Servicing

Fred Miller Jr., president and chief executive officer of the Bank of Anguilla (Miss.), has been elected chair of the board of directors of the Federal Home Loan Bank of Dallas.The FHLBank also announced the election of Pat Brister, a councilwoman for St. Tammany Parish in Mandeville, La., as vice chair. Mr. Miller, who joined the board in 1997, succeeds Henry Flores, whose term expired Dec. 31. Mr. Miller has been president of the Bank of Anguilla since 1986, and he is a past president of the Mississippi Bankers Association. Ms. Brister was named to the board in 2002 as a public-interest director. Until recently, she and her husband operated a company in Mandeville for more than 30 years, the FHLBank said. The Dallas FHLBank can be found online at http://www.fhlb.com.

Thornburg Mortgage Inc., Santa Fe, N.M., has priced an offering of 3.5 million shares of common stock at $29 per share.Net proceeds from the transaction, which are estimated at $96.3 million, will be used mainly to fund loans originated by the company and to buy adjustable-rate mortgage securities, Thornburg said. A.G. Edwards & Sons acted as the book-running lead manager for the transaction. The underwriters have been granted a 30-day option to buy up to 525,000 additional shares of common stock to cover any overallotments. Thornburg can be found online at http://www.thornburg.com.

Twenty-six single-family mortgage servicers have been honored by Freddie Mac for achieving its Tier One performance rankings, the government-sponsored enterprise has announced.The designation was given to servicers whose management of performing and nonperforming loans was deemed superior for two or more quarters in 2003. Tier One status brings with it fee waivers, financial rewards, and national recognition, Freddie Mac said. The government-sponsored enterprise ranks servicers in four tiers based on their investor reporting and default management. In addition to designating the Tier One servicers for 2003, Freddie Mac also inducted eight of the 26 servicers into its Tier One Hall of Fame for achieving Tier One status four years in a row. They are: Alliance Mortgage Co.; Bank of America Mortgage; Chevy Chase Bank FSB; Countrywide Home Loans Inc.; First Horizon Home Loan Corp.; HSBC Mortgage Corp. (USA); National City Mortgage Co.; and Wells Fargo Home Mortgage Inc.

The First American Corp., Santa Ana, Calif., has announced the signing of a letter of intent to acquire SNK Holdings Inc., a provider of mortgage default services, and its subsidiaries, including LOGS Financial Services.First American said it will combine the Northbrook, Ill.-based SNK with its Mortgage Information Group's National Default Outsourcing operations, creating a new company, First American National Default Outsourcing, to be based in Lewisville, Texas. First American will manage and direct outsourcing activities from regional offices in Milwaukee, Northbrook, and Jacksonville, Fla. "The addition of LOGS' servicing platform gives us greater capacity to support clients, and complements our recent acquisition of default claims management specialist Baker, Brinkley & Pierce," said James C. Frappier, president of First American Default Management Solutions. Regarding the acquisition of BB&P on Jan. 6, Mr. Frappier said it is "the only company in the industry that has proven itself capable of handling large volumes of claims efficiently, cost effectively, and with the turn time that our customers require." First American can be found online at http://www.firstam.com.

Terry Klein, the former head of First Nationwide Mortgage who now works as an industry consultant, says mortgage companies could live to regret reducing mortgage servicing fees the next time a real estate recession surfaces.Mr. Klein told the Mortgage Bankers Association's National Mortgage Servicing Conference in San Diego that he is skeptical of proposals that would reduce fees to the current operational cost of servicing a loan. He pointed out that the subprime credit lending industry has never been stress-tested by a real estate downturn. As a result, the impact on delinquencies and defaults -- and the cost of managing those problems -- is not fully known. Mr. Klein acknowledged that several trends have reduced servicing costs and could justify a lower fee. Advances in technology have improved servicing efficiency, and higher average loan balances have increased the dollar size of the servicing fee, which is typically expressed as a percentage of the loan. Mr. Klein said reducing servicing fees too much could front-load profits before the work of managing the loans is actually performed. "If real estate values stop growing, the game changes," he noted. "I think we should be careful about reducing the servicing fee."

Lenders would benefit from a national regulation governing abusive lending claims that pre-empts state and local laws, according to the chairman of the Mortgage Bankers Association's loan servicing committee.Robert Caruso, executive vice president at Wells Fargo Home Mortgage, told attendees at the MBA's National Mortgage Servicing Conference that already there are concerns that the Office of the Comptroller of the Currency's decision to pre-empt local lending laws may create a competitive advantage for national banks and their mortgage subsidiaries. He also said the OCC ruling raises questions for loan servicers, such as whether the pre-emption extends to loans subserviced by another party. He urged MBA members to advocate national rules governing predatory lending issues. "We don't need to take players out of the industry because of bad legislation," he said at the conference's opening session. The MBA can be found online at http://www.mortgagebankers.org.

Option One Mortgage Corp., Irvine, Calif., has announced updated best practices for its wholesale and retail loan origination businesses and its mortgage servicing operation.Option One said it revised and updated its best practices to make the information more accessible to borrowers. One practice touted by the company is the establishment of escrow accounts so borrowers can put aside money each month to pay real estate taxes and homeowners' insurance, thus avoiding the need for large lump-sum payments. The company also pointed to its practice of not charging for certain standard services, such as automatic payment withdrawals, copies of payment histories and loan documents, and payoff statements, among others.

Moody's Investors Service has lowered Ocwen Federal Bank FSB's ratings for primary servicer of residential subprime mortgage loans and for special servicer from SQ1 ("Strong") to SQ2 (Above Average).The ratings reflect Ocwen's "excellent servicing performance and below-average financial stability," the rating agency said. Ocwen achieved "above-average collection results and strong loss mitigation" from May 1, 2002, through April 30, 2003, Moody's said. "Ocwen's low staffing ratio and extensive use of technology allow it to achieve impressive collection and default servicing metrics," the rating agency said. Ocwen, the mortgage servicing operation of Ocwen Financial Corp., is an established subprime loan servicer, but its parent is seeking to exit noncore business lines to focus on mortgage servicing and mortgage-related technology. Ocwen has been named as a defendant in potential class-action lawsuits alleging predatory servicing practices. Citing Ocwen's "already weak financial condition," Moody's said a negative outcome to the lawsuits "could further erode the company's financial position and its ability to sustain its otherwise impressive servicing results." Moody's can be found online at http://www.moodys.com.

Both commercial and residential mortgage securities saw more upgrades than downgrades from Moody's Investors Service last year, rating agency officials have told MortgageWire.In 2003, the downgrade rate for commercial mortgage-backed securities transactions fell to 4.3%, from 5.3% in 2002. The upgrade rate for CMBS rose from 2.4% to 5.1%. In the residential MBS sector, the upgrade rate rose to 5.1% in 2003 from 1.7% in 2002, while the downgrade rate increased slightly to 0.5% from 0.1%. Moody's analysts said "de-leveraging" that resulted from refinancing activity contributed to the improvement. The rating agency can be found online at http://www.moodys.com.

Two classes of PNC Mortgage Securities Corp. mortgage pass-through certificates have been downgraded and removed from Rating Watch Negative by Fitch Ratings.Class DB5 of series 2000-8 group 3&4 was downgraded from B to CC, and class IB5 of series 1998-5 group 1 was downgraded from B to CCC. In addition, two classes of PNC series 2000-8 group 1&2 were upgraded, and the ratings on 23 classes in four transactions were affirmed. The downgrades were attributed to expected reductions in credit enhancement. Fitch can be found on the Web at http://www.fitchratings.com.