The mortgage lending subsidiary of a Dallas-based home manufacturer has halted new nonconforming loan applications.
CountryPlace Mortgage Ltd. has stopped taking applications for non-conforming chattel loans, parent Palm Harbor Homes Inc. announced today.
The move was made while the company attempts to replace a $42 million warehouse borrowing facility that was scheduled to expire today. The company said the line was extended until the end of next month, though it has agreed to originated only conforming loans until it finds new financing.
Palm Harbor manufacturers and markets of factory-built homes.
CountryPlace, headquartered in Addison, Texas -- a Dallas suburb, has reportedly originated 5,000 "high quality" fully-documented chattel loans and mortgages since 2002 for $351 million. The company said it serviced 4,312 loans for $291 million as of the end of its fiscal 2008 third quarter.
CountryPlace has financed around one-in-five of home sold by Palm Harbor, according to the announcement.
"Because of our careful underwriting and intense servicing, default rates and losses have been significantly lower than those experienced with manufactured home loans securitized in the late '90s, or than those experienced recently in the sub-prime mortgage industry," Palm Harbor Chairman and Chief Executive Officer Larry H. Keener said in the statement. "Through December 31, 2007, our 2005 securitization has experienced a 2.10 percent cumulative loss, and our 2007 securitization has experienced a 0.14 percent cumulative loss."
In 2004, CountryPlace announced a two-year, $200 million deal with an unnamed entity to fund chattel loans. That line required a 20 percent haircut.
"We have received strong interest from several financing sources and are currently negotiating financing alternatives," Keener added. "We are confident that we will have a final commitment in the foreseeable future."
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