Mortgage Industry Reshapes

Oxford Funding Corp., which acquired $5 million in mortgages during its first 90 days in business, announced it has agreed to utilize Quantum Servicing Corp., a subsidiary of Clayton Holdings Inc., to service the performing and nonperforming loans it acquires at up to a 50 percent discount.

NovaStar Financial Inc. will sell all of its mortgage servicing rights and servicing advances relating to its securitizations to Morgan Stanley subsidiary Saxon Mortgage Services Inc. for $175 million, according to a press release today. Proceeds will go towards debt reduction. The deal, expected to close by Nov. 1, does not include the former real estate investment trust’s servicing platform.

A good portion of the 300 servicing employees at Kansas City, Mo.-based NovaStar are expected to be impacted from the sale.

“As we continue to endure a difficult period for the mortgage industry and the secondary market for mortgage loans, our focus is on managing our portfolio of mortgage securities, along with brokering loans with a retail team that continues to serve homeowners,” NovaStar President Lance Anderson said in the statement.

The Federal Reserve recently terminated a cease and desist order action against Progress Bancshares. The order was originally issued in June 2006 after an examination of the bank found unsafe and unsound banking practices, deficiencies in its credit risk management practices, and alleged violations of state and federal banking laws. Progress had agreed to recruit a qualified chief financial officer and senior lending officer, among other things.

Matthew Locke was named president of Pulaski Bank’s mortgage lending business, Pulaski Financial Corp. announced. The Webster University graduate was credited for initiating Pulaski’s consumer lending and home equity programs, and establishing a loan production operation that has become one of the top five lenders in Kansas City, Mo.

The Mortgage Bankers Association named Kieran P. Quinn as its chairman and David G. Kittle as its chairman-elect for the 2007-2008 membership year. Quinn and Kittle are the respective chairman of Column Financial Inc. and president of Principle Wholesale Lending Inc.

Among the legislative and regulatory goals Quinn will focus on are a revitalized Federal Housing Administration, a national standard against predatory lending, oversight reform of the government sponsored enterprises and support for foreclosure prevention organizations.

Security Capital Assurance LTD announced a $145 million mark-to-market loss on mortgage related credit derivatives. Significantly wider credit spreads in the residential mortgage and corporate credit sectors led to the loss.

Accredited Home Lenders Holding Co. said Monday it would immediately resume lending operations thanks to a $100 million capital infusion from its new parent Lone Star Fund V. Accredited believes the support will help it conduct operations “in a manner that will be beneficial over the long term.”

The San Diego-based lender also said it will repay a $230 million loan it previously received from Farallon Capital Management LLC because its change in control to Lone Star triggered a clause in the loan agreement with Farallon.

Also, as of Monday, CircleLending became Virgin Money USA, according to a message posted on the CircleLending Web site, which now directs visitors to Virgin Money. Virgin Money focuses on family mortgages, and also offers seller mortgages and a retirement mortgages, according to its site.

Complete Financial Solutions Inc., which has over 100 branches, reported it has agreed to acquire an unnamed federally chartered bank holding company with a single bank branch. The acquisition by the Spokane, Wash.-based company is expected to close by January.

“This acquisition will relieve our mortgage originators of the multiple state licensing burden,” Complete Chief Executive Officer Allen Ringer said in the statement.

ATM Mortgage announced it recently merged with Comstock Mortgage, which itself reportedly became the largest mortgage company in the Sacramento, Calif., region, when it acquired Sac 1st Mortgage. ATM said the merger will add FHA-approved and reverse loans to its menu.