| |||||||||||||||||||||||
| |||||||||||||||||||||||
The gravy train has ended in the subprime lending sector, and mortgage lenders are now taking cover with the rise of foreclosures and the slowdown of the U.S. residential housing market. Although the second-largest U.S. mortgage lender, Wells Fargo & Co., has been immune from much of the subprime troubles thanks to limited exposure, the San Francisco bank said Wednesday it will close its nonprime wholesale lending unit, which has locations in Baton Rouge, La., and Des Moines, Iowa. The division funds and processes loans for third-party brokers. The shuttered unit accounted for only 1.6% of Wells Fargo's $397.6 billion of residential mortgage loan volume last year.
"For the foreseeable future, we believe continued turmoil in the nonprime sector will result in financial returns for our nonprime wholesale channel that are not commensurate with the risks inherent in this business," said Cara Heiden, president of Wells Fargo Home Mortgage. Although Wells Fargo has been insulated from the damage of risky loans, the bank joins a number of other lenders such as Washington Mutual Inc. and J.P. Morgan Chase & Co., who have withdrawn from making subprime loans. Meanwhile, other risky home lenders such as Accredited Home Lenders Home Co. and Option One have sold themselves to avoid bankruptcy, and troubled ResMae Mortgage Corp. and NovaStar Financial Group have put themselves on the auction block in hopes of following their rivals. With every passing day, it looks like companies within the subprime lending sector only have more bad financial news to report. The final outcome of the subprime mortgage lending sector may be a handful of battle-worn competitors struggling to stand up on their own two feet. —Gerald Magpily See Reuters article via CNNMoney.com Tags: Wells Fargo, sub prime lending, bankruptcy, m&a CategoriesComments
From: Gerald,
Thanks for your comment and additional insight. Yes, the additional factors you've mentioned have also added to this toxic, volatile environment, where unfortunately it looks like more companies providing easy money and buyers who who took these mortgages will have to take a fall for the market to correct itself.
Posted on:
August 2, 2007 11:11 AM
From: dee,
If the big banks didn't lend to people who couldn't afford the mortgages in the first place, we wouldn't be in this position as a nation. The mortgage lending market went unregulated and greedy brokers and loan officers did whatever they could to push loans through while the lending underwriters did their work with their eyes closed to what was going on. Whatever happens to these big banks, they deserve. It is the little guy, the old lady who refinanced at an enormous interst rate and ended up paying more than she was paying to beging with and the young couple in the early 20's that the loan officer seen coming, that I feel for. The people who are losing their homes to foreclosure because of the unethical action of these people deserve better. Until the government decides to take the blinders off and penalize these big banks our fellow tax payers will suffer. Greed and ignorance created this issue so I pray and hope that big banks like Wells Fargo do SUFFER ... it is about time they did because they sure did cause enough suffering to the little guy. If everyone who is a victim of predatory lending and subprime loans began sending in their paperwork to the proper authorities perhaps they would wake up and see the light instead of handing out millions of dollars to these organizations!
Posted on:
January 20, 2009 9:49 PM
 Deal Video
    Community
 Elsewhere on The Deal.comDealwatchThe Deal MagazineCorporate Dealmaker
The Deal VideoCategories
Blog roll
Archives
| |||||||||||||||||||||||
|
|
|
|
|
I work for CurrentForeclosures.com, a foreclosures site and have seen a huge increase in the number of foreclosures in the past 7 months. I believe it is a combination of not only sub-prime and ARM mortgages, but also the high number of people who have gotten loans with interest rates at an all time low... in addition to the rapid depreciation in some areas and the difficulty some are experiencing in selling their homes.