Servicing

First Horizon Home Loan Corp., a subsidiary of the nationally chartered bank, First Tennessee National Corp., has offered to absorb loan payments and reimburse a Rensselaer County homeowner who alleges the bank illegally threatened to foreclose on his home.The move comes after Attorney General Eliot Spitzer filed a lawsuit earlier this week on behalf of the consumer, Richard Hall, of Greenbush, N.Y. The bank admits a discrepancy in amortization resulted in the customer continuing to make payments via automated debit after the 25-year loan should have been retired. The consumer overpaid by $9,461. "It's great, but I think it's unfortunate that it had to get to this point," said Donna Heinrichs, the consumer's attorney. "In my opinion, the bank was using foreclosure as a way to attain more money than was rightfully owed," she said. The lawsuit is a direct challenge by the attorney general to the Office of the Comptroller of the Currency, which maintains that it has the sole right to regulate nationally chartered banks. As of MortgageWire's deadline, the case was still pending with the attorney general's office and no settlement had been reached between the two parties.

The mortgage insurance and other insurance-related businesses that General Electric hopes to spin off this year saw their net earnings decline by 24% during the first nine months of last year, according to new documents filed with the Securities and Exchange Commission. The mortgage insurance division of GE saw its net income decline by 20% during the period even though its revenues rose by 2%. The 'S1' statement that GE filed on the unit shows that GE Mortgage Insurance of Raleigh is the second best performer among the five insurance businesses that comprise the unit, which is called Genworth Financial. During the first nine months of 2003 Genworth, which boasts assets of $103 billion, earned $749 million. Even though the MI division saw its earnings decline it had a record year in 2002. The S1 notes that if Fannie Mae and Freddie Mac adopt policies to only do business with AAA-rated insurers, "our competitive position may suffer." GEMI, which is the nation's fourth largest MI out of seven firms, is rated AA.

When Regions Financial, Birmingham, merges with Union Planters Corp., Memphis, it will create a Southeast-based regional mortgage giant that will rank 20th among all residential servicers nationwide. According to figures compiled by National Mortgage News and its affiliate, the Quarterly Data Report, the new bank will have at least $45 billion in residential servicing rights on its books and the capacity to fund $25 billion a year in home mortgages. (Both figures are based on third quarter numbers.) The merger is valued at $5.9 billion. The combined bank will be called Regions Financial Corp., and will have $80.5 billion of assets, and almost 1,400 offices in 15 states stretching from Florida to Iowa.

Ed Fuchs has been named executive vice president of finance and secondary marketing at Central Pacific Mortgage, a mortgage banking firm and net branch provider based in Folsom, Calif.Mr. Fuchs previously held the position of senior vice president of finance and secondary marketing. He has been employed by Central Pacific Mortgage since 1992.

Class M-2 of Soundview Home Equity Loan Trust series 2001-1 has been downgraded from A to BBB-minus by Fitch Ratings.Fitch also affirmed the ratings on three other classes in the transaction. The downgrade was attributed to loss levels and high delinquencies relative to applicable credit support.

Eight classes of certificates issued by four IMC Home Equity Loan Trusts have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are the M-2 and B classes of the following series: 1997-3, 1997-5, 1998-1, and 1998-5. Moody's said the securities are backed primarily by fixed-rate, first-lien subprime mortgage loans originated by the Industry Mortgage Co. All four transactions have taken significant losses, and the securities were placed under review because their credit enhancement levels may not be consistent with their current ratings, given the weak performance of the collateral, the rating agency said. "Specifically, the most subordinate class B certificates in the 1997-3 and 1997-5 series have already experienced substantial writedowns," Moody's said. Fairbanks Capital Corp is the primary servicer of the loans in all four transactions. Moody's can be found online at http://www.moodys.com.

Wilshire Financial Services Group, Beaverton, Ore., has signed an agreement to sell its mortgage servicing subsidiary to Merrill Lynch Mortgage Capital.Wilshire Financial said it will receive a cash purchase price of about $52 million for Wilshire Credit Corp., the company's nonprime credit quality servicing specialist. The purchase price is subject to adjustment based on the net asset value reflected on Wilshire's closing-day balance sheet. Jay Memmott, president and chief executive officer of Wilshire Credit, will continue in his position once the deal is closed. The company will continue to operate from its Beaverton location. Wilshire Financial can be found on the Web at http://www.wfsg.com.

Fannie Mae reported net income of about $7.90 billion for 2003, up 71.1% from that of the year previous. Diluted earnings per share were up 75%, to $7.91.However, Fannie Mae prefers to measure its "core business earnings," which differ from the net income measure prescribed under generally accepted accounting principles. Core earnings were up 14.3% to approximately $7.31 billion for the year and up 5.9% to $1.77 billion for the fourth quarter. Core earnings per share were up 15.7%, at $7.29 per share, for the year and up 6.6% to $1.66 for the quarter. Net interest income for the year totaled about $13.57 billion, up 28.4%, and guaranty fee income totaled approximately $2.41 billion, up 32.7%, Fannie Mae reported. Meanwhile, credit-related expenses rose to $111.6 million from $91.7 million in 2003, and the government-sponsored enterprise reported losses of about $2.26 billion from the call and repurchase of debt, compared with $710.5 million in 2002. Chairman and chief executive officer Franklin Raines touted the results. "Fannie Mae delivered outstanding business results in 2003, capitalizing on opportunities and meeting significant challenges posed by a year of historic refinance and purchase volumes and volatility in our market," he said. Fannie Mae can be found online at http://www.fanniemae.com

Washington Mutual has reported earnings of $3.88 billion ($4.21 per share) for 2003, up from $3.86 billion ($4.02 per share) the year before.Home loan volume set a record of $384.18 billion for the year, up from $279.45 billion in 2002. However, fourth-quarter volume dropped $42.28 billion, falling from $99.81 billion in the fourth quarter of 2002 to $57.53 billion, the company said. Earnings fell in the fourth quarter, totaling $842 million ($0.93 per share), compared with $941 million ($1.00 per share) a year earlier. "Even though the market remains predominantly a fixed-rate market, the company is beginning to see a shift toward adjustable-rate mortgages," WaMu said. ARMs represented 55% of WaMu's home loan application volume in the fourth quarter, compared with 38% in the third quarter, the company said.

Washington Mutual Inc., Seattle, eliminated the equivalent of 4,500 jobs from its home loans group in the fourth quarter, and more cuts are on the way, a company executive said on a conference call to discuss fourth-quarter results (see item below).Chief administrative officer Craig Chapman said an additional 1,800 workers have been notified that their positions will likely be eliminated in the first quarter of this year. He said lowering the company's head count is "necessary and integral" to WaMu's ambitious plan to reduce its cost structure by $1 billion. WaMu can be found online at http://www.wamu.com.