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Subprime Lenders On The Way Out

The following are a few examples of problems in the mortgage industry:

2007-02-13: Will NFI Weather the Storm? (readers alert on NFI's robustness)

2007-02-13: ResMAE Files Chapter 11 (Added to the list, with the caveat that Credit Suisse is keeping their operations going)

2007-02-12: Merrill Loaded for Bear in Mortgage Market That Humiliated HSBC (Another MLIOM mention!)

2007-02-12: Bloomberg: Implode-O-Meter vs. "Buy The Dip" Analyst

2007-02-12: Pending Foreclosures Climb Dramatically in January ("We're not through yet with the after-effects of all the people who used creative financing to buy homes beyond their means"—but somehow the "worst is over"?)

2007-02-12: Study: 70 Percent of Early Payment Defaults Linked to Fraud (Shameful.)

2007-02-12: Fremont Nixes 2nd Lien Origination; Cuts Back AA (A "semi-plosion" with much the same effect on the market)

2007-02-10: Subprime Hits a Wall (Merrill Doing B&C Margin Calls) (Bad in general but also exacerbates the New Century situation)

2007-02-10: Wall Street growing leery of high-risk mortgages (Ya think?)

2007-02-09: FirstFed Financial Corp. Breaks Down To A 3 Month Low (This one's a real gem: "80% of its loans have little or no documentation... negative amortization constituted $223.9 million, or 68.4%, of the bank's income" --BusinessWeek)

2007-02-09: Shares of NovaStar Slide to 2002 Levels (Can someone prove to me that NFI's write-downs won't exceed their $500mln in "tangible" assets (and less, liquid)?)

2007-02-09: New Century Continues Plunge (11 new shareholder lawsuits, at my last count.)

2007-02-09: Subprime Time Bomb (From the perspective of the banking industry...)

2007-02-09: BrokerUniverse - "What We're Hearing" ("In some quarters it's being called a liquidity crisis, the likes that haven't been seen in the subprime sector since 1998...")

2007-02-09: Questioning Sell-Side Research On The Subprime Lenders (What was Wall Street thinking? We get a hat-tip in this piece.)

2007-02-09: Lifting the Lid: Securitization-ripe for results massaging? (I hate to sound like a broken record, but, COUGHenronCOUGH...)

2007-02-09: Judge certifies class in suit against NovaStar (Oops... wouldn't want NFI to feel left out!)

2007-02-09: More New Century Lawsuits (Yikes. I've compiled (the first) five here.)

2007-02-09: Schatz Nobel Izard, P.C. Announces Class Action Lawsuit Against New Century Financial Corp. (Accusations of "false and misleading statements" and yadda yadda -- the usual Enron stuff, basically. )

(older news)

List of the Defunct Lenders:

This is our list of lending operations that have shut down (see also ailing lenders). This includes all types (prime, subprime, or a mix of both; retail or wholesale; subsidiaries and entire companies) as well as modalities (exiting the business, shutting down under distress, voluntary or l 2007-02-13: ResMAE Mortgage Corporation - Wholesale Subprime lender ( story story )

The company has filed chapter 11, and is being kept on life support by Credit Suisse. The company claims it will continue to operate.

Stay tuned for more updates.

2007-02-08: Lender's Direct Capital Corporation (wholesale division) - Non-conforming lender; retail operation remains solely as broker ( story )

The notice at the web site is the link above. For posterity, here is the explanation:

Lenders Direct Capital Corporation Announces Layoffs, Closure of Wholesale Lending Operations

Lake Forest, California based nonprime mortgage company Lenders Direct Capital announces the closure of wholesale lending operations.

CEO Michael McQuiggan cited the lack of investor demand for their loan products and the current state of the US nonprime lending industry as factors in reaching the decision to cease wholesale originations effective immediately.

So trouble converged on Lender's Direct from both ends.

Supposedly they funded in excess of $100mln/mo. Here is a chunk of their mission statement, from the old "about" page (accessible through Google's cache):

Lenders Direct Capital Corporation is a national mortgage lender headquartered in state-of-the-art facilities in Lake Forest, CA specializing in niche mortgage products such as Nonprime, Alternative (Alt) A and 2nd Mortgage loans.

Found by Bakersfield Bubble.

2007-01-31: Concorde Acceptance - Dallas-based lender (no MSM story yet)

This lender appears to have gone out of business, presumably due to deteriorating demand for primary and secondary loans. We have two independent reports from brokers with word of closure notification.

The ever-vigilant Bakersfield Bubble forwarded this one.

2007-01-31: DeepGreen Financial - Home-equity lender ( story )

Housing wire reports (link above) that DeepGreen was founed in 2000 and originated over $5bln in home equity to over 65,000 customers in 47 states.

The company was based in Cleveland but served customers all over the country. It was bought out in 2004 by a private equity firm, Lightyear Capital (those of you who think private equity is somehow smarter than average should take note).

Bakersfield Bubble delivered this lead and reports that the web site of Deep Green has dropped off the face of the internet, but the following statement was available through Google's cache:

Life is full of expenses... A home equity line of credit or home equity loan from DeepGreen Financial is a great way to pay for education, home improvement and life's other big expenses like a new car or wedding.
Ah, yes. It's like free money. As long as everyone believes it exists.

2007-01-25: Millenium Bankshares (Mortgage Subsidiaries) - Community bank with lending operations ( story story )

The going got tough, so Millenium got gone from mortgage lending. Here's their press release. They are a community bank based in Northern Virginia . Here's a bit more about them from their Bizjournal profile:

Millennium Bankshares Corporation ("Millennium") is a financial holding company headquartered in Reston , Virginia . We were incorporated in 1998 and began operations in April 1999. We provide commercial and consumer banking services through Millennium Ba

2007-01-25: Summit Mortgage - Lending Subsidiary of Summit Financial group ( story )

Top 25 Subprime Lender list

(as of Q2 2006; from the Mortgage Banker's Assoc.) -

1. Wells Fargo

2. HSBC Household Finance [rumored to be up for sale]

3. New Century [restating '06 earnings downwards; major shareholder lawsuits]

4. Countrywide [reportedly in talks with Bank of America (may not be credible)]

5. Fremont

6. Option One [H&R Block; up for sale]

7. Ameriquest [owned by ACC; shut most offices, settled with 30 states over predatory lending]

8. WMC [subsidiary of GE Money]

9. Washington Mutual [closed 80 branches in late 2006]

10. CitiFinancial

11. First Franklin [acquired by Merrill Lynch from National City for $1.3bln]

12. GMAC [Major layoffs in ResCap]

13. Accredited Home

14. BNC [Lehman bros. subsidiary]

15. ChaseHome Finance

16. Novastar

17. OwnIt, 2006-12-07 [partially-owned by Merrill and BofA]

18. Aegis [recently closed two subprime operations centers]

19. MLN, 2006-12-29 [reportedly bought out by Lehman]

20. EMC

21. ResMAE,2007-02-13 [in bankruptcy; being funded by Credit Suisse]

22. FirstNLC

23. Decision One [owned by HSBC; rumored to be up for sale]

24. Encore [being acquired by Bear-Stearns]

25. Fieldstone [closing 7 of 16 ops centers, debt renegotiated through 2007-01-31]

This post first appeared on California Mortgage Advisor, please read the originial post: here

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Subprime Lenders On The Way Out


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