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Inside Nonconforming Markets

February 17, 2006

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Subprime Market Posts Record Volume in 2005 – But Clouds Exist

There’s no doubt about it: 2005 was a banner year for the subprime market as borrowers looked for ways to tap into a treasure trove of accumulated equity. But a late-year slowdown suggests that the business could prove decidedly more difficult in 2006. Inside B&C Lending estimates that a record $665.0 billion in new subprime mortgages were originated last year, a 25.5 percent jump from 2004’s $530.0 billion in total production. The origination figure… [Two data tables included] Read More

Coming Months Could Put Subprime Lenders to the Test

Does the law of survival of the fittest apply to the subprime mortgage market? Some observers think so. But what will separate the winners from the losers? That was the topic on the minds of participants at the recent American Securitization Forum conference in Las Vegas. Discussion at the conference, which drew more than 3,000 industry representatives, centered on the question of whether the mortgage market has become too saturated. … Read More

First Franklin Swings for the Fences with ‘Strike Zone’

First Franklin Financial is gearing up for growth this year with a strategy that will focus on loans in the company’s “strike zone.” That approach involves a focus on core products that First Franklin believes it can originate profitably in a difficult environment while avoiding trendy or risky products. … Read More

Pricing Pressures Still a Reality, Accredited Reports

This was supposed to be the year that subprime lenders came to their senses and changed aggressive pricing policies that wreaked havoc on margins last year, right? Well, it hasn’t quite worked out that way – so far. While many lenders say they are growing weary of low margins in a competitive environment, some still continue to cut prices in the face of rising funding costs. … Read More

Ocwen Vows to Fight Award In Texas Loan Servicing Case

Ocwen Financial Corp. has vowed to fight a $1.8 million judgment in a lawsuit that centered around efforts to collect on a delinquent home improvement loan. In December, a jury in Galveston, TX, awarded more that $11 million to plaintiff Sealy Davis, who claimed that Ocwen mislead her during foreclosure proceedings on her $31,000 home improvement loan, withheld key information about her loan, and engaged in “unconscionable” acts. Among the key allegations made at… Read More

FHA Takes Another Crack at The Subprime Market Nut

Finding wisdom in the adage of trying again if you don’t succeed, the Federal Housing Administration has once again taken aim at a share of the subprime market. But this time around, the agency is taking a different tack. Buried deep in the Fiscal Year 2007 budget plan released last week by the Bush administration is a proposal to implement a risk-based pricing scheme for the FHA’s single-family insurance program. The proposed pricing scheme… Read More

Subprime Lenders Fare Badly In New Satisfaction Survey

Mortgage borrowers apparently aren’t all that satisfied with the service they receive at subprime lending shops. In fact, a new survey by marketing firm J.D. Power and Associates shows that when it comes to a quality experience, subprime customers rate toward the bottom of the heap. The survey, taken last November, asked 4,498 mortgage borrowers who had gotten a loan within the prior nine months to rank their satisfaction with the lending process. In… Read More

Senate Bill Takes Aim at Fraud with Fines, Jail Time

A freshman lawmaker wants to get tough on mortgage fraud with federal legislation that would set harsh new penalties – including jail time – for mortgage industry professionals who bilk or mislead borrowers or lenders. Introduced last week by Sen. Barack Obama, D-IL, the “Stopping Transactions which Operate to Promote Fraud, Risk, and Underdevelopment” Act would make it illegal for “any mortgage professional to knowingly execute, or attempt to execute, a scheme or artifice… Read More

Regulators Extend Comment Period on Nontrad Guidance

Industry trade groups will get more time to comment on a controversial proposal that would set new standards for the underwriting, marketing, and sale of nontraditional mortgage products. Shortly before Inside B&C Lending went o press, federal bank and thrift regulators announced that they would extend – to March 31 – the comment period on a proposed interagency issued in December. Regulators had initially set February 27 as the cutoff date for comments. But… Read More

B&C News Briefs

â When it comes to subprime IO loans, the past may not be a good predictor of future performance. That was one of the main conclusions to emerge from a recent Fitch Ratings analysis of IO loan performance. In general, Fitch noted, IO loans have performed well over the past few years, a period that has seen robust growth in the housing market while interest rates have hovered near historical lows. But the rating… Read More

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