Interest Rate Roundup

Thursday, November 08, 2007

More mortgage casualties...

Delta Financial is out after the bell announcing some significant problems. The non-conforming mortgage firm said it lost $39.6 million in the September quarter vs. year-ago net income of $8 million. It's also letting 470 workers go and seeking working capital to keep the business going. The commentary sounds downright grim (emphasis mine). Have a gander ...

"We are disappointed to report a loss for the third quarter,” explained Hugh Miller, president and chief executive officer. “A variety of unprecedented market events took place during the quarter, which had a negative impact on not only our earnings, but those of virtually every company in the lending sector. In response to these events, the Company took important steps during the quarter that enabled us to continue operating when many others were unable.

But more recently, the secondary markets, which began to improve since September, took a turn for the worse, initially driven by the rating agencies’ sudden downgrade of tens of billions of dollars worth of mortgage-backed and related securities,” stated Mr. Miller. “This and other developments have severely limited the ability of companies in our sector to complete securitizations as a source of financing at this time."

Meanwhile, HSBC Holdings is ceasing mortgage-backed securities sales and trading in the U.S. The firm said it will jettison 120 workers as part of its exit from the business. HSBC recently shuttered its Decision One subprime lending business.


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