Servicing

First State Bancorp., Albuquerque, N.M., has announced the sale of 194 residential mortgage loans that were obtained in the acquisition of First Community Industrial Bank in 2002.The loans, which were sold at 97.75 to unrelated third parties, had a carrying value of approximately $38.5 million, the company said. Michael R. Stanford, president and chief executive officer of First State, said the sale was part of the company's strategy of "repositioning our loan portfolio in Colorado and Utah with a greater focus on commercial lending." The company can be found online at http://www.fsbnm.com.

At a company investors conference March 30, Countrywide said the company hopes to more than double annual pretax earnings to $7.5 billion by 2008.This year, Countrywide estimates that it will earn $3.5 billion on a pretax basis. The company also hopes to have $250 billion in assets by 2008, up from $98 billion in 2003. And Countrywide said it is aiming for an origination market share of 30%, compared with 11.7% today, and a servicing portfolio of $1.9 trillion in home loans, up from $645 billion at the end of last year.

The board of directors of the Federal Home Loan Bank of Seattle has declared a class B(1) annualized stock dividend of 4% for the first quarter, but cautioned that market trends may result in lower dividends later this year."Earnings thus far in the first quarter have continued to be under significant pressure for the Seattle bank," said Norman B. Rice, president and chief executive officer of the Seattle FHLBank. "Interest rates have fallen, which has resulted in faster recognition of premium expense on mortgage loans and securities, as well as generally lower yields on assets. In addition, new volume in our Mortgage Purchase Program has been lower than anticipated in the first quarter." The bank can be found online at http://www.fhlbsea.com.

Three classes of FMAC Loan Receivables Trust, series 1998-C, have been downgraded by Fitch Ratings.The downgrades were as follows: class B, from BBB to BB; class C, from BB to B; and class F, from C to D. The downgrade to class F was based on a default and writedown of the notes to zero, Fitch said. The other two downgrades resulted from the erosion of credit enhancement from writedowns and losses passed through to the trust. Fitch can be found online at http://www.fitchratings.com.

Freddie Mac has established an across-the-board minimum servicing fee of 25 basis points on its adjustable-rate mortgage products.Previously, the servicing fee minimum on some ARM products -- including balloons and one- and three-year ARMs -- was 37.5 bps. The reduction of the minimum servicing fee to 25 bps will enable Freddie Mac seller/servicers to pass on more of the coupon yield to investors, reducing their need to capitalize servicing rights. "It adds flexibility," said a Freddie Mac spokeswoman. In an unrelated matter, Freddie Mac's loan purchases fell to $33.8 billion in February, compared with $36.9 billion the month before. The company's retained portfolio fell to $637.0 billion from $639.6 billion the previous month.

Freddie Mac has announced a change in its Multilender Swap program under which lenders will swap conventional 15- and 30-year fixed-rate mortgages for Giant PCs instead of a pro rata share of a Gold PC.The program change will take effect with multilender pools posted on or after April 1 for settlements on or after July 1, the government-sponsored enterprise said. It will enable Freddie Mac to create Giant PCs by combining Gold PCs backed by mortgages purchased under its cash program with Gold PCs backed by mortgages purchased under the Multilender Swap program. "This capability will expand and enhance our Multilender Swap program by providing large, liquid, and more predictable Giant PCs in exchange for conventional 15- and 30-year mortgages," Freddie Mac explained. Details of the program can be found online at http://www.freddiemac.com/singlefamily.

Despite a rise in credit card overdue rates, the percentage of home equity loans and lines of credit that were overdue at the end of last year declined, according to the American Bankers Association.Home equity loan delinquencies declined slightly to 2.50%, from 2.52% in the third quarter, while the past-due rate on home equity lines of credit dropped to 0.43% from 0.52%. That was the lowest delinquency rate among the eight types of consumer loans tracked by the ABA. Mobile home delinquencies decreased to 5.56% from 6.00% in the third quarter. The ABA can be found on the Web at http://www.aba.com.

Postings of new notices of foreclosure auctions in the Phoenix metropolitan area have reached nearly 1,500 per month, according to Foreclosures.com, a Fair Oaks, Calif.-based investment advisory firm specializing in distressed property.In the first nine weeks of 2004, 3,285 properties in the Phoenix area have gone into foreclosure, said company president Alexis McGee. Ms. McGee attributed the wave of foreclosures to several factors. "First of all, during the recent boom in home prices and sales volume, lenders relaxed their qualification standards to get more people into homes," she said. "Secondly, record low interest rates have led homeowners to overleverage their properties, pulling out cash for major purchases and to refinance high-interest credit card balances." Ms. McGee also cited predatory lending as a factor. "Until there is a law for the attorney general to enforce, it's still the Wild West in Arizona as far as abusive lending is concerned." The investment advisory firm can be found on the Web at http://www.foreclosures.com.

With mortgage rates falling to their lowest level in six months in mid-March, some lenders may face an unpleasant impairment timing scenario when they report first-quarter financial results.Mike McMahon of Sandler O'Neill & Partners said in a report that if rates remain low at the end of the month, lenders will likely have to report impairment to the value of their mortgage servicing rights. But lenders that rely upon loan production gains to offset servicing losses may be in a bind, because loan applications taken in March in most cases won't be funded until April or May, meaning that loan sale gains will be deferred until the second quarter. Mr. McMahon said lenders that have been laying off loan production employees aggressively in anticipation of higher interest rates may be particularly vulnerable to the impairment problem.

BB&T Corporation, Winston-Salem, N.C., has lowered its earnings estimate for this year to reflect the impact that "fluctuating interest rates" have had on its mortgage operation. Management now expects earnings per share for 2004 to be $2.75 to $2.90 excluding the impact of merger-related charges. Previous guidance was $2.85 to $2.95. John Allison, BB&T's chairman and CEO, said, "fluctuations in interest rates are producing unexpected pressure on mortgage banking operations." Specifically, he said originations have been slower than expected in the first quarter, while falling rates have impaired the value of BB&T's mortgage servicing rights.