“Are you ready, are you ready for this
Are you hanging on the edge of your seat
Out of the doorway the bullets rip
To the sound of the beat
Another one bites the dust”
“Another One Bites The Dust, Queen”
Well folks, I think the sound of the beat is compliance and performance and right now, it is a machine gun. News that the #5 sub-prime wholesale mortgage lender in the country (as of 2Q 2006) has been closed by the FDIC came out after close of business this past friday. This announcement stating the shutdown of the Freemont Investment & Loan is a major shot across the bow for any subprime lender who was Sales Account Executive driven into shoddy loans. Speaking as someone who knew all about their programs, knew their account reps and culture, and never closed a single loan with Freemont, I can tell you that their reps were the source of this collapse of a major sub-prime lender.
Their banking operations and commercial division will continue to operate, and the Freemont General Corporation, the parent bank holding company does expect to survive this disaster, but in what form, nobody knows. They are trying to sell their origination platform, but who wants a winner like that!
Stay tuned boys and girls. It won’t be long before another industry stalwart folds their shop, and it’s starting to get ugly. This market report wouldn’t be complete without mentioning that so called “program hard equity” lending is beginning a major upswing in the wholesale marketplace driven by lenders such as Quality Home Loans and others, who are selling junk grade loans, probably with greatly reduced reps and warrants to investors regarding default and other loan guarantees present in B paper loans.
Also, for those who care about these things, our new Morningside Mortgage Corporation has been posted and is in the final tuning and review stages. Not all of it works, but any comments on the site would be welcome too 😀
On the flip side . .. . . . . .
