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Inside Nonconforming Markets

March 28, 2008

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Autopsy of a Subprime Failure: New Century Financial

New Century Financial was brought down by its quest for volume without regard to loan quality, according to a thorough review of the lender’s practices. When mortgage-backed security investors increasingly rejected loans made by the lender, New Century... Read More

Deal for Option One Struck; Fremont Continues to Falter

H&R Block last week struck a deal to sell the servicing operations of its subprime subsidiary, Option One Mortgage, for $1.1 billion. The deal follows the failed sale of Option One to Cerberus Capital Management in December. The Option One sale, to WL Ross & Co., a... Read More

GSEs Could Boost Subprime MBS Investments in 2008

The share of subprime mortgage-backed securities eligible for sale to the government-sponsored enterprises increased in 2007 as the subprime market faltered in the second half of the year. In the fourth quarter of 2007, 32.6 percent of... [Includes one chart] Read More

Firm Looks to Purchase, Rehabilitate Whole Loans

The former heir to the Countrywide Financial throne last week formed a new company aimed at acquiring and restructuring troubled mortgages. While many companies already do that on the securitization side, the new company is one of the few to focus on... Read More

Attorneys Urge Internal Subprime Investigations

This year, more than one subprime mortgage-related case has been filed per day, on average, suggesting that lenders’ litigation risk is high. During an audio conference this week sponsored by the law firm of Reed Smith, Jeff Nielsen, managing director... Read More

Fed’s Interest Rate Cuts Limit Subprime ARM Reset ‘Shock’

Subprime loan modifications have not increased dramatically in recent months, but a large number of subprime borrowers with resetting adjustable-rate mortgages will experience little or no payment shock, thanks to interest rate cuts by the Federal Reserve... Read More

Debate Rages Over How to Help Subprime Borrowers

Democrats are pushing for a subprime bailout which Republicans have resisted – as the Bush administration helped orchestrate a possible $30 billion bailout of Bear Stearns. Community advocates who are calling for further reforms, including allowing cramdowns... Read More

Merrill Lynch Top Subprime MBS Shelf Issuer in 2007

Merrill Lynch’s shelf registration was the top subprime mortgage-backed security issuer in 2007 and the investment bank was the third-ranked subprime MBS sponsor on the year. However, the titles were apparently unwanted; Merrill shut down its... [Includes two charts] Read More

Minnesota Mulling 1 Year Subprime Foreclosure Halt

Despite a warning from mortgage-backed security investors, Minnesota is considering legislation to delay subprime foreclosures for a full year. The American Securitization Forum testified against the bill this month; however, a committee in the state Senate approved the... Read More

B&C News Briefs

Roland Arnall, a subprime pioneer as the founder of Ameriquest Mortgage, died last week of esophageal cancer at the age... Fitch Ratings upped its loss expectations for subprime mortgage-backed securities again this week. The average... Read More

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