What exactly are criminal investigators looking at in regard to New Century Financial? One source familiarwith these matters said investigators are focusing on some of its loan trades. "Typically, they would do atrade before the quarter's end," he said. The key to such trades, the source noted, is "counter-party"risk. Counter-party risk means there's a company on the other side of the trade -- typically, an investment bankingfirm. Another item being looked at is how much cash New Century said it had on its balance sheet. What New Centurysaid it had -- and what it really had -- is a whole different matter. Meanwhile, as we went to press this weekend,the company's shares were trading under the symbol 'NEWC.PK' on the pink sheets. On Friday the last read was: up$1.01 to $2.36 -- a stunning gain of 75%. Some rumors were circulating that New Century was working on a pre-packagedbankruptcy plan...
Just how many people did Ameriquest/Argent layoff on Thursday? We were told 3,000. The company would not comment.Its entire White Plains, N.Y., operations center was completely shuttered. One former employee told us the NewYork division "was the top producing division and saved the company millions of dollars by detecting fraudulentfiles early on in the loan process"...
Here's something to think about: Now that many Wall Street firms own subprime (wholesale) funders would theyforce their very own companies to buy back early payment defaults?...
In the general business press there was a lot of blathering going on this past week about the subprime contagionand its effect on the overall economy. Fewer homebuyers translates into fewer purchases of refrigerators, couches,and so on. But we anticipate that a whole new class of investors who fund private subprime loans and keep the mortgagesas an investment will rise up. The difference will be this: these loans will be prudently underwritten, there willbe equity in the home, and the interest rate will be quite a bit above the going Fannie Mae/Freddie Macrate...
It's too bad Senate Banking Committee chairman Chris Dodd doesn't read NMN and the othertrades. He may consider investigating the collapse of a large subprime lender in his own backyard: MortgageLenders Network of Connecticut...
In case you've been missing all the rumor mongering about which firm is troubled -- and which is not -- everysingle subprime failure has been foretold on National Mortgage News' 'Grapevine' bulletin board.(
Put General Electric on the couch. Let's recap: about 15 years ago it bought a mortgage company eventhough it owned a highly profitable mortgage insurance company. The MI company was not happy that GE owned themortgage company because it competed against its MI customers. Eventually, GE sold the mortgage company -- GECapital Mortgage of Cherry, Hill, N.J. -- but kept the MI company. About three years ago it spun off the MIthrough an IPO and eventually sold all its shares. The MI company -- now called Genworth (which has otherbusinesses) -- is doing quite well. A few years ago GE bought a subprime lender called WMC Mortgage, which,well, is having some woes. We don't know how bad things are at WMC but we know it has laid off about 20% of itsworkforce. (NMN broke the story in its March 12 edition.) So, what did GE do last week? It bought anothermortgage company -- PHH Mortgage -- which it, in turn, is selling to the Blackstone Group. Confused?Maybe there's something in the water in Stamford...
IN CASE YOU MISSED IT: What's the going price for delinquent second liens in the secondary market? Answer:15 cents to 25 cents on the dollar...
The Orange County Register has a couple of reporters who are writing blogs, covering the SouthernCalifornia real estate and mortgage markets.
WASHINGTON NEWS: The Federal Housing Administration could have hundreds of thousands of subprimeborrowers if Congress passes an FHA reform bill, but if not, the agency will raise its mortgage insurance premiums,Housing Commissioner Brian Montgomery told Senate appropriators this past Thursday. As a fallback position,the FHA commissioner testified that he will raise the FHA upfront premium from 150 basis points to 166 bps andits annual 50-bp premium by a few basis points. (See Brian Collins' story in Monday's NMN.)
MORTGAGE PEOPLE: Mortgage securitization pioneer Craig S. Phillips has founded Ptarmigan Capital.The former Morgan Stanley executive will concentrate on real estate investment in Southern India. RVSRao has been named chairman of Ptarmigan’s India operations.
SURVEY NOTICE #2: Loan officers take note -- NMN's annual survey of LOs is now ready. Visit the
DATA NEWS: According to new 4Q edition of the Quarterly Data Report mortgage bankers funded $795billion in loans during the quarter. Subprime production fell to $143 billion from $176 billion in 3Q. The QDRoffers complete rankings on the top 100 mortgage funders and servicers with breakouts on loan channels, subprimeand much more. For info on the product email:
