Sorry for the information black out today folks. My company is busy moving offices so I have been burried in computers, moving boxes and dust for the last 3 days. I finally have a desk and internet.
Thanks to everyone who sent me alerts about Greenpoint and Capital One. I saw it on the news but couldn’t get to a computer - very frustrating. Here is the update from Market Watch:
The company also said it will close GreenPoint’s California-based headquarters along with 31 locations across 19 states. That will mean the elimination of roughly 1,900 jobs, most by the end of 2007…
“Current conditions in the secondary mortgage markets create significant near-term profitability challenges,” Capital One said in a statement. “Further, recent and continuing developments in the mortgage markets reduce the long-term outlook for profitability in the business, as the company expects markets for prime, non-conforming mortgage products are likely to remain challenged.”
GreenPoint originated mostly prime and Alt-A mortgages. GreenPoint had a wide range of products and specialized in large “jumbo” loans to prime borrowers. A Jumbo loan is a loan that falls outside of Fannie Mae or Freddie Macs purchasing guidelines.
They weren’t the only ones reporting losses from the Alt-A and prime markets today. Thornburg Mortgage, which lost nearly $1 billion in the sale of AAA rate mortgage backed securities. Also from Market Watch:
Thornburg Mortgage Inc. said on Monday that it lost roughly $930 million selling billions of dollars worth of AAA rated mortgage securities, while reducing borrowing and unwinding interest-rate hedges.
Thornburg shares dropped 10% to $13.54 during afternoon trading on Monday. The stock is down more than 45% so far this year.
Thornburg, which specializes in big mortgages called jumbo home loans, has been hit hard by turmoil in the industry. Declines in the value of its mortgage holdings, along with a drop in the value of hedging instruments left Thornburg struggling to borrow money and gave it limited access to sources of liquidity.
When you look at the job losses with Greenpoint and the profit loss of Thornburg it is becoming clear that the appetite for American mortgages has disappeared. Thronburg and GreenPoint made loans to high credit borrowers (mainly) and still are unable to find buyers.
Whether investors are over-reacting or not is a moot point. Until they come back to the table loans outside of conforming limits will be hard to come by and will be exceedingly expensive. Investors are like kids that grabbed a hot stove with the subprime mortgages and now they have zero confidence in the American home buyer and their mortgage payment.
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[Source: Blown Mortgage]
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