Principal Taking Big Servicing Hit

Principal Financial Group, Des Moines, Iowa, will write down the value of its residential servicing assets in the fourth quarter, reducing net income and operating earnings by $70 million to $110 million.According to figures compiled by National Mortgage News, the insurance giant's mortgage affiliate, Principal Residential Mortgage, is the nation's 11th-largest servicer, with a $117 billion portfolio. "We are highly confident our model reflects the economic value of the asset," said company president John Aschenbrenner. He added, however, that generally accepted accounting principles "require mortgage servicing rights to be carried at market value, and market valuations of MSRs are not precise in an environment like the current one, where there have been limited sales to use as comparables."