another subprimer takes a beating
There's a lot of what you'd expect in the release -- comments about the environment being "challenging" ... and comments about tightening requirements for credit score, loan-to-value, income documentation, etc. But it's the nitty-gritty in the report that really tells a sad tale ...
* Net gain on sale for whole loans dropped to just 1.4% from 1.86% in the prior quarter and 2.52% a year earlier. That a sign of profit margin pressure in the core lending business.
* The total provision for loan losses rose ... get this ... by 261% year-over-year.
* The delinquency rate (in the "old" LEND servicing portfolio, which excludes a company, Aames, that LEND just bought) jumped to 7.18% in the Dec. quarter from 5.44% in the September period and 2.49% in the Dec. quarter of 2005. In other words, the 30 day+ late payment rate has almost TRIPLED in just 12 months.
The news out of all these lenders just goes to show you that industry-wide, the whiz-bang default models aren't exactly hitting the ball out of the park.