home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Corporate Mortgage News
M e r g e r s, a c q u i s i t i o n s and private and public offerings. Other corporate activity including executive appointments, bankruptcies name changes.


Countrywide Blasts New Century, Ameriquest

Irresponsible players squeezing margins

February 1, 2006

By COCO SALAZAR


photo of Coco Salazar

Fierce competition from "irresponsible players" such as Ameriquest Capital Corp., New Century Financial Corp. and real estate investment trusts are to blame for tumbling earnings, according to America's largest mortgage banker.

Countrywide Financial Corp. announced mortgage banking pretax earnings fell to $434 million from $703 million in the third quarter, although they were 67% better than in the fourth quarter 2004.

The earnings were hampered by production sector margins, which dropped to 0.09% of loan volume in the fourth quarter from 0.32% in the third quarter and 0.61% a year earlier, Countrywide said. Prime margins of 65 basis points declined only 11 BPS and 25 BPS on a respective quarterly and annual basis, but the gain on sale on nonprime products of 114 BPS came in 50% and 69% below the previous quarter and fourth quarter 2004, respectively, according to the announcement.

So far in this quarter, subprime margins have improved slightly but nowhere near the pace of prime margins, Countrywide said in a telephonic conference.

"It's the Ameriquests and New Centuries of the world" as well as "companies that have a REIT," explained a Countrywide executive. "They're dumping the losses into the REIT and then securitizing the stuff they have a profit in."

While weaker secondary market conditions affected profit margins on the back end, on the front end, the hindrance came from competitive pricing pressures by mortgage players who priced loans too low as a means to retain market share, the Calabasas, Calif.-based lender suggested.

"We had some irresponsible players," a Countrywide executive continued. "No question the key players there [were] Ameriquest and New Century."

"I've been doing this for 53 years," he added. "I've never seen that situation sustained over a long period of time. Eventually they gag on it."

Countrywide said it could see "a little crack in the armor" already, citing the recent settlement Ameriquest made to resolve charges of predatory lending with 49 states and the District of Colombia, as well as the 10% staff reduction Ameriquest Mortgage Co. made last November.

Ameriquest declined to comment on Countrywide's statements.

New Century told MortgageDaily.com in an e-mailed statement, "We believe the pricing environment is improving and have been responsibly raising rates to restore our profit margins to acceptable levels."

Countrywide forecasts some consolidation will take place this year, with "people getting out of the business, the weaker ones folding and that will all ... help us to get a better spread" on loans.

"Irresponsible players either stop their irresponsible behavior or be knocked out for one reason or another," Countrywide added.

The lender, however, doesn't see margins getting worse than the fourth quarter. Its guidance for 2006 has pretax mortgage banking production margins between 15 BPS to 40 BPS.

Compared to the reported mortgage banking segment pretax earnings of $2.4 billion for 2005, the mortgage behemoth expects this year's total between $1.85 billion to $2.55 billion.

Residential production in 2005 of $491 billion -- an industry and company record -- may or not sustain, as the lender expects to account for about $400 billion to $600 billion of the mortgage market's total of $2.2 trillion to $3.2 trillion.


Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.

e-mail: [email protected]


Nonprime and Subprime News | Subprime Statistics
Stories about non-QM products. Coverage of subprime, Alt-A and
hard money lending. Home-equity loans and home-equity lines of credit.


Mortgage REIT news | REIT Directory
Coverage of real estate investments trust companies, litigation and corporate activity.





SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders