Tag Archive for: Sub Prime

What would happen if the bank where your savings are goes bust, and the bank where your mortgage is doesn't?

If you want a first hand account, then click here, here or here.  As horrific as a run on a bank is, this is real: my friend in Hong Kong can see the crowds from his office.  If enough people withdraw their money, it doesn’t matter how well-run or profitable a bank is, it has to close and everyone can lose most of their savings.  So this is a wake-up posting to those of us who watched Bear Stearns and Lehman go under with a hint of a “I’m so glad it didn’t happen to me” expression on our faces.  

There is nothing like a big panic for irrational reasons.  What makes this one more important than Lehman going under is that Bank of East Asia are the 3rd biggest bank in Hong Kong (that makes them global

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Why the Sub Prime market failed!

The Globe and Mail has done a great job telling the story of the collapse of the Sub Prime Mortgage market. You can read the whole story here or hang out here for my summary.

When the real estate market in the US was extremely hot a few short years ago. People were getting loans to buy homes with no documentation, less than stellar credit, financing more than the purchase price, qualifying for the loan based on a discounted teaser rate and investors were buying these loans up like they were going out of style. They were betting that the market would never cool off and home values would continue to rise, probably using the old adage ” they are not making any more real estate”. However what they failed to realize is that some of these people could not … Read more

Home Trust to offer traditional mortgages!

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


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.


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Home Capital hikes dividend!

The Canadian Press

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.

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HSBC posts steep profit drop!

The Associated Press

LONDON — — HSBC Holdings PLC [HBC-N], Europe’s largest bank by market value, reported Monday its steepest fall in profit since 2001 as costs for bad U.S. mortgage loans mounted.

Net profit for the first half of the year plunged 29 per cent to $7.7-billion (U.S.) from $10.9-billion in profit in the January to June period of last year.

“The first half of 2008 saw the most difficult financial markets for several decades, marked by significant declines in profitability throughout much of our industry,” said HSBC chairman Stephen Green. “HSBC was not immune from the turmoil.”

The biggest losses came from the North American market, which HSBC depends on for a quarter of its revenue. Operations there posted a first-half loss of $2.9-billion, compared with profit of $2.4-billion a

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GE Money Pulls up stakes!


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

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Sub-prime lender Wells Fargo beats expectations!


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,

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