Servicing

GMAC Commercial Mortgage Corp., Horsham, Pa., tops the Mortgage Bankers Association of America's annual ranking of commercial loan servicers.At the end of 2002, GMAC was administering nearly $133.8 billion in master and primary servicing. Runner-up Wachovia Securities, Charlotte, N.C., handled $83.6 billion. In terms of loans, GMAC services nearly 50,900 mortgages, almost three times as many as the 13,876 loans handled by Wachovia, according to the MBA's tally, which was released at the group's annual Commercial Real Estate Finance/Multi-Family Housing Convention in San Diego. GMAC, GEMSA Loan Services, CapMark, and Prudential Asset Resources are the largest servicers for life companies and other private investors. The largest administrators of apartment loans by Fannie Mae and Freddie Mac are Berkshire Mortgage Finance, ARCS Commercial Mortgage, GMAC, and Prudential. GMAC, Reilly Mortgage, Prudential, Midland, and Greystone Servicing Corp. are the largest servicers of multifamily loans insured by the Federal Housing Administration.

Fitch Ratings has announced that it will not rate mortgage-backed securities deals containing mortgage loans covered by the Georgia Fair Lending Act, but said it would, under certain circumstances, rate deals with loans covered by predatory lending laws in other states.The unlimited assignee liability imposed by GFLA, which affects "high-cost" loans and subprime lending, has "caused significant disruption" in the residential MBS market, Fitch said, because it could result in losses to securitization trusts that "cannot be determined or estimated in advance." Predatory lending laws that place a cap on possible losses -- such as the soon-to-be-effective New York State Lending Act and pending amendments to the New Jersey State Lending Act -- do not present as great a problem for MBS deals containing loans covered by those laws, Fitch said. The rating agency said it would analyze each situation based on the provisions of each law. Fitch's announcement followed a recent decision by Standard & Poor's not to rate any structured finance deal that contains conforming-balance mortgage loans or manufactured housing loans covered by the Georgia law. More recently, Moody's Investors Service reported that it will heighten its scrutiny of such loans. Fitch can be found online at http://www.fitchratings.com.

Moody's Investors Service has announced that it will give heightened scrutiny to investor liability for securitized residential mortgages as a result of the Georgia Fair Lending Act.The act, which affects "high-cost" loans and subprime lending, has made the risk of including such loans in mortgage-backed securities deals "prohibitively high," the rating agency said, because it allows "potentially unlimited punitive damages" and extends liability to loan assignees such as securitization trusts. Moody's added, however, that "contemplated revisions to the act could reduce risks to securitization trusts and eliminate burdens that have effectively precluded the origination of certain loans in the state." The announcement by Moody's followed a recent decision by Standard & Poor's not to rate any structured finance deal that contains conforming-balance mortgage loans or manufactured housing loans covered by the Georgia law. Many lenders have exited the state since enactment of the GFLA. The Office of Thrift Supervision recently decreed that federal law pre-empts certain provisions of the act, which means federally chartered thrifts operating in Georgia will not be subject to those provisions. Moody's can be found online at http://www.moodys.com.

Steven Chiou has been named executive vice president and head of secondary marketing at Market Street Mortgage, a retail residential mortgage banking firm based in Clearwater, Fla.Before joining Market Street, Mr. Chiou served as executive vice president for capital markets at CTX Mortgage Co., Dallas, and worked for Fannie Mae in Dallas in several key management positions, Market Street said. “Given the likelihood that interest rates will go up in 2003, hedging is going to be the number one challenge [for the secondary market], as the volatility of rates will be much greater,” Mr. Chiou said. Market Street Mortgage is a subsidiary of NetBank, which can be found online at http://www.netbank.com.

Washington Mutual Inc., Seattle, has announced that it will begin expensing employee stock options.WaMu estimated that adopting the prospective method of accounting for the expensing of stock options will have no material effect on earnings per share this year, and will affect EPS by less than $0.05 per share in 2004. Kerry Killinger, WaMu's chairman, president, and chief executive officer, said stock options "will remain an important component of our incentive compensation...." The company can be found on the Web at http://www.wamu.com.

Fannie Mae chairman Franklin Raines has told investors that he wants to move away from the view that mortgages are a commodity and toward the notion that loan products can be custom-made.During a webcast from Salomon Smith Barney's financial services conference, Mr. Raines said the government-sponsored enterprise has about $1.4 billion in guarantee fees from upfront payments Fannie charges to offset the higher risk of newer products the company is offering in pursuit of that customization goal. He characterized these loans as part of the alternative-A credit risk market. Fannie Mae can be found online at http://www.fanniemae.com.

Bank of America, Charlotte, the fifth-largest seller of loans to Freddie Mac, has ended its strategic alliance with the government-sponsored enterprise.BofA's decision to sell some of its conforming production to Fannie Mae (as well as continuing to sell to Freddie) is just the latest example of a trend toward the fraying of such alliances. For instance, Countrywide Home Loans, Calabasas, Calif., which has an alliance agreement with Fannie Mae, is now actively selling some of its production to Freddie. Jeff Lebowitz, who runs the Mortech study, called the strategic alliances "meaningless." A former executive at Fannie Mae, Mr. Lebowitz said: "It's just a venture in price cutting." A spokeswoman for BofA said the company "will continue to work closely with Freddie Mac. But at this point we are going to return to a competitive open market." BofA originated $84 billion in mortgages last year, $64 billion of which were conforming. A Freddie Mac spokesman declined to comment on BofA's action. (See the Feb. 3 issue of National Mortgage News for full details.) The companies can be found online at http://www.bankofamerica.com and http://www.freddiemac.com.

Success Financial Services Group Inc., a mortgage banking company based in Round Rock, Texas, has announced a management change and a reverse stock split.James S. Renaldo has been named chief executive officer of the company, and Robert L. Leonetti will remain president of Success Investments Inc., the company said. Success Financial's board of directors approved a resolution Jan. 24 to reverse-split the company's outstanding stock on a 1-for-100 basis. The company can be found on the Web at http://www.successfinancialservices.com.

Class B-5 of Bear Stearns Mortgage Securities Inc. series 1997-6 has been downgraded from B to D by Fitch Ratings and removed from Rating Watch Negative.In addition, class B-4 of the transaction has been placed on Rating Watch Negative. The rating agency said the actions were based on a review of loss and delinquency levels in the deal. Fitch can be found online at http://www.fitchratings.com.

Hanover Capital Partners Ltd., a subsidiary of Hanover Capital Mortgage Holdings Inc. based in Edison, N.J., has announced an alliance with DMS Advisors Inc. under which DMS will market Hanover's consulting services.The products and services to be marketed include due diligence, agency securitization, document rectification, assignment processing, servicing audits, mortgage operations process reviews, and temporary staffing placements. Hanover said two DMS principals are "veteran mortgage industry experts." Dianne Johnson was formerly vice president of capital markets and correspondent lending at Wells Fargo Home Mortgage, and Beverly Sheehy was most recently vice president of national accounts at Triad Guaranty Insurance. Hanover Capital Mortgage Holdings is a mortgage real estate investment trust.