Friday, July 27, 2007

More job cuts at mortgage lenders

It’s not just subprime, mortgage woes are affecting Alt-A and prime borrowers, so lenders are taking losses and shutting down branches. Wells Fargo announced on Thursday it will close its nonprime wholesale lending operations in Bator Rouge, Louisiana, and in Des Moines, Iowa, resulting in 200+ job cuts. Impac Mortgage Holdings also cut 190 jobs this week, or roughly 20% of its workforce.

Moody’s predicts that lending troubles will persist through the remaining part of 2007, with a peak in delinquencies in mid-2008. Foreclosure rates on “2006-vintage” home loans are expected to reach nearly 20% in late 2011, 3 times higher than the forecast foreclosure rate on mortgages originated in 2004. We don’t get forecasts quite like this one very often.

Interest rates dropped last week on weak lending application and sales data. 30-year fixed-rate mortgages averaged 6.69%, down from 6.73% a week ago, 15-year fixed-rate loans edged down to 6.37% from 6.38%. Five-year ARMs were at 6.30%, compared to last week’s 6.35%, and one year adjustable home loans declined to 5.69%, from 5.73% a week earlier.

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