C-BASS Hit, Owners Take $1B in WDs
C-BASS LLC here, which controls the nation's 10th largest subprime servicer, was the subject of margin calls in August, forcing its two mortgage insurance company owners to write down its value by more than $1 billion.
According to the Quarterly Data Report, C-BASS-owned Litton Loan Servicing, Houston, owns the right to service $48 billion in mostly subprime loans.
C-BASS is controlled by MGIC Investment Corp. and Radian Group Inc. The two had planned to merge but at press time there was talk that MGIC might back out of the deal.
As for C-BASS, the two MIs issued a statement saying the servicer/subservicer "remains confident in the overall credit quality of its portfolio and the performance of its highly rated servicing subsidiary Litton Loan Servicing." (A spokesperson for C-BASS declined to comment on the company's situation.)
Citing a "tumultuous time" in the subprime market, the two MIs said C-BASS was asked to meet $290 million worth of margin calls during the first half. (At the beginning of the year it had $302 million in liquidity.)
MGIC had valued its share of C-BASS at $516 million, Radian, $518 million. In separate statements, MGIC said its investment in C-BASS "could be" fully impaired while Radian said its investment is "materially impaired."
C-BASS is now on the auction block.
Meanwhile, Fieldstone Mortgage, Columbia, Md., which was recently purchased by C-BASS, stopped funding loans and taking new applications in early August.
An e-mail sent out by Fieldstone to employees - and obtained by Mortgage Servicing News - notes that "no further loan applications are to be accepted for wholesale or retail customers." (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.bondbuyer.com/ http://www.sourcemedia.com/