More mortgage problems ...
1) The Mortgage Bankers Association's purchase mortgage applications index fell 23.4 points in the week ended August 17 to 441.5 from 464.9. That’s a 5.03% drop, the largest decline (on a percentage basis) since the week of January 19. The refinance index fell 123.3 points to 1806.3 from 1929.6, a decline of 6.39%. That’s the sharpest decline for refi activity since the week of May 25.
My take: These figures probably reflect growing disillusionment with the mortgage and housing markets. Consumers see the news. They see that home sales are slumping and that lenders are rejecting more applicants. So they’re moving to the sidelines. Longer-term, we’ll probably see even more pressure on the housing market. After all, some lenders are failing, while others are tightening their lending standards.
2) H&R Block tapped $850 million in credit lines to finance its Block Financial business. It did so because the turmoil in the commercial paper market prevented it from obtaining financing on decent terms there.
3) Accredited Home Lenders is closing 60 retail branches, five support centers, and no longer accepting U.S. mortgage applications in its wholesale lending arm (which makes loans through third-party brokers). It is also slashing 1,600 jobs. HSBC is also pulling back from its subprime mortgage business. It said it would close an Indiana loan servicing office and let 600 workers go.
UPDATE: Subprime lender Delta Financial is now on the tape saying it's eliminating 300 jobs, or about 20% of its workforce. It is closing offices in Florida, Texas and California as part of the move.
UPDATE2: Lehman Brothers is shutting down its BNC Mortgage division and jettisoning 1,200 employees. The unit originated about $14 billion in subprime mortgages last year.