News

Report: 2.2 Million Borrowers Face Foreclosure on Subprime Home Loans

A new Center for Responsible Lending (CRL) study says that 2.2 million American households will lose their homes and as much as $164 billion due to foreclosures in the subprime mortgage market. The CRL claims that the study, "Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners," is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006. CRL's research suggests that risky lending practices have triggered the worst foreclosure crisis in the modern mortgage market, projecting that one out of five (19.4 percent) subprime loans issued during 2005-2006 will fail.
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Housing Starts Up, Permits Drop

A government report this morning showed that the pace of homebuilding increased 6.7 percent in November, rebounding from a poor showing in October. While housing starts increased, the Commerce Department said permits to build new homes dropped to their lowest level in at least nine years.
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New Century Co-Founder, Chairman Retires

New Century Financial Corporation, a real estate investment trust (REIT) and one of the nation's largest subprime mortgage companies, announced today that Robert K. Cole will retire as Chairman of the Board and that Fredric J. Forster, Lead Independent Director, has been appointed to serve as Non-Executive Chairman of the Board effective January 1, 2007. Mr. Cole's employment term as Executive Chairman of the Board will expire on December 31, 2006; however, he will continue to serve as a member of the company's Board of Directors.
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Former Fannie Execs Charged, Face 101 Counts of Misconduct

The Office of Federal Housing Enterprise Oversight (OFHEO) announced that it has filed charges containing 101 counts of misconduct against three former Fannie Mae executives, former Chairman and CEO Franklin D. Raines, former Vice Chairman and Chief Financial Officer J. Timothy Howard, and former Senior Vice President and Controller Leanne G. Spencer. According to a statement issued by OFHEO, remedies sought will include civil money penalties that could exceed $100 million, disgorgement of bonuses totaling over $115 million, loss of indemnification, and debarment from participating in Enterprise affairs.
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K. Hovnanian: 'Disappointed' with 2006 Results

Hovnanian Enterprises, Inc., a New Jersey-based national homebuilder, reported painful results for the 2006 fiscal year today, with net income available to common stockholders of $138.9 million on $6.1 billion in total revenues for the full year ended October 31, 2006. In fiscal 2005, net income available to common stockholders was $469.1 million on total revenues of $5.3 billion. Homebuilding gross margin, before interest expense included in cost of sales, was 23.1 percent for fiscal 2006, a 330 basis point decline from an all-time record of 26.4 percent in the prior year.
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Home Builders' Confidence Holds Steady

Heading into the holidays, builders of new single-family homes continue to believe that the worst of the downswing in home buying is behind them, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for December. At 32 for the present month, the overall HMI is down a single point from November but remains above the recent low of 30 in September.
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Specialized Loan Servicing's Servicer Ratings Affirmed

Fitch Ratings announced that it has affirmed Specialized Loan Servicing, LLC's (SLS) residential primary servicer ratings for Alt-A, subprime, and home equity line of credit (HELOC) products at 'RPS3' and its special servicer rating at 'RSS3'. Headquartered in Highlands Ranch, Colorado, SLS is a privately-held mortgage servicing company owned by Terwin Advisers, LLC (Terwin) and its affiliates. SLS has been servicing loans since January 2004 and as of Aug. 31, 2006, serviced 134,817 loans with a principal balance of over $11 billion, a 63 percent growth in loan volume over the past year with a corresponding 56 percent increase in staff.
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