CA’s foreclosure plan, Rescap on the ropes? Lambo dealer shuts down

November 6th, 2008 · No Comments


That money talks

I won’t deny

I heard it once

It said ”goodbye”.

(By Ogden Nash. He was famous for his short poems like, “God in his wisdom made the fly. And then forgot to tell us why.”)

California Gov. Schwarzenegger will ask lawmakers to back legislation imposing 90-day stays on home foreclosures as part of an economic stimulus package. (I am not clear why 90 days has become a magic number: President-elect Barack Obama has also proposed a 90-day ban on foreclosures but Schwarzenegger’s plan differs in that it offers a “safe harbor” to mortgage lenders, and JPMorgan Chase is also not foreclosing for 90 days.) To avoid having a stay put on individual foreclosures, lenders could prove they have a robust modification program for troubled mortgages. Obviously this impacts companies servicing mortgages – so will working in servicing departments become the new growth industry for out-of-work mortgage folks?

GMAC LLC, the financing arm of General Motors Corp. gripped by a cash squeeze, posted its fifth straight loss and said its mortgage unit may not survive. The Residential Capital home-loan unit lost $1.9 billion during the quarter, while GMAC’s auto finance unit lost $294 million. ResCap, which ranked among the biggest U.S. subprime lenders two year ago, has posted losses totaling $9.1 billion over the past eight quarters. Without more support from GMAC, “substantial doubt exists regarding ResCap’s ability to continue as a going concern,” GMAC’s statement said. Fortunately, the Correspondent Channel/Division is part of GMAC Bank, not ResCap, and is “very liquid” according to an inside source.

Reunion Mortgage, headquartered in the SF Bay Area, sent a notice to brokers saying “we have decided to stop doing business in the state of Florida , due to high fraud. As a result, we are closing our Tampa Branch.”

U.S. Bank Home Mortgage Correspondent Lending Division revealed that they will implement changes to their Fannie & Freddie pricing. More specifically this will be composed of an increase in delivery fees beginning Friday for IO product, multi-unit, subordinate financing, low FICO, etc.

The world’s largest dealer of Lamborghini’s, Lamborghini Orange County , has shut down. Apparently 2,400 of them are made each year, and LOC sold 10% of them. Lamborghini’s separate sales company in the United States says the dealer closed because of its own mistakes, however, and not the economy.

Tomorrow’s jobs numbers are usually the most important monthly number that we see. Some are fearing that we’ll see some pretty negative (for the economy, which could help rates) news. For example, Goldman Sachs cut their forecast for Nonfarm Payroll for October to -300,000 from -250,000. The bond market was not impressed with today’s unemployment claims report, which showed that the number of U.S. workers filing new claims for jobless benefits fell by 4,000 last week to 481,000. The department revised up its estimate for jobless claims in the prior week to 485,000 from a previously reported 479,000. A four-week moving average of claims, which smoothes out weekly variations, was unchanged at 477,000 last week. After the news, the yield on the 10-yr moved up to 3.70%, and 30-yr mortgage prices are worse by about .250 versus yesterday afternoon.


Tags: Commentary · Mortgage Market

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