Servicing

Employment in the mortgage industry fell by 7,300 in January as lenders continued to trim their payrolls for the sixth consecutive month.The U.S. Bureau of Labor Statistics reported March 5 that jobs in the mortgage banking/broker sector fell from 439,800 in December to 432,500 in January. Since last July, lenders have cut 25,100 full-time employees. But the layoffs and job cuts may be ending soon, since home sales remain strong and refinancing activity is increasing. The February employment report indicates that job creation in the economy continues to be anemic, and the yield on the 10-year Treasury note fell to its lowest level since July. This should give homeowners another chance to refinance at historically low mortgage rates. (The February employment report released on Friday provided mortgage sector employment data for January only. BLS instituted this one-month lag in the mortgage data when it revamped its jobs report in May.)

GMAC Mortgage has signed two new subservicing clients, Redwood Trust and MortgageIT.Tony Renzi, GMAC Mortgage's executive vice president and head of national loan administration, said the arrangements with the new clients are unique. "Not only do we offer services for a variety of mortgage loan products and asset classes, we also can customize our servicing options to meet a client's specific business objectives," Mr. Renzi said. Redwood Trust, based in Mill Valley, Calif., is a real estate investment trust that participates mainly in jumbo single-family residential loans, commercial mortgage loans, and mortgage-backed securities. GMAC will service the company's jumbo adjustable-rate mortgage loans. For the New York-based MortgageIT, GMAC will service new subprime offerings.

Standard and Poor's Ratings Services has announced that it will continue to rate structured transactions containing loans originated by national banks governed by anti-predatory-lending laws in 11 states and in Oakland, Calif., because the lenders would not be subject to assignee liability.The 11 states are: Georgia, Illinois, Kentucky, Maine, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, and South Carolina. The rating agency said it was unable to make the same determination about assignee liability for loans originated by national banks subject to predatory-lending laws in Arkansas and Los Angeles. The decision followed a review of a final rule issued by the Office of the Comptroller of the Currency that amends criteria regarding the OCC's pre-emption authority over national banks and their operating subsidiaries. S&P can be found online at http://www.standardandpoors.com.

Principal Residential Mortgage, Des Moines, Iowa, the nation's 11th-largest residential servicer, is on the auction block, industry sources have told MortgageWire.One mortgage executive familiar with the company said, "They're in talks now with buyers." A spokeswoman for PRM's parent, the Principal Residential Group insurance company, declined to comment. According to figures compiled by National Mortgage News, PRM serviced $118.9 billion in loans at year-end. Among funders it ranked 15th. Its production volume in the quarter fell by 52% and the unit suffered an operating loss of $42.8 million, versus a profit of $29.1 million a year earlier. (For more details, see the March 8 issue of NMN.

The servicer ratings of Fairbanks Capital Corp. have been removed from Rating Watch Negative by Fitch Ratings.Fitch also affirmed the company's servicer ratings as follows: residential primary servicer for subprime and home equity products, RPS3-minus; servicer for alternative-A product, RPS3; and special servicer, RSS3. (Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating.) Fitch said it found in recent onsite reviews of Fairbanks' servicing facilities in Utah, Florida, and Pennsylvania that its restructured management team had made many procedural improvements. The changes were aimed at correcting problems cited in an earlier Fitch review and in a November 2003 settlement with the Federal Trade Commission and the Department of Housing and Urban Development, the rating agency said. They include system upgrades, compliance training, expanded internal audits, the formation of a Consumer Advocacy Department, and the development of a Consumer Assurance Review Department that reviews each loan before referral to foreclosure. The changes "have significantly reduced the number of customer disputes, as well as the time required to resolve these disputes," Fitch said.

American Home Mortgage Investment, Melville, N.Y., has priced a public offering of 12.5 million shares of common stock at $25 per share.The underwriters have been granted an option to buy up to 1.875 million shares to cover any overallotments, the company said. The joint lead managers of the offering were Friedman, Billings, Ramsey & Co. and Lehman Brothers Inc.

The risk that mortgages of nonprime credit quality will go into default remained steady in the winter of this year, according to University Financial Associates.The UFA's Nonprime Mortgage Report for Winter 2004 registered a reading of 99, down one point from 100 the previous quarter. A reading of 100 means the risk of default on newly originated nonprime loans is equal to the average risk of default for loans originated during the 1990s. A lower reading indicates a lower risk level. UFA said the index has risen by 10% since 2001 but remains moderate by historical standards.

Jill Spencer has been promoted to executive vice president and chief operating officer of the Federal Home Loan Bank of Atlanta.Ms. Spencer, who was formerly EVP and general counsel, will oversee the FHLBank's administrative services, community investment services, corporate communications, credit and collateral, government relations, human resources, legal services, and strategic planning functions. The FHLBank also announced several other appointments. Greg Mayfield, formerly vice president of legal services, has been named senior vice president and general counsel and Charles Abbitt has joined the bank as chief credit officer. Cathy Adams has been promoted from group vice president for human resources and administrative services to senior vice president.

A predicted surge in foreclosures in the Chicago metropolitan area has begun, according to Foreclosures.com, a distressed property investment advisory firm based in Fair Oaks, Calif.New foreclosure filings jumped to 433 in Cook County in the first week of February, a level 30% higher than the weekly average of 334 new cases for all of 2003, the firm reported. "Late last year, we were advised to expect a sudden upsurge in mortgage defaults in early 2004," said Alexis McGee, president of Foreclosures.com. "That's happening now." Among the economists predicting the surge was Diane Swonk, chief economist at Bank One in Chicago. Foreclosures.com can be found on the Web at http://www.foreclosures.com.

Class B1 of GE Capital home equity loan pass-through certificates, series 1997-HE2, has been downgraded from CCC to C by Fitch Ratings.Fitch also placed two classes from other transactions on Rating Watch Negative, affirmed the ratings on 26 other classes in six deals, and placed two of those 26 classes on Rating Watch Negative. The classes placed on Rating Watch Negative were class B2 of series 1999-HE1 and class B3 of series 1999-HE3. Those removed from Rating Watch Negative were the M classes of series 1996-HE4 and series 1997-HE3. Fitch attributed the negative rating actions to loss levels and high delinquencies relative to the applicable credit support. Fitch can be found online at http://www.fitchratings.com.