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Inside Nonconforming Markets

September 29, 2006

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Rising Delinquencies Could Signal Cracks in Subprime Performance

Competition appears to be having an impact on performance in the subprime market: delinquencies trended upward during the first half of the year and a growing number of borrowers had trouble making even the first pay-ments on their loans. The rise in delinquencies was evident in a number of major indexes and in reports filed by major subprime servicers. The Mortgage Bankers Association, for instance, reported that... Read More

Post-Settlement Ameriquest is Battling New TILA Lawsuits

Perhaps proving the adage that no good deed goes unpunished, Ameriquest Mortgage is being sued over a policy that – ironically – goes beyond existing law to extend the timeframe in which borrowers can walk away from their loans. One of the subprime market’s largest players, Ameriquest made headlines earlier this year when it agreed to pay $325 million and change its business practices to put to rest allegations that its loan officers used deceptive tactics to trick borrowers into taking high-priced mortgages... Read More

Final Nontrad Guidance Focuses on Repayments

Federal bank and thrift regulators have issued long-awaited guidance on nontraditional mortgages. And, as expected, they came down hard on underwriting practices that fail to shield borrowers from the potential for payment shock. The 45-page guidance, issued by the Federal Reserve Board, the Federal Deposit Insurance Corp. the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the National Credit Union Administration shortly before Inside B&C Lending went to press, maintains... Read More

Moody’s Gains Ground in B&C Rating Share Race

Moody’s Investors Service has picked up considerable market share in the subprime rating business this year, a development that reflects the increased popularity of collateralized debt obligations in the subprime space. But new legislation passed by Congress could increase competition for Moody’s and its rival Standard & Poor’s. According to data compiled by Inside B&C Lending, S&P and Moody’s closed the second quarter of 2006 in a neck-and-neck race. S&P had a slight lead, claiming a...[Includes data page and chart] Read More

Program Touts Route Around Downpayment Gift Limits

Borrowers bumping up against downpayment gift limits are getting a boost from a new program that claims to provide earned income. “Now borrowers can earn their downpayment overnight,” boasts National Direct Sales in an advertisement solicitation for its DPNow program. How can borrowers do that? By selling membership in the Owner’s Alliance, an organization that bills itself on its Web site as “an organization created to promote real estate ownership, provide savings to... Read More

Predatory Lending Bill Not Coming Soon, Bachus Says

Don’t look for a new proposal on predatory lending to come out of the House any time soon: a key lawmaker says that he won’t do anything without consensus. Reports that a new predatory lending proposal would be offered soon began to swirl last week after Rep. Spencer Bachus, R-AL, chairman of the House Financial Services Subcommittee on Housing and Community Opportunity, told reporters after a recent conference that his staff was putting the finishing touches on a legislative draft... Read More

Argent Targets Brokers With New Online Discount Program

Argent Mortgages has taken aim at more business through an online program that allows brokers to purchase office supplies at deep discounts, lowering the costs of their business operations.Dubbed “Argent Purchasing Express,” the new program reflects the efforts of mortgage lenders to court brokers through a value-added strategy. Surveys suggest that brokers generally make their decisions about lenders based on service, pricing, and turn-times. But brokers are also looking at ways to... Read More

Minorities Not Big Users of Manufactured Home Loans

White borrowers in rural areas were the primary users of manufactured home loans last year, a Federal Reserve Board review of 2005 Home Mortgage Disclosure Act data reveals. One of the most beleaguered sectors of the home finance market in recent years, manufactured housing lenders have suffered from high delinquency and default rates and inventory gluts that have made it difficult to profitably sell repossessed units... Read More

Option One Sued For Alleged Overtime Payment Violations

Subprime lenders are grappling with the thorny issue of overtime pay for loan officers – a problem that has landed some companies in court with former employees who claim that they were inadequately compensated. A case in point is Option One Mortgage, which revealed in a recent securitization prospectus that it has been sued by loan officers in California, in a class action lawsuit that alleges violations of the... Read More

B&C News Briefs

SouthStar Funding has agreed to pay $500,000 to resolve a discrimination case that revolved around the company’s policies of not making loans on row homes of less than $100,000 in most areas – or on any row home in the city of Baltimore. In a complaint filed earlier this year with the Department of Housing and Urban Development, the National Community Reinvestment Coalition contended that the policies discriminated against Hispanics and African Americans because row homes are... Read More

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