Luminent Mortgage Pays Off Debt, Cuts Jobs

September 11, 2007 No Comments »

Luminent Mortgage Capital Inc. said Tuesday it has repaid all of its warehouse lines of credit that were used to finance $915.7 million in mortgages, and that it has cut 15 jobs in September to quell costs.

The company sold nearly all the loans in its warehouse facilities except five, and disclosed that it currently maintains interest in ten whole loan securitizations.

“These initiatives are designed to resolve Luminent’s liquidity issues,” Chief Executive Trez Moore said in a statement.

Luminent also severed one of its warehouse lines valued at $1 billion, leaving two lines of credit totaling $1.5 billion to borrow against.

Warehouse lines of credit allow mortgage lenders to borrow money for short-term financing to fund mortgage deals, which once sold to investors, can be reimbursed.

But in recent months the secondary mortgage market has dried up, causing many lenders to hold onto large pools of mortgages, leading to liquidity issues and complete collapse in some cases.

Early last month, Luminent received two default notices from its lenders, leading to analyst downgrades that sent shares down 75% in one day.

On Aug. 20, Luminent announced that it would sell a majority stake at a huge discount to Arco Capital Corp, a San Juan, Puerto Rico-based holding company.

Shares of Luminent were up today on the news, rising over 30% to hover around $1.71 in midday trading, well below the 52-week high of $10.84.

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