Like Kernels Popping

A few days ago Twist and I were reflecting on the folding in rapid succession of sub-prime lenders Ownit and Sebring. It seemed to us like the scattered explosions at the start of popcorn popping. Since then, several other lenders have more or less stopped operations. In recent days we followed the demise of Connecticut’s Mortgage Lenders Network. Just yesterday, Crispy reported [1] that Secured Funding had gone out of business. Also on Friday, in yesterday’s Ben’s bits (scroll down), Crispy points out Decision One as a possible next victim.

Comment by crispy&cole
2007-01-05 09:47:45
The scuttle butt today is on – D1.

 

Doomers who want help keeping score in this process can click on the new link The Mortgage Lender Implode-O-Meter in the Doom Resources section. This leads to a page maintained by bubble blogger Aaron Krowne, of autoDogmatic fame.

D1 (7) ranks higher on Aaron’s list than Ownit (11), so if once again the faint rumors condense rapidly to fact, it would signal a significant escalation in trouble for the sector. One thing we’re wondering at Doom is what will happen to all the mortgages that get into trouble early and were supposed to be bought back by a lender that’s now bankrupt. It’s not at all clear to us what will be the final resting place for much of the loss arising from defaults as the housing market turns down.

In any case, this trend has passed the stage where it circulates only in bubbledom. The MSM is becoming seriously concerned.[3]

________________________

Notes and References

[1]: "It’s Official", by Crispy, BakersfieldBubble blog, January 5, 2007.

[2]: "The Mortgage Lender Implode-O-Meter", site maintained by Aaron Krowne (blogs on autoDogmatic).

[3]: "Jitters Rock Subprime Mortgage Market", by Anusha Shrivastava, Dow Jones, January 5, 2007.

Investors worried about the slowing housing market and the shuttering of several subprime lenders Friday sent the home equity credit derivative index to its widest levels ever.

 

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1 Comment for this entry

  1. natedog says:
    January 6, 2007 at 2:04 PM

    I am a mortgage broker and have personally seen friends lose jobs in the MLN situation. This is only the beginning of a collapse of subprime lenders who funded loans to risky people in risky housing enviroments. Also the exotic loans were forced on many people who should of stayed in more risk adverse programs and not bite off more then they can chew

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