac MBS were similar to or slightly below those of comparable Fannie Maes, which the Bear Stearns analysts said may stem from Freddie Mac's efforts to return its MBS speeds to market averages. "With minimal spillover effects expected from an origination pipeline with excess capacity, speeds across the entire coupon stack should reverse course in May as the effects of the 80-plus basis point selloff in mortgage rates since March begins to hit the numbers in May, June, and July," Mr. Westhoff and Mr. Kramer said. Bear Stearns can be found online at http://www.bearstearns.com.

Subprime servicer Fairbanks Capital Corp. has agreed to refund Florida homeowners $1.65 million for allegedly charging improper fees, according to state officials.The settlement agreement is the result of an extensive review of Fairbanks' records by state examiners. The $1.65 million does not come out of the $40 million pot that Fairbanks created as part of a settlement with the Federal Trade Commission last November. "It goes above and beyond" the Fairbanks/FTC settlement, said Bob Tedcastle of Florida's Office of Financial Regulation. Florida regulators alleged that the Salt Lake City servicing company charged unwarranted fees for appraisals and improper fees for releasing borrowers from mortgages that were paid off. They also alleged that Fairbanks improperly charged interest to cover advances the company paid for force-placed insurance, appraisals, and credit reports. A Fairbanks spokeswoman said the possibility of such settlements was disclosed last year.

Employment in the mortgage industry jumped 1.7% in March as low mortgage rates spurred refinancing and homebuying.The U.S. Bureau of Labor Statistics reported Friday that jobs in the mortgage banking/broker sector rose from 436,700 in February to 444,300 in March. The 7,600 jump in new hires came during a month when 30-year fixed mortgage rates dipped below 5.4%. The 30-year mortgage rate moved above 6.0% at the end of April, and the strong April jobs report is putting more pressure on rates. The BLS reported that the U.S. economy generated 288,000 new jobs in April and the unemployment rate fell to 5.6% from 5.7% in March. (There is a one-month lag in the BLS's reporting of mortgage-sector employment data. The April employment report released Friday only provided mortgage banking/broker data for March.) The BLS can be found online at http://stats.bls.gov.