Opteum Inc. (NYSE:OPX) said Friday that its subsidiary, Opteum Financial Services, LLC, an Alt-A mortgage lender, intends to exit both its conduit and wholesale mortgage loan origination businesses. The company said it has ceased accepting new applications in each of the two origination channels, effective immediately -- leaving only a retail channel as the company's active source of new loan fundings.
Opteum officials blamed a "deterioration in the secondary market for closed mortgage loans and continuing weakness in consumer demand for mortgage products and services."
Opteum has been the recent focus of strong industry speculation, with HW
reporting March 20 that a Friedman, Billings & Ramsey Group, Inc. analyst had questioned the company's future
amid what is now clearly becoming an emerging credit crunch in the Alt-A lending sector.
Jeffrey J. Zimmer, chairmain and CEO of Opteum Inc., said the company had run into trouble with its primary funding agreement with a Citigroup affiliate, and that "lax underwriting standards, early payment defaults and high delinquency rates involving subprime mortgages and concerns over the general state of the U.S. housing market" had led to "significant distress" in the secondary market for mortgage loans.
"This has forced OFS to re-market loans in respect of which it believed it had already obtained purchasing commitments," Zimmer said, "and has resulted in an estimated $22 million pre-tax loss associated with mortgage loans originated by OFS."
Zimmer said the loss will hit the company's books, and that he believes the current market environment has legs through 2007 -- the primary reason the company decide to exit warehouse and conduit lending.
In a press statement, the company ntoed that it continues to originate loans through its network of 230 retail loan professionals located in 24 offices throughout Georgia, Florida, Illinois, New Jersey and Massachusetts. Additionally, the company's $2.9 billion REIT portfolio today consists entirely of Ginnie Mae, Fannie Mae and Freddie Mac agency securities.
For more information, visit http://www.opteum.com