|Glut of Repos to Hurt Conseco's Manufactured Housing Business Into 2003
Home equity originations up 18% in Q1
May 1, 2002
By MortgageDaily.com staff
The glut of repossessed manufactured housing units in the market will continue to be a drag on Conseco, Inc.'s earnings throughout 2002 and into 2003. In a memorandum to shareholders about first quarter earnings today, Conseco CEO Gary Wendt said the stock of repo units throughout the country is affecting recovery rates, forcing a larger mix of "repo-refis," and depressing sales of new units.
The Indiana-based financial services concern said loan originations were $2.12 billion, down 26% from the fourth quarter and down 5% from the first quarter of last year. Conseco's home equity originations were 18% higher than last year's first quarter, while manufactured housing originations were down 35%.
Wendt said securitization execution improved while spreads compressed during the most recent quarter.
The company reported mortgage loans outstanding at the end of the quarter were $1.3 billion, up slightly from March 31st of last year. Pretax operating earnings at Conseco Finance were $33.1 million, up 23% from the fourth quarter's $27.0 million.
The memorandum said Conseco was able to move forward on the settlement of securities litigation pending in federal court against the company and several of its present and former officers and directors. Last month, the company entered into a new Memorandum of Understanding with the plaintiffs where it agreed to pay $95 million up front, and another $25 million plus interest, subject to court approval.
Wendt noted that 2002 liquidity issues have been resolved and the company is confident about liquidity in 2003.