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Mortgage defaults hurt lenders
Countrywide Financial Corp. and IndyMac Bancorp said profit fell, and Friedman, Billings, Ramsey Group Inc. reported a loss, the worst first-quarter earnings reports yet caused by the surge in subprime mortgage defaults.
Net income dropped for the second straight quarter at Countrywide, the biggest U.S. mortgage lender, declining 37 percent to $434 million, or 72 cents a share. IndyMac said earnings fell 34 percent as defaults forced the company to slash the value of home loans it planned to sell.
Friedman, Billings wrote down mortgage holdings and stakes in subprime lenders, resulting in its third loss in the past 12 months.
Shareholders are paying a rising toll for irresponsible lending as lax standards across the industry and weakness in the U.S.
Web Lenders Wooing Risky Borrowers
NEW YORK/CHICAGO (Reuters) - Get a "$200,000 mortgage for $667 a month!" a banner advertisement on a lending Web site proclaims. "Bad credit OK!" Even after months of nonstop news coverage about the subprime mortgage mess and the steep rise in defaults and foreclosures, pop-up Internet advertisements and banners permeate cyberspace pitching low-monthly-payment loans. Financial services, including mortgage lending, are the second-biggest category of advertising on the Internet, according to the Interactive Advertising Bureau, based in New York. Preliminary results show that 2006 online advertising revenues rose to $16.8 billion from $12.5 billion in 2005. Subprime lenders source more loans through the Internet than prime-quality lenders, market analysts say.
Mortgage Interest Rates Fall Again
After four straight increases, mortgage rates fell 2 basis points for the second week in a row, according to a weekly survey conducted by Bankrate.com. The average interest rate on 30-year mortgages dropped to 6.27% from last week’s 6.29%. A year ago the average rate was 6.64%, and a month ago it was 6.22%. The average for 15-year, fixed-rate mortgages fell 3 basis points to 5.99%. Meanwhile, the rate on five-year adjustable-rate mortgages rose 1 basis point to 6.12%, after a 6-basis-point drop last week. Click on "Read More" below for the full article by Bankrate.com. .
Countrywide, IndyMac Profit Hurt by Mortgage Defaults (Update5)
April 26 (Bloomberg) -- Countrywide Financial Corp. and IndyMac Bancorp said profit fell, and Friedman, Billings, Ramsey Group Inc. had a loss, the worst first-quarter earnings reports yet caused by the surge in subprime mortgage defaults. Net income dropped for the second straight quarter at Countrywide, the biggest U.S. mortgage lender, declining 37 percent to $434 million, or 72 cents a share. IndyMac said earnings fell 34 percent as defaults forced the company to slash the value of home loans it planned to sell. Friedman Billings wrote down mortgage holdings and stakes in subprime lenders, resulting in the third loss in the past 12 months. Shareholders are paying a rising toll for irresponsible lending as lax standards across the industry and weakness in the U.S.
Home mortgage lender ResCap to cut 1000 jobs as market deteriorates
MINNEAPOLIS, Minn. (AP) - In its second major job cut this year, Residential Capital LLC said Thursday it will eliminate 1,000 jobs due to the "deterioration of the subprime mortgage market." The Bloomington, Minn.-based company said about a third of the latest cuts would come from eliminating currently unfilled positions. After the cuts, the company will employ about 12,000 worldwide. Worry over delinquencies and home foreclosures on U.S. "subprime" loans, higher-priced loans for people who are considered higher credit risks, has roiled financial markets and sparked worries that it could spill over into the wider economy. ResCap in March reported a fourth-quarter operating loss of $651 million, compared to net income of $118 million in the same period a year ago.
Sagging mortgage market weighs on LendingTree
IAC/Interactive Corp. today reported growth in first-quarter earnings, but the media conglomerate felt the weight of a slowing housing and mortgage market on its LendingTree unit. Overall, IAC saw a 32 percent growth in net income to $62.1 million over the prior year, while revenues climbed 10 percent to $1.6 billion for the quarter. Diluted earnings per share rose 46 percent to 20 cents a share. Strong growth at Ticketmaster and ServiceMagic was partially offset by a decline in LendingTree revenue, which continues to feel the impact of a lagging mortgage market, the company said Thursday. Revenue at LendingTree fell 12 percent to $100 million from the prior year, while operating income at the unit plunged 99 percent to $100,000. IAC attributed the decline to fewer loans being sold into the secondary market and fewer loans closed at the online lending exchange.
Home purchase loans reach 3-month high
WASHINGTON -- Mortgage applications in the U.S. rose last week for the second week in a row, as demand for loans to purchase homes increased to a three-month high.
The Mortgage Bankers Association said Wednesday that its index of applications to buy a home or refinance a loan rose 0.6 percent last week compared with the previous week, to 657.2. The group's gauge of purchase applications gained 4 percent, to 427.3, the highest since the week ended Jan. 12.
The report might raise speculation that housing is emerging from the worst slump in more than a decade and will become less of a drag on the economy.
The group's refinancing index fell 3.2 percent, to 2015.8. The share of applications for refinancing slid to 41.5 percent from 43.4 percent the previous week.
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