Salt Lake-based Fairbanks Capital Corp. said on Tuesday that the majority of its lenders and shareholders have agreed to provide an extension of committed financing for serving advances and working capital through Sept. 30, 2004, and that primary shareholders will provide an additional $35 million of financing.
The final documentation of the agreement is expected to be completed by June 6.
Jim Ozanne, Fairbanks' chief executive officer, said in a prepared statement that the agreement "will provide financial stability for Fairbanks as it moves forward with its multi-point plan and work already initiated to address the concerns recently raised by the rating agencies and other parties."
In mid-May, Fitch Ratings downgraded four of the company's ratings from a Level 1 servicer — the highest rating possible — to a Level 2. The ratings range from Level 1 through a Level 5. Level 5 indicates minimum industry standards.
The ratings are an indication of a company's ability to effectively service residential mortgage backed securities transactions. Fitch cited a "significant amount of uncertainty" regarding Fairbanks' financial viability, management stability and operation strength.
On April 30, Fairbanks Capital received a "below average" ranking by Standard & Poor's Ratings Services. That was down from a previous "strong" rating by S&P 30 months ago.
Reasons for S&P's downgrade included inaccurate payoff quotations, a substantial number of false property inspection fees and an increasing amount of consumer-oriented litigation filed against Fairbanks, according to a press release.
In the Tuesday announcement Ozanne said Fairbanks will cooperate with the Federal Trade Commission, the Department of Housing and Urban Development and state regulators on their reviews of the company.
Fairbanks is a nonprime residential mortgage loan servicer with other facilities in Hatboro, Pa.; Jacksonville, Fla.; and Austin, Texas. It services more than 550,000 non- prime residential mortgage loans.