The latest corporate activity in mortgage lending involved the bankruptcy of Fieldstone Mortgage Co., the liquidation of the former parent of a subprime lender and estimates of billions of dollars in subprime losses at Freddie Mac. Still, one merger managed to surface.
But first, the Federal Reserve Board announced Wednesday it terminated an enforcement action against Putnam County Bank related to a written agreement the two parties entered in November 2003 in which Putnam agreed to continue making progress in improving its programs and procedures for complying with the Currency and Foreign Transactions Reporting Act and the anti-money laundering provisions of Regulation H.
Taylor, Bean & Whitaker Mortgage Corp. announced it hired former Microsoft chief information officer Stuart L. Scott as its chief operating officer. Published reports indicate Scott was fired from Microsoft earlier this month for violating unspecified company policies.
Freddie Mac could see losses of between $1 billion to $5 billion on its $120 billion subprime AAA portfolio “if the recent credit spread widening does not reverse over the coming quarters,” according to a report by Credit Suisse research analysts. The losses could lead the secondary lender to sell additional portfolio holdings or raise preferred stock. The analysts reduced their 12-month price target on Freddie to $45 from $68.
Option One Mortgage Corp. lost a $750 million origination warehouse facility from Greenwich Warehouse Trust in light of reduced mortgage volume. Additionally, the subprime lender amended an a committed lines of credit/bridge facility agreement with JPMorgan Chase Bank that, among other things, reduced to $0.8 billion from $1 billion the minimum net worth covenant for the fiscal quarters ending Oct. 31, 2007 and Jan. 31, 2008, in order to meet net worth requirements for flexible negotiation of the company’s sale. However, Option One also recently had a servicing advance facility increased to $750 million from $400 million by Greenwich Capital Financial Products Inc., according to a FORM 8-K filing with the Securities and Exchange Commission.
Subprime lender Fieldstone Mortgage Co. filed for Chapter 11 bankruptcy protection on Friday, according to documents filed in the U.S. Bankruptcy Court District of Maryland. Estimated assets are between $1 million to $100 million, while liabilities are estimated at more than $100 million.
The Columbia, Md.-based company estimates it has between 1,000 to 5,000 creditors, which include Ameriquest Mortgage Co., Dynamic Capital Mortgage Inc., Gateway Funding Diversified Mortgage, GF Mortgage Inc. and Merrill Lynch Mortgage. A meeting with creditors is scheduled for Jan. 2.
NetBank Inc., which filed for bankruptcy protection in September, said in an SEC filing today it will liquidate.
“The company believes that its equity securities have and will have no value and that any Chapter 11 plan approved by the court will not provide the company’s stockholders with any distributions,” NetBank said in the filing. “Accordingly, the company does not anticipate providing for any value or distribution to stockholders.”
NetBank was the parent of subprime lender Meritage Mortgage before the unit was shut down a year ago.
Anworth Mortgage Asset Corp. today said it plans to generate $60.5 million in net proceeds from a public offering of 9 million common stock shares in which it will grant underwriters an option to purchase up to an additional 1.35 million shares to cover any over-allotments. The Santa Monica, Calif.-based company intends to acquire agency mortgage-backed securities with the proceeds.
This afternoon, Coast Financial Holdings Inc. will hold a meeting with shareholders to vote on the proposal to buy First Banks Inc., according to an SEC filing. Coast said that, as of Sept. 30, 2007, the amount paid would be $3.17 per share, but “in view of our current and anticipated performance, it is likely that the deficiency will continue to increase in size and the amount that you will receive will be further reduced.” On Aug. 3, 2007, the last full trading day before announcement of the merger, the closing price of Coast Financial common shares was $2.28 per share. Coast noted the merger deal needed to be approved by the holders of a majority of its outstanding common shares of Coast.
Hilltop Holdings Inc. recently paid over $63 million to acquire 6.8 percent of the outstanding shares of common stock of Downey Financial Corp. in a move to obtain a meaningful equity position in the Newport Beach, Calif.-based lender and possibly buy it, a filing Monday with the SEC stated. Hilltop said its chairman, Gerald J. Ford, met with representatives of Downey on Nov. 16 and will continue evaluations to acquire control of Downey through a business combination or other transaction.
