The implosion in the subprime sector came home to roost in the third quarter with A- to D fundings falling tojust $28.5 billion in the period, a seven-year low, according to new and exclusive survey figures published byNational Mortgage News. Every single subprime funder (those that are left) was whipsawed with theexception of one: Chase Home Finance of Woodcliff Lake, N.J. For the full story see the Monday edition ofNMN. If you want to see the complete rankings — including production breakdowns — order the QuarterlyData Report by e-mailing:
If you would like to view a list of recently defunct subprime shops and platforms complete with loan productionnumbers visit our website at
Now, let's play a little game. I've been doing research into the roots of the subprime mess and I've come upwith a "family tree" of subprime where quite a few B&C operators got their start in the businessat one of these institutions: Long Beach Financial (this category also includes Ameriquest/Argent), GuardianSavings where Russell and Becky Jedinak ruled the roost, and Plaza Home. Jack Mayeshand his crew at ResMAE got their start at Long Beach while Bob Cole and Brad Morrice of NewCentury cut their teeth as Plaza Home. Long Beach, of course, was Roland Arnall's baby. If you have moreinfo that could fill out this family tree send me an email at
The big event in Washington next week is (hands down) the Office of Thrift Supervision summit on themortgage mess. (Officially, OTS is calling it National Housing Forum.) Speakers include housing secretary AlphonsoJackson, Angelo Mozilo of Countrywide, Kerry Killinger of Washington Mutual, DanMudd of Fannie Mae and a host of others. Meanwhile, the there is plenty of talk in the media about Treasuryunveiling a big plan where servicers will "reset" subprime ARMs. Of course, many servicers, where theycan, are already doing just that. One mortgage executive told us that the big problem is payment-option ARMs wherethe consumer has a rate of 3%. A rate that low cannot be artificially maintained by servicers. In other words,if Treasury thinks a servicer (or end investor) will roll over a 3% rate, the government is dreaming. One industryveteran — requesting his name not be used — raised another issue: "OK, so you keep the rate the same for thesubprime borrower. Then the prime borrower who has been current all along and who also has an ARM says, 'Hey metoo. Keep my rate the same.'" This industry vet said Treasury has to either come up with a plan where allARM rates are frozen or none are. "Think about the lawsuits," he said. See the Monday edition of NationalMortgage News Online (MortgageWire) for reports on the OTS conference:
Most media outlets have not explained how exactly E*Trade screwed up its mortgage business. It was nota big player in subprime. Its Achilles heel, we are told, was HELOCs, including those on 80/20s. One source whodid business with E*Trade's mortgage group, noted that the company was a major player in the home equity marketbut instead of underwriting the loans itself outsourced that chore to a vendor in California called Genpact.He said Genpact's biggest clients were E*Trade and E-Loan...
One of the most closely watched earnings reports of the next two weeks will (without a doubt) be Lehman Brothers.Lehman, a major player in subprime and alt-A, announces on Dec. 13. Lehman owns Aurora Loan Servicesand used to own BNC Mortgage and Finance America, the latter two of which are on the scrap heap...
Here's something some readers probably didn't know: Mortgage insurance giant MGIC Investment Group isinvolved in a joint venture called Sherman, which during the second and third quarters paid $415 millionfor various portfolios of delinquent second-lien subprime loans...
One way to revive our housing markets is this: sell the homes to European investors. Why? Because they loveFlorida and the euro and British pound are worth almost twice the dollar (sort of). A study carried out by Datamonitor,on behalf of Overseas Property Professional magazine, has found that British and Irish citizens nowown 3.81 million properties overseas (excluding time share and fractional ownership), with 1.21 million of theseproperties being owned by permanent U.K. and Irish citizens. Of course, the Brits may love Florida but they alsolike warm beer. They gave us the Clash and Beatles so they can be forgiven...
Foreclosures in Montgomery County Md., the most prosperous county in the state, are up 2000%...
Even though dozens of lenders are running, screaming from the wholesale sector, blaming subprime and loan brokers(in some cases) for their misery, BankUnited Financial of Florida says it still believes in the channel."Wholesale lending has been an important part of BankUnited's history and we remain committed to this lineof business," said Ramiro Ortiz, president of the thrift...
Over the past year I have been hearing a handful of stories about how some Wall Street firms are mishandlingthe servicing of loans they purchase in the secondary market. Here's what one executive said the other day in regardto a Wall Street firm: "We would service a loan for 60 days and collect all payments on time. When the WallStreet firm took over servicing, the loan went to hell. We found that they were late setting the loan up for servicing(creating a delinquent event) or they serviced by predictive dialer at the same time of day for 60 days, neverhaving a phone pick up. We would call the alternate customer phone number and get responses and payments immediately"...
LOAN ABUSE STORY OF THE WEEK: "We had a client come in to us a month after closing with anotherbroker because she thought she was ripped off. The client was recently divorced and had to refi her ex-husbandoff the deed and mortgage. She had not worked for several years being at home raising the kids. We reviewed herclosing docs and realized that this other broker put her in a stated-income subprime loan, created a job for heras an attorney working for the closing attorney's firm, and the attorney verified her employment. They chargedher one point on the front and two on the back (YSP) on a $600,000 loan." — R.S., Mass. (Have a loan abusestory you would like to share? Send an email to
MORTGAGE PEOPLE: Prospect Mortgage of Chicago has named Richard Loeffler its new chiefoperating officer. He joins Prospect from American Home Mortgage, the 10th largest mortgage lender in thecountry prior to its closure in September.
DATA INFORMATION: According to the eMortgage Industry Directory, Wall Street firms ownresidential servicers that control $115.7 billion in subprime loans or roughly 8.52 % of the market. Need annualrankings and profiles on the top residential lenders and servicers? Need commercial mortgage banking informationas well? Try the eMortgage Industry Directory, an online book that tracks the nation's top 400 lenders,300 servicers, top 85 subprime and much, much more. The e-book also provides a special analysis on America's subprimecrisis. To order e-mail
