Mortgage News Friday
Well it’s been another week, and some mortgage companies remain open, while others have met their demise.
Let’s take a look at what’s going on today in the news.
The biggest story by far is the discount rate cut by the Fed this morning, dropping the interest rate the Fed charges commercial banks for loans some 50 basis points to 5.75%
The move allows cash-strapped banks and lenders to stabilize somewhat, though I doubt it will change the ultimate fate of any one bank or lender.
If you were going out of business before this rate cut you’re probably still going out of business, and vice versa.
Banc of America Securities upgraded Countrywide from sell to neutral Friday with a price target of $21.
Countrywide shares seemed to benefit from the Fed’s decision and the upgrade news, climbing back up to $21.43, up $2.48 or 13.09% in trading Friday.
Countrywide depositors weren’t as thrilled, storming Countrywide branches early Friday morning to withdraw their assets from the under-pressure bank.
See more on the Countrywide bankruptcy fears.
Thornburg Mortgage continued its rally that has been going strong since the CEO spoke out, climbing 23.02% to $15.23 a share, up $2.85.
And Bear Stearns was up slightly as the company announced layoffs in its subprime unit, including 100 at Encore Credit, its California-based wholesale division.
There have also been reports of more mortgage companies closing their doors today.
Quick Loan Funding, an Orange Country, California retail subprime lender is reportedly closed, and final paychecks were given to employees.
Mercantile Mortgage was reported closed by one website, though the company quickly posted an announcement in return stating it had not closed the company.
There are also reports today that Calusa Investments, a subprime lender located in Herndon, Virginia has ceased operations.
Novastar, who halted loan production earlier this month for several days, closed their wholesale division for good and announced it will cut 37% of its workforce immediately.
The company is still originating loans through the retail channel, but stopped working with mortgage brokers.
As I previously mentioned, look for Countrywide to cut out their correspondent lending division as well.
Finally, New York Senator Schumer plans to unveil legislation to raise the caps on Fannie Mae and Freddie Mac’s portfolios, who look to benefit from the current upheaval, while Senator Dodd is pushing for FHA reform.
Despite the easing of tensions today, the worst is still not behind us. Look for many more mortgage companies to close in the weeks and months as competition for government-backed loans intensifies.
More mortgage news will be reported as it happens.
Related Topics:
