Posted on 05/03/2006 9:59:27 AM PDT by BurbankKarl
ACC Capital Holdings, the parent company of Ameriquest Mortgage Co. and Town and Country Credit, said Tuesday it is closing all of its 229 retail mortgage branches and cutting 3,800 jobs across the country to cut costs.
The closures include a handful of Ameriquest and Town and Country retail branches in Sacramento, Rancho Cordova and Stockton, possibly affecting dozens of employees in the region.
Ameriquest's California regional mortgage center in Sacramento will remain open. The Orange-based firm, which handles subprime mortgage loans, would not give specific information about local branch closings or jobs cut.
ACC Holdings vice-chairman Adam Bass said in a statement the job cuts and closures were difficult but necessary to lower costs and remain competitive. The firm until Tuesday had 11,000 workers.
Spokesman Chris Orlando denied that a national real estate slowdown and a related decline in mortgage business were factors.
(Excerpt) Read more at sacbee.com ...
ping
I guess new home mortgages stopped getting gobbled us like in the past and the industry is grinding down to a slower pace.
Thanks for the *Ping* ! I hear about Ameriquest last night. Mortgage companies all over the U.S. are tightening their belts. What do lenders understand, that most people do not even have a clue about?
Well, the stuff is about to hit the fan. Everyone has borrowed, then borrowed again. Companies like Ameriquest have made questionable loans to folks who are cashing in on the "equity" in their homes.
Many of those loans were made at rates that have long since become obsolete. The ARMs are about to hit their conversion date. The interest-only loans are about to change to ARMs.
There is going to be great wailing and gnashing of teeth among those homeowners who were expecting a constant rate of growth in the value of their homes. Nobody wants to give them yet another refi.
It's gonna get ugly.
I will not go into detail but the closing of some of these mortgage companies will be no great loss to the consumer.
Especially for people who refinanced the over valued homes in California and bought a vacation home in another state. They are going to be hit worse than people who just bought two luxury autos and paid off credit cards. Because lenders will soon demand the difference between to loan amount and the market value of the properties. Upside down really means upside down. It is going to worse than ugly.
"Especially for people who refinanced the over valued homes in California and bought a vacation home in another state."
That's a small group. A larger group is made up of folks who refinanced more than once, to pay off bills, get nice stuff, etc. Most of them are SOL on this one. Most didn't really understand the terms of what they were doing, and Ameriquest and others were predatory in seeking those borrowers.
These are the folks who are already living from paycheck to paycheck and juggling bills to pay their mortgage. They'll soon be defaulting, and lenders don't want the houses.
Being upside down on debt is a very bad thing. It's going to cause a reverberating cycle that's not going to be good for the economy.
Are you saying mortgage loans are callable? I thought that was illegal.
I knew they had pretty much tapped the market when I heard about mortgage companies selling illegal immigrants interest-only mortgages.
Mine isn't, and I've never seen one that is. When signing my papers on my new home, I looked for such a provision and couldn't find it. I then asked my realtor and the escrow officer if they ever see callable mortgages, and they said they have never heard of such a thing.
Use your imagination. If the bubble bursts (not just leaks), lenders will become very aggressive. "Demons from hell," might be more accurate.
"There is going to be great wailing and gnashing of teeth among those homeowners.."
There may also going to be great wailing and gnashing of teeth among us taxpayers. I wonder how much liability Fanny & Freddie are on the hook for?
Amen to that. Ameriquest is just the beginning. Wait until option ARM's come due in the next 1-2 years. Then it will get very ugly.
Where Freddie and Fannie could be on the hook, are areas where you have seen large property appreciation and borrowers in turn have converted that equity into debt via cash out refinances and 100% purchase loans. I have seen loans made to folks who now owe $50-60,000 more on their homes than what they purchased them for 3-4 years ago. These loans are approved by Fred and Fan via their computer scoring sytems and once the loans are closed sold to them. There are a lot of new cars on the highway today that owners will still be paying for years after they have found their way to the junkyard. The amount of current mortgage debt that has to be repaid is unprecedented, how these loans perform will be interesting.
The home owner will file bankruptcy, the mortgage co. will foreclose and will be lucky to get 200,000 at auction for the house...OR the mortgage company could not hassle the homeowner and continue to recieve payments and I believe in this circumstance require PMI for the $300,000 or a portion thereof.
Stockholders that force the mortgage co. to foreclose in such situations are only shooting themselves in the foot. I'm fairly certain that, though many will be screwed, the "Demons from hell" scenario you envision will not happen. Many people will be stuck with living in the house they are in practically forever, some will commit insurance fraud, and some will file bankruptcy.
What you neglect to mention is that most of these appraisals are not fraudulent. I refinanced a year ago to get a lower interest rate. My home appraised for what homes were selling for in my neighborhood. This was easily verifiable, even by me. One year later I sold my home for almost exactly what it appraised for last year.
If the market drops, the lenders are out of luck if they have to foreclose. If they don't have to foreclose, then it really does not affect them since they are still earning a market rate on their investment.
You still haven't told us why a mortgage company would want to foreclose on a performing loan. To do so would be monumentally stupid.
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