National City Mortgage Ooops!
Yahoo News- "National City Corp. said Thursday it will trim its previously stated third-quarter results after discovering the value of mortgage servicing rights were overstated and the amount of reserves for repurchased mortgage loans was understated."
"The mortgage servicing rights were $21 million less than National City had estimated, which will lower loan servicing revenue to $104 million from the $125 million amount it stated earlier.
The company also said that reserves for repurchased loans were understated by $18 million and would be lowered to $215 million."
"The updated amounts will affect the National City Mortgage and First Franklin business units, and lowered third-quarter net income to $551 million to $526 million."
"National City said it figures mortgage serving right values and reserves for repurchased loans using an estimation process that applies the "best available information at the time." After it determined the values for the recent third quarter, more information became available and based on it, National City will revise its earnings."
"National City is the second-largest bank in the Dayton area with $2.2 billion in local deposits and more than 50 branches. It's banking networking is primarily in Ohio, Illinois, Indiana, Kentucky, Michigan, Missouri and Pennsylvania and had more than $140 billion in total assets as of April."
posted by Athena @ 12:42 PM
4 Comments:
No subprime lender has anything like adequate loan loss reserves,and all the subprime lenders are having increasing problems in selling their mbs,many are having to increase the yield on subprime mbs to the point that they are taking a loss.first franklin makes obscene loans imho.check tour e-mails.
I'm curious--what happens when a lender is tied up with too many defaulted morts--are they sold to another bank?
the lenders,usually a "mortgage banker" packages a large number of mortgages of similar types into a "pool" and securitizes them.different tranches are sold at different yields to investors of these mortgage backed securities based on the percieved risk and expected return.the risk models used do not come remotely close to accurately measuring the risk.an example of a mortgage pool would be a group of loans,all of which are stated income,100% firsts,with credit scores ranging from 640-680.this would be a typical pool from a subprime lender such as first franklin.short answer,the lender sells these turkeys to people with no sense of smell,if they go bad quick,or there is fraud,the lender is supposed to "buyback"the loans.read the repurchase agreement REAL careful.also lenders are cash-flow businesses,and don't typically have much in the way of reserves...so they can buy back a few loans without going broke,but only a few.
check this out:
http://www.youtube.com/watch?v=LqMQoA1fsds
Can anyone help this lady with her fence problem.....
Post a Comment
Subscribe to Post Comments [Atom]
<< Home