Commentary: Subprime Crunch Not Over Yet

And there’s the rub: For all the negative press the subprime industry has been getting lately, Impac’s admission of significant losses this past week – along with other residential REITs outside of the subprime sector, including Opteum – signals that the problems within subprime credit may not be entirely confined just to subprime. Last week’s commentary in this space speculated that Alt-A could be the next credit sector to show some weakness, and Impac’s “earnings,â€? along with a warning on servicer stability from Moody’s, suggest that the Alt-A credit sector is seeing increasing volatility as well. Whether this is evidence of the “credit spilloverâ€? some inside and outside the industry have predicted or not, nobody knows for sure – but it certainly bears watching in the days and weeks ahead.

Rumors times two: Two juicy rumors have emerged this past week – the first surrounds the possible pending exit of a large Wall Street player from subprime lending, and the resulting industry fallout. The second says that Citigroup might be deciding between a purchase of Ameriquest and H&R Block’s subprime unit, Option One…only time will tell, but a source has suggested to HW that an Option One deal is ‘quietly’ being discussed by involved parties….. I’ll probably regret this, but: This week’s commentary by National Mortgage News editor Paul Muolo in his “What We’re Hearingâ€? column took a thinly-veiled shot at the blogging community by implying that only NMN‘s tracking of failed subprime lenders was current and accurate. NMN only recently began tracking lender closures; blogger Aaron Krowne’s popular site, the Mortgage Lender Implode-o-Meter, has been tracking the subject since December. Krowne’s site, for the record, has been deemed accurate enough to be cited by Bloomberg and other leading financial press, not to mention being cited here on HW. Here’s thinking Muolo might want to focus his energy elsewhere, rather than taking pot shots at a blogging community that beat NMN to the punch by at least three months. Not that I’m complaining — if anything, Muolo’s comments serve to highlight the need the industry has for an independent voice. I’m hoping that HW will serve that need. Don’t subscribe? Take a minute and sign up to receive our daily updates today. Full disclosure: The author owns no securities in any of the companies discussed in this commentary.

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