Servicing

Duff & Phelps Credit Rating Co., Chicago, has downgraded four public classes of residential mortgage pass-through certificates and placed a fifth on Rating Watch-Down.Three of the downgraded securities are from transactions issued by DLJ Mortgage Acceptance Corp.: DLJ 1995-Q3 P1, Class IB-1, downgraded from B to CCC and left on Rating Watch-Down; DLJ 1994-Q1 P1, Class IB-1, downgraded from CCC to DD and removed from Rating Watch-Down; and DLJ 1996-Q2, Class B-2, downgraded from CCC to DD and removed from Rating Watch-Down. The fourth downgraded security was issued by MDC Mortgage Funding Corp.: MDC 1994-LB7 G2, Class IIB-1, downgraded from B to CCC and left on Rating Watch-Down. The security placed on Rating Watch-Down was DLJ 1996-Q2, Class B-1, which is now rated A. The downgrades stemmed from "a continued decrease in credit enhancement, in combination with high levels of delinquent loans, foreclosure properties, and REO properties," the rating agency said. The securities are all backed by pools of subprime mortgage loans, originated by Quality Mortgage USA Inc. in the case of the DLJ transactions and by Long Beach Bank FSB in the MDC transaction. Duff & Phelps's website address is http://www.dcrco.com.

PNC Bank has been talking to AccuBanc Mortgage, Houston, about buying the firm's $12 billion servicing portfolio, sources have told MortgageWire.At least two investment banking sources went so far as to say that PNC had been awarded the portfolio. However, PNC and AccuBanc officials could not be reached for comment. One advisor noted that "not too long ago" the two parties "were far apart on price." AccuBanc, which is owned by a company called InterAmericas, is one of the nation's largest remaining conventional non-depositories. It was widely known that William Starkey, AccuBanc's chief executive, had been trying to buy the independent mortgage banker. It was unclear whether PNC had bought only the servicing. "It is possible," said one investment banker, that Mr. Starkey "may have worked out a deal to buy the production network while selling the servicing to PNC." PNC is based in Pittsburgh. Its mortgage subsidiary, PNC Mortgage, is headquartered in Vernon Hills, Ill. In the first quarter, AccuBanc ranked 21st among all residential lenders, and 43rd among all servicers. If PNC winds up with AccuBanc's servicing portfolio it will control $53.5 billion in residential receivables, ranking 15th or 16th, according to first-quarter figures compiled by the Database Products Group, a MortgageWire affiliate.

Southern Pacific Funding Corp., Lake Oswego, Ore., has announced record net earnings of $14.5 million ($0.60 per share) for the second quarter, compared with $13.4 million ($0.56 per share) a year ago.Total nonconforming loan origination and purchase volume increased to $800.2 million for the quarter, up 82% from $439.6 million a year ago, SPFC reported. Wholesale originations totaled $425.1 million, up from $269.9 million a year earlier, and nonconforming mortgage loans originated through SPFC's operations in the United Kingdom totaled $44.6 million, up from $27.9 million. Nonconforming home equity loans acquired through strategic alliances rose to $218.9 million from $46.9 million a year earlier. The company experienced net losses of $4.8 million on its servicing portfolio, compared with $2.6 million in the first quarter of 1998. SPFC's website address is http://www.sp-funding.com.

HomeGold Financial Inc.'s 10.75% senior unsecured notes due 2004 have been downgraded from B-minus to CCC-plus and removed from RatingAlert by Fitch IBCA.The Greenville, S.C.-based home equity lender and servicer reported a net loss of $20.6 million in the first quarter as a result of several one-time charges, prompting the rating agency to place the $125 million of senior debt on RatingAlert on May 7. The latest rating action reflects HomeGold's "limited financial flexibility," uncertainty about the company's ability to execute a whole loan strategy to improve cash flow, heightened competition, and HomeGold's "limited equity base," Fitch IBCA said.

Fitch IBCA Inc. has downgraded Residential Funding Mortgage Securities Inc.'s Series 1993-S30, Class B2 mortgage pass-through certificates from B to D and placed the series's Class B1 certificates on RatingAlert negative.The rating agency cited losses and high delinquencies in relation to available credit support as the reasons for the actions, noting that 1.4% of the pool was over 90 days past due and losses totaled $1.4 million (0.43% of the initial pool) as of the June 25 distribution. Fitch IBCA's website address is http://www.fitchibca.com.

Standard & Poor's has revised its outlook on Delta Financial Corp. to negative from stable, while affirming the company's senior debt and long- and short-term counterparty ratings.The actions followed the subprime lender's announcement of a $4.9 million net loss for the second quarter due to a change in prepayment assumptions for earlier securitizations. S&P said it believes Delta's current rating "adequately incorporates prepayment risks, which are felt to be the company's primary vulnerability." Delta's "key strength continues to be its underwriting ability that should provide better protection relative to other subprime lenders in a recessionary environment," S&P said. However, the outlook revision reflects the rating agency's concern that liquidity pressures "could increase over time, especially if capital and debt market sentiment remains negative against the company and the sector for an extended time period." S&P's website address is http://www.ratings.standardpoor.com.

Freddie Mac has appointed three new vice presidents, two of whom have been serving in the posts on an interim basis.Margaret A. Colon was named vice president of corporate finance operations in the Corporate Finance Division; Charles Foster was named vice president for the Securities Sales & Trading Group in Freddie Mac's Single Family Securitization Group; and Jesse Abraham was promoted to vice president for servicer analytics and risk management in the Servicer Division. Ms. Colon, who has been serving in her post since November 1997, is responsible for all operational risk, information management, strategic engineering, and portfolio administration processes for Freddie Mac's $200 billion retained portfolio and provides treasury services for cash and security transactions. A 15-year veteran of Freddie Mac, she was previously vice president and assistant to the president. Mr. Foster, who has also been serving in the appointed post on an interim basis, oversees the daily operation of Freddie Mac's broker/dealer function, including securities trading and underwriting, repo funding, credit and interest rate risk management, institutional sales, and research. He was previously national sales director of the Securities Sales & Trading Group. Mr. Abraham's new post, vice president for servicer analytics and risk management, is a newly created position in the Servicer Division. "The creation of a new senior position in this area recognizes the importance of information management and analytical tools to the division's future success," said Paul Peterson, senior vice president of the Servicer Division. Mr. Abraham was previously the division's director of credit loss forecasting. Freddie Mac's website address is http://www.freddiemac.com.

Resource Bancshares Mortgage Group Inc., Columbia, S.C., has reported net income of $13.1 million ($0.56 per share) for the second quarter.Excluding a $1.5 million pretax gain from the sale of the retail production, the company's operating earnings were a record $12.2 million ($0.52 per share), compared with $7.4 million ($0.35 per share) a year ago. The company's total agency-eligible mortgage loan pipeline was $1.8 billion at June 30, compared with $1.5 billion a year earlier, and its agency-eligible servicing portfolio totaled $9.4 billion, up from $7.2 billion a year earlier. The earnings increase for the second quarter was mainly attributable to a $19.2 million increase in net gain on sale of loans and a $1.5 million gain on sale of the retail production platform. The company said the gain-on-sale increase for loans "are primarily due to increased production and gains derived from the growing subprime and commercial mortgage operations, neither of which contributed significantly to the comparable periods of the prior year."

Delta Financial Corp., Woodbury, N.Y., has reported a net loss of $4.9 million ($0.32 per share) for the second quarter, compared with a net income of $7.2 million ($0.47 per share) a year ago.The net loss is "the direct result of fair value adjustments the company made to its residual...and servicing assets by increasing the prepayment assumptions it uses in valuing these assets," Delta said. The assumptions were changed from a 12-month ramp to "a vector curve with a peak speed of 31% for fixed-rate mortgages and 50% for adjustable-rate mortgages," the company reported. Hugh Miller, Delta's president and CEO, attributed the increase in prepayments to low interest rates and a flattened yield curve. "While we are not convinced that the current interest rate environment will continue unabated and believe that the spike in prepayments may only be a short-term event," Delta decided it was "prudent" to adjust its prepayment assumptions, he said. "It is important to note that the recent spike in prepayments...has occurred predominantly in our older pools and mostly for our adjustable-rate mortgages, neither of which represent a significant portion of our residual asset," Mr. Miller said. Delta's website address is http://www.deltafinancial.com.

The ratings on United Companies Financial Corp., Baton Rouge, La., have been placed under review by Standard & Poor's and Duff & Phelps Credit Rating Co. in the wake of the subprime lender's announcement that it has retained Salomon Smith Barney to "seek a potential strategic partnership."S&P placed UCFC's ratings on Credit Watch with developing implications, which means the ratings could be raised, lowered, or affirmed depending on the outcome of the review. Duff & Phelps placed its UCFC ratings on Rating Watch--Uncertain. S&P said its action reflects concerns about UCFC's announcement that second-quarter earnings will be about $10 million lower than expected as a result of charges related to a writedown in its interest-only strip, and about "heightened competition in the subprime home equity markets as well as the declining trend in the company's profitability and asset quality measures in selective pools." Duff & Phelps also cited "the fundamentals of the subprime home equity lending business," higher prepayment levels in relation to prepayment assumptions, and "pressure on capital measures" stemming from declining profitability.