And now for some mortgage news from across the pond…
According to the Sunday Telegraph, Barclays Plc is preparing to sell its subprime consumer loan business FirstPlus Financial Group Plc at a loss.
The paper said FirstPlus, which was worth $9.9 billion this summer, is expected to sell for less than $9.1 billion, below the value of its current loan portfolio which is comprised mostly of second mortgages.
Possible suitors include General Electric and insurance giant American International Group.
Frits Seegers, the head of Barclays’ global retail business, has reportedly been holding an auction for several weeks to procure a buyer for FirstPlus.
Barclays clearly want to dump the home equity unit before more subprime problems surface, as the market for second mortgages is beyond risky in the current lending environment.
According to its website, FirstPlus was established in 1997, has “helped” 250,000 consumers, and has over 350 employees, though it’s unclear what will happen to the existing workforce if and when the company is sold.
Barclays also owns American subprime lender Equifirst, which experienced problems of its own fairly recently.
A month ago I reported that the lender had laid off several hundred employees amid deteriorating conditions in the non-conforming market, though a company spokesman was quick to say, “Barclays is not exiting the nonprime business in the Americas…”
Looks like more rough waters ahead for the United States and Great Britain.