Mortgage Daily Logo

Nonprime Production Vs. Earnings

Mortgage News

Nonprime Production Vs. EarningsEarnings, shares suffering while fundings fantastic

September 28, 2005


Nonprime companies need to push yields higher — at the expense of origination.

The sector has reported massive production gains recently, but earnings and share prices are disintegrating.

A prime example of this is New Century Financial Corp.

The Irvine, Calif.-based company reported second quarter production of $13.4 billion — the highest ever. At the same time, it lowered its dividend guidance for the second time in 60 days to $7.25 per share, citing margin compression.

Shares of real estate investment trusts have been pounded as a result. New Century shares, which had traded near $67 during the past year, are currently trading at just above $35.

Impac Mortgage Holdings Inc. had solid second quarter fundings of $5.5 billion, almost $1 billion better than the first quarter.

But as for earnings, Impac chief Joseph Tomkinson also cited “margin compression” as the culprit for the company’s quarterly net loss of $55 million.

Yesterday, Impac announced it would cut its dividend, noting the continued rise in short term rates — or what it pays for funds. Impac shares are currently trading around $12, way off the 52-week high of over $27.

NovaStar Financial Inc., which reported its second highest quarterly volume ever of $2.4 billion, has seen its shares tumble $26 from their 1-year high of $58.

The notion that production has prevailed over earnings needs to change.

New Century Chairman and CEO Robert K. Cole noted in his company’s latest earnings announcement the REIT will continue raising its rates, and other nonprime lenders should follow suit.

Sam Garcia holds shares of several subprime REITs, including one mentioned in this story.

He worked in mortgage lending for twenty years prior to becoming publisher of

e-mail: [email protected]

Related Posts

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

The Mortgage Graveyard 2018 Archives

The Mortgage Graveyard 2018 Archives Failed, Struggling and Acquired Mortgage-Related Companies Non-Bank Closures 3 Bank Failures (FDIC) 0 Credit Union Failures 0 Total Mortgage-Related Failures 3  

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

MBS Statistics

MBS Statistics Non-Agency Issuance 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 Private Label RMBS Issuance (S&P) $80 billion to $100 billion (est) $70 billion $34...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Sample E-Mail

Sample E-Mail   Covering the Real Estate Finance Since 1999  Mortgage Industry News free news content | view headlines online  Advertorial Text Ad This ad includes a linked bold headline of up to 50 characters and up to 100 words of text. The ad can be...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI