Servicing

Freddie Mac has provided new details and formats for six new items it will disclose to investors in its mortgage participation certificates, and says the inclusion of borrower credit scores should not raise concern about privacy rights.A spokeswoman said the credit score disclosure will be made at the pool level. "The individual borrowers will not be identified," she said. Earlier, Ginnie Mae executives expressed concern that disclosing borrower credit scores could run afoul of recently enacted federal privacy laws. The other new disclosure items, all recommended by a federal task force, include original loan-to-value ratio, loan purpose, servicer identity, property type, and occupancy status. Freddie Mac can be found on the Web at http://www.freddiemac.com.

A for-profit subsidiary of the American Bankers Association is going to provide a form of pool insurance for Mortgage Partnership Finance loans so that small community banks selling loans to the Federal Home Loans Banks can earn more fee income."It is cross-pool insurance for individual loans and small pools," said ABA senior counsel Joseph Pigg. The FHLBanks will pay ABA's Corporation for American Banking for insuring a portion of the credit risk associated with small, geographically concentrated pools of residential mortgage loans. This credit enhancement will enable FHLBanks to pay participating community banks up to 14% more fee income over the life of the loan. But the actual pricing of the loans will remain the same, a Chicago FHLBank official said. In addition to servicing fees, banks and thrifts receive fee income for retaining a portion of the credit risk on MPF loans. To participate in the ABA/MPF alliance, a community bank has to be a member of an FHLBank that offers the MPF program. "You do not have to be an ABA member to participate," Mr. Pigg said. The ABA can be found online at http://www.aba.com.

The board of the Federal Agricultural Mortgage Corp., Washington, has declared a dividend of $0.80 per share on the corporation's 6.40% cumulative preferred stock, series A.The dividend, for the period Jan. 1, 2003 to March 31, 2003, will be payable March 31 to stockholders of record as of March 20, Farmer Mac said. The government-sponsored enterprise can be found on the Web at http://www.farmermac.com.

Radian Group Inc., Philadelphia, has announced that it plans to sell $250 million of senior unsecured notes.The company said it plans to use approximately $75 million of the net proceeds of the sale to repay debt and the remainder for general corporate purposes. Radian, the parent company of mortgage insurer Radian Guaranty Inc., can be found online at http://www.radianmi.com.

First National Financial Corp., Toronto, has been added to the Standard & Poor's Select Servicer List as a master, special, and primary servicer of commercial mortgages.S&P said the company is the first Canadian commercial mortgage servicer to be added to its Select Servicer List. The rating agency cited the company's "extensive history of originating, securitizing, and servicing assets, combined with an experienced management team and suitable computer systems." S&P said it admits servicers to the list based on "a comprehensive assessment of firms' operational capabilities for servicing commercial mortgage, residential mortgage, or asset-backed portfolios." S&P can be found online at http://www.standardandpoors.com/ratings.

A nonconforming mortgage specialist and investment manager has launched what it says is the first real estate-backed synthetic guaranteed investment contract in the market.Larry H. Mylnechuk, a principal at Residential Capital Management LLC, told attendees at a State Street Global Alliances roundtable in New York that the company has signed one account for the new investment product it created and is working to sign a second by the end of the first quarter. Residential Capital is one of the asset managers SSGA supports by providing strategic operating capital, managerial support, and distribution as part of its goal to increase the value of its portfolio companies and offer a wider array of investment products to its institutional client base. SSGA can be found online at http://www.ssga.com.

Ocwen Financial Corp., West Palm Beach, Fla., has reported a net loss of $66.5 million ($0.99 per share) for 2002, compared with a loss of $124.8 million ($1.86 per share) in 2001.For the fourth quarter, the company reported a net loss of $7.8 million ($0.12 per share), compared with a loss of $6.9 million ($0.10 per share) a year earlier. William C. Erbey, Ocwen's chairman and chief executive officer, said the fourth-quarter loss included nonrecurring and severance charges totaling $6.5 million that will lower the company's expense structure. "We continue to make progress in our strategy of transitioning Ocwen to a fee-based business and reducing our noncore assets," Mr. Erbey said. He cited the company's core business earnings as "especially noteworthy" because its residential loan servicing business had record pretax earnings of $9.2 million in the fourth quarter despite very low interest rates. As of Dec. 31, Ocwen serviced approximately $30.7 billion of loans, up 40% from $21.9 billion at year-end 2001, Ocwen said. The company can be found online at http://www.ocwen.com.

AmeriServ Financial Inc., Johnstown, Pa., has announced the sale of servicing rights on approximately $450 million of mortgage loans being serviced through its Standard Mortgage Corp. of Georgia subsidiary.The servicing rights represent 69% of Standard Mortgage's total servicing portfolio of $650 million, AmeriServ Financial said. "We have been clear in our intent to return to a strategic focus more suited to a community bank," said Craig G. Ford, the company's interim chairman, president, and chief executive officer. "This sale of mortgage servicing rights provides reduced exposure to interest rate risk and will accelerate AmeriServ Financial's recovery momentum." In 2002, AmeriServ Financial realized a mortgage servicing impairment charge of $3.7 million.

Prepayment rates for agency mortgage-backed securities slowed down in January for most conventional 30-year coupons and vintages, according to the Bear Stearns Prepayment Commentary.The slowdown in constant prepayment rates averaged 2-3 CPR for most coupons, while the 2002 vintages slowed even less or, in the case of the 5.5% and 6.0% coupons, speeded up slightly, said analysts Dale Westhoff and Bruce Kramer. "The numbers show little evidence of burnout in the fully refinanceable conventional coupons, even among the most seasoned vintages," the analysts said. "For example, January marked the fourth consecutive month that 1998 6.5s have paid above 60 CPR and 2000 7.0s above 70 CPR." As for Ginnie Mae MBS speeds, they held steady or rose somewhat in the January reporting period. Messrs. Westhoff and Kramer said this may represent "the leading edge of a borrower response" to the falloff in mortgage rates in late December, or a reflection of servicer buyouts. Bear Stearns can be found online at http://www.bearstearns.com.

Employment in the mortgage banking and brokerage sectors rose 1% in December from the previous month as lenders added workers to handle the tidal wave of loan applications.Compared with the same month a year ago, the two sectors (which are listed as one in government statistics) increased their employment ranks by 16.6%. At the end of December mortgage jobs totaled 412,400, according to the Bureau of Labor Statistics. A year ago the number stood at 353,500. How much longer the industry will continue to add workers remains unclear. According to preliminary survey information being compiled by National Mortgage News, the industry funded a record $940 billion in the fourth quarter alone. And residential loan volumes continued strong in January as well. "I think the first quarter is going to be very good for this industry," one investment banker told MortgageWire. The BLS can be found online at http://stats.bls.gov.