WMC Auctioning Scratch and Dent
General Electric-owned WMC Mortgage here is trying to sell "hundreds of millions" of dollars in subprime scratch-and-dent loans, according to one market participant.
A WMC spokeswoman confirmed that loans are being auctioned but said she could not provide a dollar amount or any details on the pools. "It's being done in the standard course of business," she said, adding that if the company does not like the bid it will keep the loans in portfolio.
The product that WMC hopes to unload includes nonperforming and underperforming first and second liens, said a source.
WMC, said the source, has tested the secondary market for scratch-and-dent loans before but has not always like the bids, especially on second liens.
In mid-April, the non-depository wholesaler laid off 50% of its workforce. That reduction-in-force followed a 20% staff cut in March. It now has just two wholesale offices remaining - its Burbank location and one in Orangeburg, N.Y. A year ago it had nine.
Despite its buyback woes - and layoffs - the company said it is committed to the subprime mortgage business. WMC funded $3.4 billion in residential mortgages in the first quarter, a 50% decline from the same quarter last year.
Wmc's shrinking business
1st Qtr. '07 Funding Volume $3.4 Billion
1st Qtr. '06 Funding Volume $7.0 Billion
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