It's getting tough to make profitable mortgages when borrowers don't have to pay interest. And cost of funds is way up in July from April-June. We will see how these companies perform when borrowers don't make payments at all.(*) Must be a masterplan in there somewhere, please clue me in?
Mortgage banking pretax profit fell 48 percent to $526.4 million. Production margins shrank to 40 basis points (0.4 percentage points) from 93 basis points in the first quarter, a bigger decline than several analysts expected.
COMPETITION FROM LENDERS
"Pressure is coming from the point of origination," Chief Executive Angelo Mozilo said on a conference call. "We're not able to originate these loans at the pricing that we were able to do before."
Mozilo said margins on prime mortgages, especially three- to five-year hybrids, are under pressure amid competition from such lenders as Wells Fargo & Co. (WFC.N: Quote, Profile, Research) , Bank of America Corp. (BAC.N: Quote, Profile, Research) and JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research) . In subprime lending, competition from Ameriquest Mortgage Co. and New Century Financial Corp. (NEW.N: Quote, Profile, Research) crimped margins. "
(*) Provision for loan loss reverse LOWERED and on a larger, riper portfolio, nice way to manage earnings:
Provision for loan losses
2q, 05 (17,101)
2q, 2004 (19,747)
(-13%) |
