THIS JUST IN: Yet another large subprime lender is having trouble and appears to be on the verge of doingsome employee house cleaning. To find out which lender see the Monday edition of National Mortgage News.Don't subscribe? Call: (800) 221-1809...
Traders and other mortgage executives tell us that secondary market bidders are offering between 15 and 25 centson the dollar for delinquent HELOCs. We've heard the bid prices from three trusted sources. One investment bankersaid a large California lender wanted 65 cents for a recent pool of bad seconds. Needless to say, the sale neverwent through...
After last week's column we received a ton of requests for our list of defunct mortgage firms. In case you wantto see yet another (accurate) update visit:
Also, NMN has a new fraud e-newsletter. Visit:
What the heck is the ABX Index and what does it matter to the subprime industry? It's a thinly tradedindex that tracks how much it costs to insure BBB-minus rated bonds that are tied to subprime securitizations.Investors can be "long" or "short" the index. Six months ago the "spread" betweenBBB- bonds and LIBOR was 350 basis points. Recently it's been at 700 to 800 basis points. One lender told us attimes it's been as high 1,200 basis points. For more on the ABX Index and what it means read Bonnie Sinnock's"Street Smarts" column in Monday's NMN...
On Thursday one wholesale executive in Southern California told us that his two largest non-prime competitorshad just raised their rates by 45 basis points each. This, of course, means that rates are going up for consumers.One thing to keep in mind is this: with all the menu tightening going on -- and with all the emphasis on creditquality -- it's only a matter of time before subprime firms begin hiking their rates. And with many firms goingbust that means less competition, which means lenders can charge, well, more. Who gets hurt? The subprime consumer.Can anything be done about this? No. Some lenders believe credit impaired borrowers have benefited from great ratesthe past three years. And now, the gravy train is over...
One other thing to keep in mind: the Dow fell 416 points one day last week. Stocks are not looking good. Whenthe "dot-com" crash came in 2000 investors began pulling money out of stocks and putting it in housing.Now both stocks and housing are cracking up. Where will investors put their money? Answer: cash. As cash pilesup, that will force down short-term rates, at least it should...
Countrywide Financial Corp. said in a SEC filing on Thursday that its subprime servicing portfoliois suffering from a 19% delinquency rate. Amazingly, its stock only fell a fraction on the day. The company didnot return several press calls from NMN and other publications. (Rick Simon don't be shy. What gives?)According to the just released Quarterly Data Report, Countrywide is the nation's largest subprime servicer.Don't subscribe? Email:
It was almost a year ago when NMN broke the news about subprime lender Acoustic Home Loans goingbust, inspiring bloggers everywhere to pay attention to our business. The more the merrier!...
Three years ago -- while the subprime market was red hot -- ACC Capital Holdings talked to WashingtonMutual about the Seattle S&L buying Ameriquest/Argent. The mega thrift ultimately passed, said oneformer WaMu executive. "The asking price was then $4 billion," said the official. Last week Citigroupsaid it has an option to buy Argent and Ameriquest's servicing. If you read in between the lines of the press releaseit looks pretty clear that Citi will eventually buy the thing -- unless it uncovers some type of deal breaker.What will it pay? You can bet it won't be $4 billion...
As expected, Federal regulators soon will unveil new underwriting standards for certain hybrid mortgage products.Under the guidelines lenders will have to qualify borrowers at the fully-indexed rate -- rather than the teaserrate -- for 2/28s, and 3/27 ARMs. What does the Mortgage Bankers Association have to say about this? Ina statement MBA notes: "Overly prescriptive measures run the risk of eliminating valuable financial optionsthat help consumers and support homeownership." MBA, of course, recently merged with a non-prime trade group...
WASHINGTON NEWS: The Department of Housing and Urban Development had this reaction to a recentstory appearing on NMNOnline: "We appreciate the recent coverage on the FHA modernization proposal.It has generated some questions for us and I wanted to clarify one point that could confuse readers. FHA expectsthat even borrowers who take out zero down payment loans will nevertheless pay a minimum cash investment and thatinvestment will be in the form of an up front mortgage insurance premium or the closing costs payment. No one shouldexpect to obtain an FHA insured mortgage without a minimum investment."
SURVEY NOTICE #1: Loan brokers take note. NMN is conducting its annual survey of mortgage brokerage firms.To participate send an email to:
SURVEY NOTICE #2: Loan officers take note -- NMN's annual survey of LOs is now ready. Visit:
DATA NEWS: According to the new 4Q edition of the Quarterly Data Report mortgage bankers funded$795 billion in loans during the quarter. Subprime production fell to $143 billion from $176 billion in 3Q. TheQDR offers complete rankings on the top 100 mortgage funders and servicers with breakouts on loan channels, subprimeand much more. For info on the product email:
