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SOURCE ONE MORTGAGE CORP 'F-1' COMMERCIAL PAPER AFFIRMED BY FITCH, OFF FITCHALERT -- FITCH FINANCIAL WIRE --

 NEW YORK, May 13 /PRNewswire/ -- Source One Mortgage Services Corp.'s `F-1' commercial paper is affirmed and removed from FitchAlert, where it was placed with negative implications on April 1, 1993. The affirmation recognizes that parent Fund American Enterprises Holdings Inc. (FAEH) established a stock purchase agreement between FFOG, Inc., a wholly owned FAEH subsidiary, and Source One Mortgage Corp.
 The agreement calls for FFOG, Inc., if Source One so directs, to purchase shares of Source One class A common stock up to an amount equal to cash and/or investment securities held by FFOG. FFOG may not pay dividends if the prescribed calculated portfolio value falls below $150 million, consisting of 100 percent of the value of cash and cash equivalents along with 50 percent of the fair market value of investment securities. The portfolio currently consists of $312.2 million of investment securities. An additional $7.2 million of cash will be received into the portfolio next week. This agreement provides Source One a pool of capital to draw on under extreme financial conditions.
 Source One was placed on FitchAlert as a result of rapid mortgage loan prepayments in the servicing portfolio, lack of originations to replenish the runoff, and increased leverage. With a smaller servicing portfolio, the company's book value of servicing was valued higher than industry averages at 1.67 percent at year-end, while leverage on a book basis increased to 3.59 times (x) at Dec. 31, 1992 from 2.54x at Dec. 31, 1991.
 The company maintains one of the industry's largest servicing portfolios, roughly $37.3 billion at Dec. 31, 1992, which has contributed to strong cash flow. The servicing portfolio declined 9 percent in 1992 due to rapid prepayments and the company's inability to replenish the runoff with net originations. The servicing portfolio declined another $1.1 billion in 1993's first quarter with the further fall in interest rates. Source One expects to begin originating more than current runoff in June 1993, which will limit 1993's total portfolio decline.
 -0- 5/13/93
 /CONTACT: Teri L. Seelig, 212-908-0638, or Nancy E. Stroker, 212-908-0533, of Fitch/
 (FFC)


CO: Source One Mortgage Services Corp. ST: IN: FIN SU: RTG

SM -- NY057 -- 8152 05/13/93 13:32 EDT
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Publication:PR Newswire
Date:May 13, 1993
Words:374
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