Servicing

The delinquency rate for Federal Housing Administration-insured mortgages rose to a record high in the first quarter of 1998.According to data released Friday by the Mortgage Bankers Association, the FHA delinquency rate stood at 8.35% -- a 20-basis-point increase year over year. MBA executive vice president Paul Reid said a sharp rise in adjustable-rate mortgage delinquencies contributed to the overall increase in the number of troubled FHA loans. The delinquency rate for FHA-insured ARMs rose 100 bp over the past 12 months. Year over year, the FHA fixed-rate mortgage delinquency ratio increased 57 bp, MBA data show. Meanwhile, the overall delinquency rate for conventional and government-backed residential loans rose 13 bp to 4.47% in the first quarter -- the highest rate recorded by the MBA since the third quarter of 1995. Mr. Reid told reporters that an increasing number of the MBA's members are originating subprime mortgages and loan data collected from these lenders are inadvertently being mixed with data gathered from "A" paper mortgage companies. "Subprime delinquencies are starting to show up in our data, which is one reason why the overall rate is higher," Mr. Reid added. "We are working to separate out the B&C data."

The second-quarter earnings of Haven Bancorp Inc., Woodhaven, N.Y., will be affected by a one-time revenue reduction tied to its subsidiary CFS Bank's acquisition of the assets of InterCounty Mortgage Inc., Haven has reported.Under the terms of the purchase agreement, Haven was initially unable to recognize certain servicing release premiums from InterCounty's loan pipeline, but it will begin realizing the SRPs starting July 1, the company said. Haven said it does not expect the transaction to be dilutive to earnings per share in the first 12 months of operation, and believes it will be accretive thereafter.

New Century Mortgage Corp., Irvine, Calif., has completed its first net interest margin private placement.The $58 million offering, NC Finance Trust 1998-1, is collateralized by the residual bonds from four prior asset-backed securitizations: SBM7 1997-NC4, SBM7 1997-NC5, SBM7 1998-NC1, and NCHET 1997-NC5. The transaction was structured with debt and equity components, and New Century retained the equity portion, entitling it to receive residual cash flows from the trust. Brad Morrice, vice chairman and president of New Century Financial Corp., New Century Mortgage's parent, said the NIM transaction improved the company's balance sheet. "We reduced our residual assets, reduced the amount of residual financing outstanding, and improved liquidity," he said.

First Alliance Corp., Irvine, Calif., has announced an approximately $4.5 million writedown in the value of its securitization residual interests for the second quarter.Prepayments of the company's adjustable-rate loans increased about 20% in the second quarter, First Alliance said. However, the delinquency and loan-loss experience of mortgages in First Alliance's servicing portfolio "continues to be among the lowest in the subprime sector," the company said. In other company news, First Alliance announced the appointment of Richard Taylor as legal counsel and corporate secretary. He replaces Ed Summers, who has resigned to take a post with a manufacturing company.

Thomas Glanfield has been named co-leader of Price Waterhouse LLP's asset securitization practice.Mr. Glanfield will assume the responsibilities of Shahid Quraishi, who recently resigned to join NationsBank. Mr. Glanfield will be based in the firm's Arlington, Va., office. David Baranick will continue as co-leader of Price Waterhouse's asset securitization practice in New York, focusing mainly on commercial mortgage-backed securities.

A portfolio of servicing rights on $202 million in mortgage loans from the southeastern United States is for sale.The average loan balance is $100,343 and the average note rate is 7.289% on the Freddie Mac loans. Countrywide Servicing Exchange is the broker. Bids are due by June 30.

The ratings of HomeSide Lending Inc. and HomeSide International Inc., Jacksonville, Fla., have been placed on FitchAlert with negative implications by Fitch IBCA Inc. The action followed the placement on FitchAlert-negative of the ratings of National Australia Bank Ltd., which owns the U.S. holding company whose subsidiary acquired HomeSide and HomeSide Lending in February.The rating action on NAB was, in turn, related to the placement on FitchAlert-negative of Australia's foreign currency. The affected HomeSide ratings include those on HomeSide Lending's senior medium-term notes (rated AA-minus), its commercial paper program (rated F1-plus), and HomeSide's $200 million senior secured second-priority notes due 2003 (rated A-plus).

Countrywide Credit Industries Inc., Calabasas, Calif., has reported unaudited earnings of $90.8 million for the fiscal first quarter ended May 31, 30% higher than its earnings of $70 million a year ago.Basic and diluted earnings per share were $0.82 and $0.78, respectively, up from $0.66 and $0.64. The company's board of directors declared a cash dividend of $0.08 per common share for the first quarter, payable July 31 to shareholders of record on July 15, 1998. Countrywide chief executive officer Angelo R. Mozilo said the highlight of the quarter was record fundings of $20.9 billion, up 123% from a year ago. "While this is predominantly a refinance market, purchase mortgage fundings also reached an all-time high of $9.0 billion during the quarter," Mr. Mozilo said. Subprime and home equity loans accounted for 23% of the production sector gain on sale for the quarter and 11% of the sector's pretax profits, he said. The servicing portfolio ended the quarter at $192 billion, and the servicing sector margin declined to "essentially a break-even level" because of an increase in the normal amortization of the servicing asset, Mr. Mozilo said. The company's website address is www.countrywide.com.

Fannie Mae, Freddie Mac, and the Mortgage Bankers Association of America will guarantee up to $8 million in loans to the Mortgage Electronic Registration Systems Inc., a McLean, Va., enterprise that is cooperatively owned by member firms.MERS is trying to jump-start an electronic registry for tracking ownership of mortgage loans and servicing rights. The recapitalization plan, which also includes support from participating lenders, was necessary because MERS backers underestimated how long it would take the industry to implement the electronic registry.

Principal Residential Mortgage Inc., Des Moines, Iowa, has agreed to buy ReliaStar Mortgage Corp., also of Des Moines, for an undisclosed price.ReliaStar currently is a subsidiary of ReliaStar Financial Corp., Minneapolis. The deal will give Principal a servicing portfolio of nearly $40 billion; ReliaStar currently services $7 billion. On a pro forma basis, Principal will become one of the top 20 servicers in the country, according to a list compiled by the Database Products Group of Faulkner & Gray. ReliaStar is a wholesaler with an 800-broker network nationwide. Principal is retail and correspondent lender, purchasing more than $6.1 billion from other lenders last year. Its retail network had production of $950 million.