Tag Archive for: Alt-A

Home Trust to offer traditional mortgages!

Alternative lender believes competing with banks will lower risk, allow it to pick up more business

LORI MCLEOD

 

00:00 EDT Wednesday, August 06, 2008

Alternative lender Home Trust Co. is launching a line of traditional mortgage products that will compete directly with those offered by the banks.

The Toronto-based lender hasn’t been pushed out of lending to riskier borrowers, a problem encountered by some of its competitors as a result of the U.S. subprime crisis.

Instead, the company, which uses a deposit-based funding model, believes the move will help fuel the growth of its core alternative-loan business and its relationships with mortgage brokers.

“What we can offer is a one-stop shop, particularly for brokers where time is of the essence for their clients,” said Gerald Soloway, chief executive officer of Home Trust’s parent, holding company Home Capital Group Inc.

To get the rest of this story from the source click here other wise here is my take on this. I want to start by saying that I love Home Trust. They have been great to my clients in the past, and I intend on doing business with them again. However that being said I don’t like the fact that they are getting into the “A” business at the expense of their core non traditional or sub prime equity lending background. Yes they are still doing some equity deals but they have pulled and or changed products in that line of business. With many players already leaving that market you would figure that they would be able to take more of the market instead of staging a retreat. Anyway since they do not sell ABCP to raise funds they should be able to come back to those products if the market demands. Only time will tell.

Cheers,

Pat

 

Home Capital hikes dividend!

The Canadian Press

August 5, 2008 at 7:18 AM EDT

TORONTO — Home Capital Group Inc. profit was $26.6-million in the second quarter, an increase of 20.6 per cent over $22-million in the same period last year. Basic earnings per share were 77 cents, up from 64 cents for the second quarter of 2007.

Return on equity was 27.7 per cent for the second quarter, compared to 28.9 per cent for the second quarter of 2007. Total mortgage originations were $886.9-million during the second quarter, an increase of 42.5 per cent over the $622.6-million advanced during the same period in 2007.

Home Capital’s board has approved an increase in the quarterly dividend to 13 cents per share on the outstanding common shares of the company, which is equivalent to an annual dividend of 52 cents per share.

Great for the investors, now how about getting back into the sub prime alt-a market again. I am pleased as punch that you are doing well but don’t take away options from borrowers. Honestly I love Home Trust, I just think that going after the “A” business when they are traditionally not an “A” lender is not the best move for them.  

Cheers,

Pat

GE Money Pulls up stakes!

GE exits Canadian mortgage business

LORI MCLEOD

REAL ESTATE REPORTER

July 30, 2008

The global credit crisis has claimed another victim in the Canadian mortgage industry asGeneral Electric Co. winds up its mortgage operations here.

After three years in the business, GE Money Canada said it will stop taking new mortgage applications tomorrow. It’s the latest in a string of alternative lenders that have decided to scale back operations or close shop amid the credit crunch.

Lenders who relied on bundling and selling loans to fund new mortgages have run into trouble as the securitization market went dry.

GE uses its own capital to fund mortgages, and in its case the decision is part of a broader corporate strategy to shift away from consumer financing, said Stephen Motta, chief executive officer of GE Money Canada.

“This was precipitated by the credit market turmoil, and the need to deploy capital more effectively,” Mr. Motta said.

The business is worth less than $1-billion and has 50 employees, some of whom will find new jobs within GE.

GE exited its U.S. subprime lending business in July, 2007, and has been scaling back its mortgage operations around the world. Last week the company said it was realigning its operations to focus on its core business areas: infrastructure, media and finance.

The company is also considering strategic options for its credit card operations, including GE Money Canada’s business primarily consisting of private label cards, Mr. Motta said. However it will continue to focus on expanding a division that provides loans for power sports equipment and other big-ticket items.

Other foreign-based lenders that have recently departed the Canadian mortgage lending market include HSBC Financial Corp. Ltd. and Accredited Home Lenders.

“This is the one major, direct impact on the Canadian mortgage market from what’s happened in the U.S.,” said Jim Murphy, president of Canadian Association of Accredited Mortgage Professionals. “My concern is that fewer mortgage providers means less choice and options for Canadian borrowers.”

GE Money Canada will finish processing current mortgage applications, and will hold existing mortgages on its books until their terms conclude.

This is what I was sent as one of their brokers:

 To our broker partners,
 
GE Money wishes to advise that, effective at the close of business this coming Thursday, July 31, we will no longer be accepting mortgage applications. This difficult decision to wind down our mortgage business in Canada comes as a result of a lengthy analysis of our global business, as GE and GE Money continue to apply investment capital in areas providing the best potential return for our shareholders.  

Though we will stop taking mortgage applications as of Thursday, we will fund our outstanding commitments. 

We are grateful to our employees, and to our many broker and business partners who assisted in the development and launch of our mortgage products across Canada. Our first priority today is to assist the members of our talented team who have been impacted by the announcement with the transition to the next steps in their careers.

  
Best regards,  

Joe Veckerelli

President, GE Money-Mortgages 

This is my take, another one bites the dust.  For those of  you who are keeping track here is a list of lenders who have pulled Alt-A or Sub Prime products or left the market all together. If I have left anybody out please let me know. Accredited Home Lenders, Abode Mortgage, GE Money, GMAC-RFC, Money Connect, myNext Mortgage Company, N-Brook, ResMor Trust, Street Capital, Interbay and Xceed. At this point I must give a shout out to Wells Fargo for sticking it out and hanging in with us. Thank You. 

Cheers,

Pat

 

Sub-prime lender Wells Fargo beats expectations!

Reuters

July 16, 2008 at 8:27 AM EDT

NEW YORK — — Wells Fargo & Co. [WFC-N], the fifth-largest U.S. bank, reported better-than-expected quarterly results on Wednesday and raised its dividend despite a 23 per cent decline in profit caused by deteriorating credit.

You may be wondering why is this important? Well let me tell you. Wells Fargo is largely an Alt-A or Sub prime lender here in Canada. We need options and Wells Fargo provides that. I have been a broker for over 5 years and many sub prime and Alt-A lenders have come and gone. Wells Fargo has stayed the course. “A” lenders are a dime a dozen, and many offer similar products. 

Let me give you some examples, say you have less than perfect credit, we can most likely find something for you at Wells Fargo, well what if you are self employed and can’t prove your income the traditional way, well there is a program for you at Wells Fargo, want a longer amortization ( they still have 40 year amortization’s), have higher debt load( over 40TDS%) or have no down payment (they will do 100% financing)  then Well Fargo again. 

So let me end by saying having options are good, and Wells Fargo gives us options as not everyone fits the same mold. If it’s good for Warren Buffett of Berkshire Hathaway ( he own’s 8.8% of the company) then it is good enough for me.

Cheers,

Pat