Pennies For Your SubPrime Thoughts
ResMae Mortgage Corp. may be on the cutting edge of a trend in the U.S. sub prime loan industry. It's bankrupt and selling assets for pennies on the dollar.
"Loans in 2006 will be the worst we have ever seen in the business," said Matthew Howlett, an analyst who covers the subprime market in New York for Fox Pitt, Kelton Ltd., an investment bank. "The underwriting quality was disastrous."
At least 20 subprime lenders have shut down, scaled back or sold themselves to larger companies since the start of 2006.
Mortgage Lenders Network USA, shut down most of its operations Dec. 29 after mistakenly offering below market rates on $600 M in loans and running short of cash to meet collateral calls by its banks. The company filed for bankruptcy Feb. 5.
ResMae, is the third to file for bankruptcy protection in the past two months.
Ownit Mortgage Solutions, declared bankruptcy Dec. 28, saying it didn't have enough cash to make a required buyback of $166 M of bad loans it had sold to Merrill Lynch and other financial firms.
New York based Merrill, the world's 3rd largest securities firm by market value, was demanding that ResMae buy back $308 M of loans. Merrill considered the loans covered by early default protections.
"Loans in 2006 will be the worst we have ever seen in the business," said Matthew Howlett, an analyst who covers the subprime market in New York for Fox Pitt, Kelton Ltd., an investment bank. "The underwriting quality was disastrous."
At least 20 subprime lenders have shut down, scaled back or sold themselves to larger companies since the start of 2006.
Mortgage Lenders Network USA, shut down most of its operations Dec. 29 after mistakenly offering below market rates on $600 M in loans and running short of cash to meet collateral calls by its banks. The company filed for bankruptcy Feb. 5.
ResMae, is the third to file for bankruptcy protection in the past two months.
Ownit Mortgage Solutions, declared bankruptcy Dec. 28, saying it didn't have enough cash to make a required buyback of $166 M of bad loans it had sold to Merrill Lynch and other financial firms.
New York based Merrill, the world's 3rd largest securities firm by market value, was demanding that ResMae buy back $308 M of loans. Merrill considered the loans covered by early default protections.
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