PRESS RELEASE
Subprime Meltdown Culprits Emerge from MortgageDaily.com
DALLAS — (May 29, 2007) Several culprits emerged last week in the subprime mortgage meltdown, according to the latest coverage from https://www.mortgagedaily.com, the dominant source of online news for the mortgage industry.
A wave of repurchases that sank dozens of nonprime lenders this year were the result of mortgage fraud, according to panelists at a secondary marketing mortgage conference last week in New York. Loans with fraud are eight times more likely to default in the first year and 20 times more likely to enter foreclosure, according to one fraud expert. And although 45% of early payment defaults historically involve fraud, fraud is seldom stated as the reason. (https://www.mortgagedaily.com/FraudRepurchases052307.asp)
Declining property values also played a big role, according to a ratings agency report. During the first year after issuance, residential real estate backing first quarter 2006 mortgage securitizations saw just 0.5% appreciation, sharply contrasting 17.0% for properties backing 2005 RMBS — which also saw much lower default rates during the same time frame. (https://www.mortgagedaily.com/SubprimeValues052407.asp)
The chairman of the Mortgage Bankers Association blamed the current “mess” on mortgage brokers — people who get a commission when the deal happens because for them it’s the quantity, not the quality of loans that matter. Speaking at the National Press Club, the executive called for a national licensing system because it’s too easy for someone to put out a shingle and call themselves a mortgage expert. (https://www.mortgagedaily.com/PressClub052307.asp)
The president of the National Association of Mortgage Brokers immediately shot back — accusing MBA’s chairman in a written statement of trying “to shift blame away from Wall Street, Federally-chartered banks, state-chartered lenders, and underwriters for the subprime situation we find ourselves in today.”
The broker trade group executive highlighted the $325 million Ameriquest settlement and New Century’s boiler room training manual. (https://www.mortgagedaily.com/TradeGroupsLetter052207.asp)
Subprime mortgage servicing executives, speaking at a recent conference in Las Vegas, also blamed mortgage fraud as well as poor underwriting for the wave of defaults that began surfacing last fall. (https://www.mortgagedaily.com/ServicerSolutions052507.asp)
Complete subprime mortgage news at https://www.mortgagedaily.com/subprime.asp.
Journal of of failed, ailing and acquired lenders at https://www.mortgagedaily.com/MortgageGraveyard.asp.
About MortgageDaily.com
Founded in 1998, MortgageDaily.com is the dominant online news source for the mortgage industry. Around one million mortgage business news pages are viewed monthly at MortgageDaily.com and its affiliate publications.
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Source:Â MortgageDaily.com
