38 Lenders Have Now Gone Kaput

[Tellurian]

Quote Of The Week

"The regulators are trying to figure out how to work around it, but the Hill is going to be in for one big surprise. This is far more dramatic than what led to Sarbanes-Oxley, both in conflicts and in terms of absolute economic impact."

—Josh Rosner, managing director, Graham-Fisher & Company (quoted from here)

Top 25 Subprime Lender list

(as of Q2 2006; from the Mortgage Banker's Assoc. # are shutdown and/or bankrupt, ** are no longer operating independently) -

1. Wells Fargo

2. HSBC Household Finance (HSBC's subprime erased at least half of '06 earnings)

#3. New Century (funding pulled; lending halted, lawsuits, criminal probes, impairments)

4. Countrywide (subprime to hurt results; layoffs)

#5. Fremont General (2007-03-02; residential subprime activities ceased)

6. Option One (H&R Block; mounting losses; up for sale)

7. Ameriquest (On life support from Citigroup; may end up acquired. Owned by ACC. Recently shut most offices and settled with 30 states over predatory lending)

8. WMC (subsidiary of GE Money)

9. Washington Mutual (some branch closures starting late 2006)

10. CitiFinancial



**11. First Franklin (acquired by Merrill Lynch from National City for $1.3bln)

12. GMAC (Major layoffs in ResCap; Looming writedowns subprime loan portfolio and residual)

13. Accredited Home (in a serious cash crunch)

14. BNC (Lehman bros. subsidiary)

15. ChaseHome Finance

16. Novastar (serious impairments; likely no dividends in 2007, no taxable income through 2011; shareholder lawsuits)

#17. OwnIt, 2006-12-07 (partially-owned by Merrill and BofA)

18. Aegis (recently closed two subprime operations centers)

#19. MLN, 2006-12-29 (Much of the sales force has gone to Lehman)

20. EMC



#21. ResMAE,2007-02-13 (acquired by Citadel)

22. FirstNLC

23. Decision One (owned by HSBC; rumored to be up for sale)

**24. ECC/Encore (fire-sale bought out by Bear-Stearns)

**25. Fieldstone 2007-02-16, bought by C-Bass

...will post updates as they become available..

[hippiechick]

1. YIKES!

So what happens to the schmucks who got stuck with mortgages from any of these companies (... of which I was nearly one last summer, til I got cold feet) ??

And what does it do to the rest of the lending market for people looking to buy a home?


:shrug:

[Tellurian]

2. They have to keep paying their mortgage..

and keeping track of their RECEIPTS..

I'm sure each one of these company's administrative accounts receivables are still active.

What will be a shame, if people think they can take advantage of this situation and NOT PAY their mortgage.

[hippiechick]

3. What I was wondering was ...

... from the reverse angle, if their mortgages would be 'assumed' by one of the more stable companies, are the terms still valid or would the homeowner be open to some outrageous interest hikes/penalties or some creative terminology that will force them to pay more ... or could they just flat out be foreclosed on because the new company doesn't want to carry the risk?

:shrug:

[Tellurian]

4. THE best thing to do...

Continue to make timely payments, stressing the importance of keeping receipts, once again. Most likely the loans would be sold off as is to a stable company...(then who knows) I doubt very much, a new lender could go wild, changings the terms of the original agreement. And if that were to actually happen, I'm thinking there will have to be government intervetion at some point in time to curb any abuses.

The ramifications and unknown ripple efects are indeed very scary. This is all uncharted territory.

[Tellurian]

12. Just as I thought.. Congressional Leaders Afraid of Abuse..

...what you're NOT seeing as Front Page Headlines..

Congress may have to act on subprime loans: Dodd

By Robert Schroeder, MarketWatch

Last Update: 3:58 PM ET Mar 14, 2007

WASHINGTON (MarketWatch) - Congress will probably have to do more to address problems in the subprime mortgage sector to make sure that predatory-lending practices and regulatory failures don't force large numbers of American homeowners out of their houses, a senior member of the Senate said on Wednesday.Sen. Christopher Dodd, D-Conn., spoke against a background of continued turmoil in world stock markets triggered in part by problems among lenders that specialize in risky, or subprime, mortgage loans. Concerns that those problems could spread to other parts of the economy have pushed The Dow Jones Industrial Average and other stock indexes to their lowest levels of the year.

Speaking to reporters following a speech to the U.S. Chamber of Commerce, Dodd declined to list specifics about possible congressional action but did say he wouldn't consider a bailout for companies who may have been engaged in predatory lending. Dodd is chairman of the Senate Banking Committee, which has jurisdiction over financial markets as well as housing.

His comments on Wednesday followed remarks to reporters on Tuesday, in which Dodd said "large numbers of American homeowners" are facing foreclosure and the loss of their homes due both to predatory lenders and what he called regulatory failures. Dodd was referring to a study by the Center for Responsible Lending, which concluded that 2.2 million households hold subprime loans that will fail and end in foreclosure this year or next. That amounts to about one of every five subprime loans underwritten in the past two years.

Dodd, who is seeking his party's 2008 nomination for the White House, said in a statement on Tuesday that he was mulling legislation and other options that would protect consumers from abusive lending practices and allow them to keep their homes. Two weeks ago, federal banking regulations released proposed new rules on subprime loans that could severely curtail their availability. Among other changes, the regulators want lenders to loan only to borrowers who can prove they can pay back the loan, even after the initial teaser rate resets to a higher interest rate.

See full story.


http://www.marketwatch.com/news/story/dodd-says-more-action-may/story.aspx?guid=%7BEECEBB11%2DB706%2D4A22%2DAE7D%2D81D6E0E9BF12%7D

[Warpy]

5. They sell paper to other banks as the defaults build up

which is how big financial outfits (Citigroup, Merrill, Morgan Stanley, BofA, Wells Fargo) are now taking hits as that paper goes into default, too. Plus, they all had at least partial ownership of subprime lenders.

I had my fixed rate mortgage sold three times before a local bank outside the conglomerate system ended up with it, probably because a woman was considered high risk.

[Tellurian]

7. Yes, that was the norm within a stable environment..

What I'm hearing today, is many more companys are going out/bankruptcy or shutting their doors. The worry now is, the huge investment firms that purchased many sub prime lender outfits since Aug of 06' feeling the pummeling to the tune of $100's of billions of dollars; if it may just be too much, and destabilize an already volatile economy.

[Warpy]

10. True, the subprimes are going under because they

can no longer find a bigger sucker to buy the bad paper.

[Tellurian]

11. Actually, it's all part of the pnac plan to break the middle class..

that has been the goal, all along. A two class system, the Rich and the Poor.

[gravity]

6. They brought it on to themselves

personal responsibility.

[fasttense]

13. Gravity, your RW talking point is showing.

Your absent-minded conservatism is showing like a dirty petticoat under your dress when you use the phrase “personal responsibility”.

When most thoughtless conservatives use the phrase, they mean that the impoverished should not expect help from society especially not from our government and the rich men who control it. They mean that others should not expect help from the government but they were glad they got that public school education, used our tax supported roads and were protected by our military and police.

"Compassionate conservatives" are willing to accept all manner of help from our government, they just don’t want to give any extra help to the truly needy, and they do not want to feel sympathy for them either.

By using that phrase, they have put the blame of poverty on the poor and are not obliged to help them.

The arrogant well-to-do merely use it as an excuse to avoid any obligation to their fellow man.

Thank goodness, soldiers and firefighters don’t think that way.

[gravity]

16. I was being Ironic

This issue is about some sub prime lenders, people who tried to make a quick buck signing loans to people who can't afford to pay them using predatory tactics.

[fasttense]

22. Oh sorry, I thought you were a freeper. My detector is broken. n/m

[Tellurian]

8. Top Investors sees U.S. property crash

Top investor sees U.S. property crash

Mar 14, 2007

By Elif Kaban

MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.

"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.

"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops

"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.

Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.

Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.

Continued...

http://www.reuters.com/article/newsOne/idUSL1470530620070314?src=031407_1316_DOUBLEFEATURE_mortgage_troubles

[Tellurian]

9. This latest report is very disheartening..

I certainly don't mean to put anyone into a panic. We need to be well informed for our own selves. What worries me is some of the people i talk to have no idea this is going on. It's not exactly Front Page news in everyones local newspapers.

Alls, I'm saying, is be prepared for the worst. Have some cash on hand in the house in case everything goes down. The main thing is we need to survive the worst of times. Bush doesn't care about us. There will be no government help available. He'll make sure of that.

Love you all, and hope my posts aren't upsetting anyone!

[sbyte]

21. Have you contemplated worst case scenario's?

Liquidity implosion.
Good thing the fed has room to lower rates, if that could help.
:nopity:
But where oh where is all the money going to.
where oh where is it all going to,
"" " "" " " " " " '
Early in the morning.
:nopity:

[Tellurian]

14. Hedge funds hit hard by subprime woes

The limited partnership investment funds are much more exposed to the high-risk loans than mutual funds.

March 16 2007

BOSTON (Reuters) -- Hedge fund portfolios seem to be suffering the most within the fund industry from turmoil in subprime lending, as most mutual fund investors have so far escaped big losses, industry analysts and investors said.

"This is probably a case where the tail is wagging the dog," said Jeff Tjornehoj, an analyst at fund research firm Lipper, a unit of Reuters. "The people taking the biggest hit seem to be the hedge funds, and their nervousness is spreading through the markets; but so far most mutual funds do not look to be heavily impacted," he added.
Video More video
The subprime mortgage market is heading for a meltdown with some major lenders defaulting on current financial agreements. CNN's Gerri Willis reports. (March 10)
Play video

The value of the average stock mutual fund, which could own anything from financial companies to home builders, slipped 0.4 percent in the week ended Thursday, Lipper data show. In the previous week they were off 0.3 percent, but for the year to date, they are still nearly flat - off only 0.03 percent. Hedge fund data is not available on a weekly basis.

"On the other hand, a small number of hedge funds exposed to the mortgage-backed securities and some subprime lenders, may be nursing bigger losses, people who track performance in the $1.4 trillion industry said. And their problems - real or perceived - make for daily conversation, fund of fund investors and performance trackers said.

Hedge fund Second Curve Capital invested in subprime lenders, and people who track performance said losses were in the double digits through February. The fund's manager did not respond to an earlier email request about the performance.

Greenlight Capital had owned a chunk of New Century - the nation's largest independent subprime lender. which has seen its stock tumble roughly 95 percent in less than a year - and its manager was on the board until earlier this month.

Through the end of February, the fund was off 2 percent, an investor said.

"If there is someone out there who is levered and has concentrated bets, they could have a big problem," said Charles Gradante, principal at hedge fund investors and consultants Hennessee Group.

"But I imagine if there were some fund on the verge of blowing up in a big way, we would have heard about it by now."

Even on the mutual fund side, some investors who made concentrated bets in financial services or even real estate funds, where builders' stocks have been hit amid the slowdown in the housing market, are nursing bigger losses.

On average the $10.6 trillion mutual fund industry's 131 financial services funds fell 1.53 percent during a week markets when were spooked by economic data that showed higher default rates, regulators began probing rosy reports on subprime lenders, and lawmakers promised new bills to reign in aggressive lending. Last week they were off 0.4 percent. Real estate funds lost 0.31 percent this week after falling 1.8 percent in the previous week.

The $350 million Fidelity Select Banking Portfolio - which owned shares of Countrywide Financial (Charts) and more regionally oriented names like Wachovia (Charts), according to its latest holdings data through year-end - is off 3.64 percent this year. The fund pared some losses this week.

Losses at the $274 million FBR Small Cap Financial Fund are even deeper at 7.7 percent because market jitters hurt even the small bank stocks with conservative portfolios that the fund's manager prefers, Morningstar analyst Andrew Gunter said.

Countrywide, which has lost roughly 16 percent this year, also hurt diversified stock funds like Legg Mason's Value Trust fund, now off 2.9 percent. The fund - managed by Bill Miller, who is the only man to beat the broader Standard & Poor's 500 stock index 15 times in a row, also owned homebuilder stocks which fell, according to the latest available data.

http://money.cnn.com/2007/03/16/markets/hedge_subprime.reut/index.htm?postversion=2007031615

[Tellurian]

15. Update for defunct Lenders IS "41" .....nm

[Tellurian]

17. New number..."42" nm

[Captain Angry]

18. Where are you getting your updated numbers?

If you are getting it from different articles as you go, could you please post the links?

Thank you.

[Tellurian]

19. The updates are via- my email..

sent by the Mortgage Bankers Ass.

I will request they sent links with detailed info.

[Captain Angry]

20. Thanks for the info.

I'm always curious to see the details.

[Tellurian]

23. MSM posits this is a minor problem..

...but we know better. Is this a ruse not to alarm the public our economy is tanking and the government isn't doing a thing to stop it? I don't know what else to think.

"The main stream media (MSM) was so filled with contrived “it’s a minor problem” and “isolated” Matrix balm that the script being used sounded like it came out of a bad high school drama course. The key to this Matrix operation is repetition and orchestrated manipulation. You are now seeing this gaming at its worst. Then the Pig Men all recommended each other’s stocks, and ran them up over three days with concentrated stock buyback programs. The buying was sloppy and the volume was generally light. No doubt shorts were swept aside for the umpteenth time. Typical of the drumbeat was this UBS buy recommendation of Moodys, who in turn has sat on their rating hands over the last couple weeks during a subprime meltdown:

Shares of Moody’s Corp. rallied nearly 2%, helped by an upgrade to buy from neutral at UBS, which cited valuation. Analyst Brian Shipman said he thinks the weakness in the stock over the last month, resulting from concerns over the impact of troubles in the subprime mortgage market, is “overblown.”

Next, various transactions are announced but without much of the intimate details, such as who bought them. I suspect the Milky Way. In fact I predict that when and if these deals are eventually revealed they will be so convoluted, complicated and lacking in transparency as to be nearly worthless for analysis. Case in point is Fremont General who is claiming that $4 billion in Old Maid Card securities (OMCS) were sold and it only resulted in a $140 million loss. Accredited Lending also sold its entire $2.7 billion portfolio to meet margin calls and took a $150 million loss. In other words we are being asked to believe that these subprime OMCS traded hands at a firm 96.5 cents on the dollar in the case of FMT and 94.5 cents in the case of LEND, thus supporting the illusion of a contained correction.

One name we have tracked is Novastar. Taken from an earlier post is a look and comment on their year end balance sheet. If NFI were to also sell its $4 billion holdings it would need to collect 88 cents on the dollar to end up with zero net assets. Apparently the stock market is still optimistically assigning a $232 million value to its market cap, suggesting a circling it’s wagons around that 95-96 cents on the dollar fantasy? Well this one ain’t over till the fat lady sings.

http://wallstreetexaminer.com/blogs/winter/?p=548

[Odin2005]

24. OMG, this is SOOOO not good...

:scared:

[Tellurian]

25. IBM Setting Sights on Mortgage Market

IBM Setting Sights on Mortgage Market

* March 26, 2007

While the mortgage market continues to roil from the effects of a meltdown in subprime credit, IBM (NYSE: IBM) said today it intends to enter the loan fulfillment business and that it has formed a new business unit which will specialize in providing software and services for mortgage lenders.

IBM Lender Business Process Services, Inc., a wholly-owned subsidiary of the IT services giant, will offer a full range of lending services, including loan application, underwriting, processing, vendor management, document preparation and loan closing, the company said in a press statement.

IBM said its new LBPS subsidiary will seek to provide top-tier lenders an opportunity to utilize leading-edge technology and processes much more economically, while offering mid-market lenders an opportunity to tap into enterprise-class origination technology that otherwise would be too costly to develop and maintain.

IBM said it will introduce a variable-cost mortgage origination platform to compete with the fixed-cost approach currently employed by most vendors competing in the space. “There is a fundamental shift in how the mortgage industry uses technology and automation to achieve the kinds of efficiencies required to thrive in the new lending economy,” says Af Assur, general manager, IBM mortgage origination.

“Lenders need a partner like IBM who can invest to automate the total loan fulfillment supply chain on their behalf, to give them the competitive advantage they need. By integrating fulfillment and imaging technologies, proven processes and highly experienced lending professionals, we will deliver the automation and digitization necessary to help achieve the loan fulfillment efficiencies and service required for success.”

IBM officials said they beleive the cyclical mortgage market is placing mortgage lenders under pressure to manage an inherently high-cost, labor-intensive process. “Lenders are challenged to achieve scale in a fixed cost structure environment that adversely impacts lender profits as the housing and interest rate markets fluctuate,” the company said in a press statement.

The company said has been steadily building on its existing capabilities through strategic acquisitions and blending of software and services to help its banking and lending customers worldwide tackle their pain.

http://www.housingwire.com/2007/03/26/ibm-setting-sights-on-mortgage-market/

[Tellurian]

26. Morgan Stanley auctions New Century mtgs: report

Morgan Stanley auctions New Century mtgs

Mar 26, 2007

NEW YORK (Reuters) - Morgan Stanley is auctioning $2.48 billion of mortgages from troubled subprime lender New Century Financial Inc., the New York Post said on Monday.

The loans represent collateral that New Century gave the investment bank for a $2.5 billion credit line, the newspaper said.

(...)

Two weeks ago, Irvine, California-based New Century stopped making loans, and said it had less than $60 million of cash on hand. Many analysts have said the company appears on the brink of bankruptcy.

At least two other large subprime lenders, Accredited Home Lenders Holding Co. and Fremont General Corp. this month announced agreements to sell many of their subprime loans at a discount.

http://www.reuters.com/article/bondsNews/idUSN2633718720070326

Morgan Stanley in Saudi Arabia bank venture

Mar 23, 2007

RIYADH, March 23 (Reuters) - U.S. investment bank Morgan Stanley (MS.N: Quote, Profile, Research) signed a deal on Friday to form a joint venture with Saudi securities firm Capital Group.

Officials said at the signing that the U.S. bank would hold a 50 percent stake in Morgan Stanley Saudi Arabia. They did not give the value of the deal, pending regulatory approval.

The Riyadh-based Capital Group holds licences from Saudi Arabia to offer advisory, banking, asset management and trading, officials said earlier.

Wall Street firms have been expanding overseas, eager to secure new private and corporate clients in fast growing markets. Morgan Stanley in particular targeted the Middle East, where years of high energy prices have generated enormous wealth and stimulated local economies. Morgan opened its first office in the region in Dubai last year and has also secured a banking licence in Qatar.

http://www.reuters.com/article/idUSL233966220070323

[Chimichurri]

27. this reminds of how fuckedcompany.com came to be - right in the beginning

of the tech bubble implosion.

[Tellurian]

28. I hear ya!

This is not a market correction by any means. This is a complete restructuring of our financial systems replete with its own trickle down economic devastation. It seems new job losses occur just before the release of the quarterly unemployment reports. Therefore, skewing the numbers before the report even hits the printer.

[Eurobabe]

30. oh that was a good site! we found out alot of dirt on my dh's old company

and he bailed at the right time.

[Tellurian]

29. Where Subprime Delinquencies Are Getting Worse

Where Subprime Delinquencies Are Getting Worse

(Click on column headers to sort the table and change the map view)

SUBPRIME MORTGAGES have been cropping up in surprising spots. Typically, these loans to home buyers with the weakest credit were concentrated in lower-income or economically depressed areas. But over the past few years, a large chunk of the subprime-loan market has shifted to higher-income metropolitan areas. In many of those wealthier areas, the delinquency rate has increased quickly. In the Sacramento, Calif., region, where the median household income ranks among the top 10th of major metropolitan areas, the portion of subprime mortgages delinquent for 60 days or more hit 14.1% in December -- more than four times the level a year earlier. Other parts of California, as well as sections of Florida and Massachusetts -- especially those areas where housing prices have surged -- also logged rapid increases in delinquencies.

— Compiled by Pat Minczeski and Brett Taylor

http://online.wsj.com/public/resources/documents/info-subprimemap07-sort2.html

[Tellurian]

32. Are the affected areas beginning to form a pattern here

Noticably higher concentrations in the Blue States?

[Tellurian]

31. Sen Clinton Wants Stricter Loan Standards

Mar 31, 2007

ORLANDO, Fla. - Sen. Hillary Rodham Clinton said Saturday she favors stricter home loan standards, clearer mortgage documents and better counseling for borrowers to stave off delinquencies and foreclosures.

The Democratic presidential candidate proposed more leniency for borrowers in a financial crisis, allowing them a grace period from mortgage payments. She also called for more selectivity when screening people for loans to ensure they are qualified. "The loans need to be legitimate so people aren't strung out," Clinton told a group of about 20 people at a community center.

The New York senator said borrowers should have more access to counseling and unbiased advice on lenders, loan types and refinancing options and that mortgage documents should be written in plain, easy-to-read language. "We need clear, easily understood language in all these documents," Clinton said. "Enough with the confusion and complexity."

The troubles of risky subprime mortgages - home loans given to people with blemished credit histories or low incomes - have made big news lately. Weak home prices and rising interest rates have made it increasingly difficult for borrowers to keep up with their payments. Delinquencies and foreclosures are sharply rising.

"Home ownership is such an important part of people's savings. It's the biggest asset people own. It is the key part of the American dream," she said.

http://www.examiner.com/a-649650~Clinton_Wants_Stricter_Loan_Standards.html

[One Sweet World]

33. Nice gesture

but a little late.