Servicing

Hamilton, Carter, Smith & Co., Beverly Hills Calif., is accepting bids on a $69 million servicing portfolio.The average loan balance is $135,000, with a weighted average interest rate of 7.52%. The original loan-to-value ratio is 63%. The loans are concentrated in Illinois. Bids are due June 25.

Delinquency rates on home equity loans and home equity lines of credit fell to two- and three-year lows, respectively, in the first quarter of 1998, according to data released by the American Bankers Association.The delinquency rate on HELs (closed-end seconds) in the first quarter was 1.30% -- an 8-basis-point drop compared with the first quarter of 1997 and a 19-bp decline from the fourth quarter. The last time the HEL delinquency rate was this low was the third quarter of 1996, when it stood at 1.29%. The delinquency rate on HELOCs fell to 0.76% in the first quarter, a 44-bp drop over the past 12 months and a 20-bp drop when compared with fourth quarter numbers. The delinquency rate for HELOCs has not been this low since the second quarter of 1995, when it was 0.75%. The ABA did not distinguish between 'A' credit and subprime borrowers in its quarterly survey. However, a spokesperson said a small portion of the loans were originated to 'B' credit borrowers.

Countrywide Servicing Exchange has a bid deadline of June 18 for three servicing deals.The first is an annual flow purchase agreement for $500 million to $1 billion of annual Fannie Mae, Freddie Mac, and Ginnie Mae servicing. The loans are primarily from California, with a small portion coming from Nevada. The average loan balance is expected to be $165,000 to $185,000. Countrywide is also selling a $135 million bulk package of Fannie Mae, Freddie Mac, and Ginnie Mae servicing with a weighted average note rate of 7.872% and an average loan balance of $90,831. Separately, Countrywide also has a $101 million Ginnie Mae portfolio for sale with the same bid deadline. The weighted average note rate is 8.675%, and the average loan balance is $64,683.

The first mortgage-backed securities deal by Bayview Financial Trading Group, Miami, has been rated by Moody's Investors Service.Bayview Financial Acquisition Trust Mortgage Pass-Through Certificates, Series 1998-1 is backed by performing loans, many of which have had payment problems in the past, Moody's said. All the loans in the portfolio, acquired by Bayview from a variety of originators, were less than 60 days delinquent as of the cutoff date and less than 10% have been delinquent for 90 days or more in the past year, the rating agency said. The senior certificates were rated Aaa and the mezzanine certificates were rated Aa2, A2, and Baa2. Moody's said the rating actions were based mainly on the 15.5% credit support provided to the senior certificates by the subordinate classes.

Countrywide Servicing Exchange is brokering a one-year bulk forward commitment of $300 million to $600 million of Fannie Mae, Freddie Mac, and Ginnie Mae servicing rights on loans concentrated in the Midwest.The average loan balance is about $110,000 on the conventional loans and $90,000 on the Ginnie Mae product. Bids are due June 17. Separately, United Financial Inc., Denver, is brokering a $51 million portfolio of servicing rights on Freddie Mac loans from Texas. The loans have a weighted average interest rate of 7.61% and an average balance of $66,624. Bids are due June 16.

Glen Messina has been named executive vice president and general manager of GE Capital Mortgage Services Inc., Cherry Hill, N.J., a unit of GE Capital Mortgage Corp., Raleigh, N.C. Mr. Messina has served as acting general manager of the subsidiary since January, when Jenne Britell left to serve as a group vice president of GE Capital Global Consumer Finance in Central Europe.Mr. Messina previously served as the company's vice president and chief financial officer. GE Capital Mortgage Services' $93.5 billion servicing portfolio as of March 31 ranked eighth in the U.S. in mortgage servicing volume, according to the Database Products Group, a MortgageWire affiliate.

Norwest Mortgage Corp., Des Moines, whose parent bank is merging with Wells Fargo Bank, San Francisco, will change its name to Wells Fargo Mortgage, NMC president Mark Oman has told MortgageWire.In an exclusive interview, Mr. Oman -- who manages the nation's largest lender/servicer -- called the merger a "win-win" situation for NMC even though Wells, historically, has frowned upon the residential business. Mr. Oman said even though NMC has mortgage origination branches in markets where Wells has bank branches, he does not see any danger of overlap or mortgage-related layoffs. He said that in some cases NMC mortgage employees would move into Wells branches and operate there. Some mortgage analysts expected that, although the combined banks would take the Wells name, the mortgage division would retain the NMC name because of the brand recognition it carries. But Mr. Oman said he likes the Wells name and its "stagecoach brand." Thanks to the merger, he also looks forward to cross-selling new products to "millions of new customers."

The delinquency rate on commercial mortgages owned by life insurance companies fell to 0.85% at the end of the first quarter of 1998, the seventh straight quarterly decline, according to data from the American Council of Life Insurance.Commercial mortgages make up approximately 92% of life companies' total mortgage investments. However, because delinquencies in the agricultural sector exploded from 0.97% at year-end 1997 to 2.04% for the first quarter, and single-family residential delinquencies increased 20 basis points to 1.99% during the same period, the overall delinquency rate for the first quarter was up 2 bp to 0.94%. This is the first increase in the overall rate since June 1996. The ACLI noted that life companies have been returning to mortgage investments after years of selling off such assets. The overall portfolio increased from $174.2 billion at the end of 1997 to $175.1 billion as of March 31, 1998. Commercial investments increased during the period from $159.6 billion to $161.0 billion.

Wells Fargo, which exited the mortgage business in April, is merging with Norwest Corp., Minneapolis, which owns the nation's largest residential lender/servicer.Because Wells has no mortgage division, Norwest Mortgage Corp. chief Mark Oman likely will have no competition for the top spot once the two commercial banks combine. In April the San Francisco-based Wells sold its $34 billion servicing portfolio and platform to GMAC Mortgage. Although some banks have been gobbling up mortgage assets during the decade, others have been exiting the business entirely. When Wells sold its servicing it joined other large banks such as BancOne, Barnett, First Bank, and National City that have exited the business over the past two years. Ed Elanjian, managing director of Cohane Rafferty Securities, Harrison, N.Y., told MortgageWire that some commercial banks don't like the high expense ratios that are involved in running a mortgage operation. He noted that some banks sell their mortgage divisions to make their expense ratios look better in preparation for a merger. At the end of March Norwest Mortgage was the nation's largest mortgage banker, with $212 billion in servicing. In the quarter NMC produced $20.9 billion in residential loans.

Prepayments for Fannie Mae and Ginnie Mae mortgage-backed securities "continued to show healthy declines" in the May reporting period, which should cause the mortgage market to "breathe a sigh of relief," according to the Bear Stearns Prepayment Commentary.However, analysts Dale Westhoff and Bruce Kramer cautioned that despite the "reassuring numbers," they believe "the level of prepayment risk remains extremely high." Speeds for Fannie Mae 30-year coupons of 7.0% and higher generally fell 5%-15% from April levels, the analysts said. "These numbers are consistent with our theory that even in a low and stable interest rate environment, prepayments will experience a natural decay as the eligible pool of refinancers diminishes over time," they said. "Indeed, we believe that only a clear break-out from this trading range will reverse the slowing trend and produce a significant refinancing surge." There were exceptions to the slowing trend in the discount sector, where most Fannie Mae and Ginnie Mae speeds increased.