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Lenders Default and Mortgage Brokers uncertainty post subprime market

June 7th, 2008 12:37 PM by Sam Kader MLO# 130505

When lender goes bankcrupt, the company which goes under court supervision would sell the assets and use the proceeds to repay its creditors. That means that your loan would be sold to another financial institution. While it's possible that the original bank still has the mortgage, most lenders simply originate loans, package them together and sell them to a bank in a bundle. In many cases, the bank repackages a group of bundles and sells them to the securities markets as mortgage-backed bonds or other complex financial instruments. In the end, whoever holds the loan is till going to have to honor the terms of the contract. Vise versa, you - the borrower still needs to pay your loans to either servicing agents or banks.

As of last summer, Washington has 1200 independent mortgage brokers and according to estimate, a third may not survive the turmoil if their balance sheets are not strong enough. Borrowers with solid credit ratings and employment history with strong liquidity are not affected as much as borrowers seeking Alt-A or subprime mortgages.

In Washington as of June, 6% of Washington mortgages were subprime adjustable-rate loans compared to 6.6% nationwide. Of those Washington mortgages, 8.75% were delinquent in the first quarter, compared with 13.87% nationwide.

Top 20 Alt-A Lenders in 2006

# Lender                         State       Status              Alt-A in billions

1. IndyMac                     CA   (Fed Supervision 7/1/08)  $70.15

2. Countrywide Financial           CA     Still in business    $68.00

3. Residential Capital Group        MN   Still in business    $44.00

4. EMC Mortgage                        TX   Still in business    $28.27

5. Washington Mutual                WA   Still in business     $25.30

6. Aurora Loan Services             CO  Cuts to services     $19.40

7. GreenPoint Mortgage Funding     CA  Out of business  $18.30

8. WMC Mortgage                       CA  Still in business  $17.70

9. First Magnus Financial              AZ  Out of business  $13.32

10. Impac Mortgage Holdings        CA  Still in business  $11.57

11. Sun Trust Mortgage                 VA Still in business  $10.09

12. Chase Home Finance                NJ  Still in business  $9.40

13. National City Mortgage              OH  Still in business  $8.74

14. CitiMortgage                            MO Still in business  $8.22

15. New Century Financial                CA  Bankcrupt        $8.10

16. First Horizon Home Loans            TX  Still in business  $7.25

17. American Mortgage Network         CA Still in business  $6.61

18. PHH Mortgage                            NJ  Sold                $6.50

19. Taylor, Bean & Whitaker mortgage  FL  Still in business  $6.27

20. American Home Mortgage              NY  Sold                 $5.24




Posted in:General
Posted by Sam Kader MLO# 130505 on June 7th, 2008 12:37 PM



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