Sub Prime Casulties

[scott1]

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LEND is a great company

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Sarcastic?

[gonebroke2]

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LEND is a great company

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Sarcastic?

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Great if you are short or bought puts. Pink sheets for them soon.

[James282]

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LEND is a great company

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Sarcastic?

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Not at all - they are the best underwriters in their sector. Definitely the best of the subprime lenders. This company just got run into the buzz-saw due to sector concerns and a bit of bad luck at the same time. I doubt this company will go bust and believe that it will be a huge value once the lesser companies do and things stabilize.

James

[ezmogee]

Does anyone have any good analysis on AHM? I own a lot of it at the suggestion of my broker/advisor and I really liked a lot of the research I did on the company (assuming their books/filings are legit). That said, I didn't have a great subprime understanding and still don't, and perhaps I was blindsided by their very nice dividend.

There's been a lot of vol in the past month and I've kept buying more as its faded including after yesterday's 15% drop. Today it's up 15%, but I think we all know that doesn't mean too much.

Can anyone explain the implications of the subprime concerns as regards AHM or give me a good place to look?

[hawk59]

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LEND is a great company

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Sarcastic?

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Not at all - they are the best underwriters in their sector. Definitely the best of the subprime lenders. This company just got run into the buzz-saw due to sector concerns and a bit of bad luck at the same time. I doubt this company will go bust and believe that it will be a huge value once the lesser companies do and things stabilize.

James

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What makes you think this other than because bankstocks.com has said it? Their LTV's are 90%, they originate predominately ARMs, 2/28's were half their production in 05, and 15% of their production is interest only. Saying that they have higher underwriting standards than other companies that are originating the same types of mortgages doesn't mean anything even if it is true. The problem is with the types of loans they are writing. Being hit with forced repurchases and margin calls is not a sign of good underwriting.

[DesertCat]

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LEND is a great company

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Sarcastic?

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Not at all - they are the best underwriters in their sector. Definitely the best of the subprime lenders. This company just got run into the buzz-saw due to sector concerns and a bit of bad luck at the same time. I doubt this company will go bust and believe that it will be a huge value once the lesser companies do and things stabilize.

James

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There are better sub prime lenders out there, I am looking at one that is less highly leveraged, earned a spread twice as large as LEND did in Q4 on loans sold, and unlike LEND hasn't been forced to buy back any loans yet.

The problem with ARMs & IO loans is that they lend themselves to fraud. People who really can't afford a home choose the most exotic loans with the lowest payments. More stodgy lenders don't offer the type of products that the worst customers want.

[laserboy]

Here's a great article!

Mortgage Lending Tycoon blows fortune on gambling, sports cars, bankrolling box office bomb "Redline"

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Daniel Sadek played Orange County's subprime lending boom like a card shark dealt the ace and jack of spades.

Just five years ago he was selling cars.

Then, in January 2002, he anted up $250 for a state lender license and started selling home loans through his company, Quick Loan Funding.

Over the next five years, Quick Loan wrote $3.8 billion in mortgages, lending money fast – and often on onerous terms – to people with shaky credit.

Boosted by high fees and interest rates – high even for the subprime industry – Quick Loan's after-tax profits averaged 29 percent of revenue. In 2005, Quick Loan's biggest year, profit topped $37 million.

Sadek used the earnings to live the high life, buying a fleet of Ferraris, Lamborghinis and Porsches, dating a soap opera starlet and producing movies. He flew private jets to Las Vegas, where he gambled with high rollers at the Bellagio Resort.

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Sadek says Quick Loan had to buy back $29 million in loans that defaulted in the first two months. That's a number that's likely to grow.

Today he is $16 million in debt, he says. Sadek says he raised $13 million for Quick Loan by selling his cars and refinancing his Newport Coast mansion, an Irvine penthouse and a Las Vegas condo.


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[VeryTnA]

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600ish ficos are now required for the "subprime" loans

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I am still getting people with low 500 FICO's approved where I work. Low LTV refinances with a good mortgage history are still getting rates in the 6 -7% range. We loan in 40 States.

[BradleyT]

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I am still getting people with low 500 FICO's approved where I work.

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Hope you don't lose money when they default.

[jaydub]

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I am still getting people with low 500 FICO's approved where I work.

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Hope you don't lose money when they default.

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From the post:

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Low LTV refinances


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They will do alright on a default.

Sanity is gradually being restored to the business of lending money.