Although Bay View Capital Corp. announced last week that it sold Franchise Mortgage Acceptance Corp.'s (FMAC) servicing unit to the subsidiary's current and former management, sources close to the situation are calling this a temporary solution, and anticipate another announcement sometime soon.

Specifically, these sources are expecting the entire unsecuritized portfolio and the new FMAC servicing unit to be placed with a well capitalized entity that could truly reap value from it. The unsecuritized portfolio is estimated to be between $500 million and $650 million in size.

Still, as one industry banker said, "I don't understand why there would be a need for an interim step, between Bay View and whoever would end up buying FMAC."

Moreover, one owner of FMAC paper, who has been in contact with the company, said FMAC has given him no indication that the company has these plans to sell itself. Officials at the new FMAC did not return phone calls when contacted.

According to industry sources, there are several concerns associated with a standalone FMAC, including the ability to make the required servicing advances, and other liquidity issues associated with a potentially thinly capitalized operation, especially one exposed to the legal issues associated with an under-performing securitized portfolio.

FMAC is said to have secured a warehouse line of credit.

Still, as one source pointed out, unless the company is planning to start originating loans again, they're essentially "sitting on a wasting asset, as the loans run off."

One possibility is that FMAC will be strictly in the business of servicing loans, shopping its services out to other originators.

In the near term, the current restructuring should have minimal impact on the servicing, as a transfer isn't taking place, according to the rating agencies. However, both Moody's Investors Service and Fitch said they are waiting for more information before they can make any official opinions.

If in fact FMAC does have a suitor in line, at least two sources are pointing at General Motors Acceptance Corp. Commercial Mortgage as the likely candidate. Former FMAC insiders confirmed that GMAC had been looking closely at the portfolio earlier this year, although, as one source put it, "just about everybody, including everybody on the Street, has taken a look at that portfolio."

Meanwhile, GMAC recently picked up the Enterprise Mortgage Acceptance Corp. (EMAC) servicing platform, just after EMAC failed to make a servicing advance. In January, McCracken Financial Software, which is a subsidiary of GMAC, acquired Univest Financial Services, a franchise special servicer.As for other potential FMAC suitors, sources indicated Cargill Financial and even GE Capital, which recently acquired Franchise Finance Corp. of America (FFCA), had been close to the portfolio at different points in time this year.

Currently, Bay View's former chief financial officer, Mark Lefanowicz, is heading FMAC. Lefanowicz, now CEO of FMAC, stepped down from his post at Bay View at the end of May. Lefanowicz is said to have a background in loan workouts.

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