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To: ~digs who wrote (2900)	4/3/2007 1:09:46 AM
From: ~digs	Respond to of 7944

Mortgage Woes Spread Up Credit Ladder biz.yahoo.com Monday April 2, 4:40 pm ET ; By Dan Seymour, AP Business Writer NEW YORK (AP) -- The deterioration of the market for mortgage debt at the bottom of the credit ladder may be climbing up to the next rung. M&T Bank Corp., a Buffalo, N.Y.-based regional bank, said in a Friday regulatory filing that it is having trouble selling some of its loans. It's not unusual to hear a subprime mortgage lender -- or a mortgage bank that caters to borrowers with bad credit -- complain that investors don't want to buy its loans. What's unusual is that M&T Bank is not a subprime mortgage lender. Shares of M&T fell 8.5 percent Monday, the first day of trading since its filing. Shares of its competitors fell sharply as well. M&T Bank said prices dropped more than anticipated in its recent auction of some of its Alt-A loans, which carry better credit than subprime loans but don't require borrowers to provide as much documentation as prime loans. That puts the credit quality of Alt-A loans somewhere above subprime and shy of prime. The results of the auction don't bode well for investors who believed the credit problems plaguing subprime mortgages would stay contained in subprime mortgages. The bank cited fewer investors than expected in the bidding, and said the subprime mortgage market, which this year has been wracked by a spike in payment defaults and falling home prices, appears to be hurting the rest of the mortgage market, the bank said. A credit crunch forced leading subprime lender New Century Corp. to file for Chapter 11 bankruptcy on Monday, becoming one of a dozen such lenders to seek court protection recently. "There just is not much liquidity for selling loans right now as investors are currently not willing to pay much for loans until there is some comfort that Alt-A will not significantly deteriorate," Goldman Sachs analyst Lori B. Appelbaum wrote in a research report. M&T Bank also said the investors who buy the bank's mortgage debt are taking advantage of contractual clauses to force M&T to buy loans back, sometimes because of payment defaults. The bank set aside $6 million anticipating that more investors will force M&T to repurchase Alt-A loans at a loss. "Buyers are getting very edgy right now," said Morgan Keegan analyst Robert S. Patten. "Anything that shows any hair on it is going to get put back to the lenders." Loan repurchases and devalued loan portfolios have become a familiar story for subprime lenders in the past six weeks. Sandler O'Neill & Partners analyst Joseph Fenech wrote in a client note M&T Bank is one of the first lenders to report the subprime issues spreading upward to higher-quality borrowers. Appelbaum said banks like Wells Fargo & Co., Washington Mutual Inc., Capital One Financial Corp., SunTrust Banks Inc., National City Corp., and First Horizon National Corp. could face softer demand for their Alt-A mortgage debt for the next three to six months. M&T's disclosure dragged most lenders' shares down sharply Monday, with the Philadelphia KBW Banking Index falling about 1.5 percent. IndyMac shares fell 4.4 percent to $30.65 in Monday trading on the NYSE, Countrywide shares fell 2.7 percent to $32.73. IndyMac Bancorp Inc., based in Pasadena, Calif., was the biggest issuer of Alt-A mortgage loans in 2006, and Calabasas, Calif.-based Countrywide Financial Corp. was the second-biggest, according to Inside Mortgage Finance. M&T shares sank $9.88 to close at $105.95 on the New York Stock Exchange. The stock fell as low as $104.52, slipping past the previous 52-week low of $112.05.

To: ~digs who wrote (2900)	4/20/2007 8:13:07 PM
From: ~digs	Respond to of 7944

Shares of Capital One Financial [COF] fell sharply in Friday trading on news that the bank missed analyst expectations for the first quarter due to mortgage-related problems. The bank posted a profit of $675.1 million, or $1.62 per share, versus $883.3 million, or $2.86 per share, for a similar period a year ago. Revenue rose to $3.43 billion, up from $3.07 billion last year. The numbers undershot Wall Street expectations. Analysts forecasted earnings of $1.98 per share on revenue of $4.1 billion. Looking ahead, Capital One lowered its full-year profit outlook. Previously, the bank had said it was looking for earnings in a range between $7.40 and $7.80 per share. Now it's giving guidance of earnings in a range between $7 and $7.40 per share. Shares of Capital One were down 5.9%, or $4.53, to $72.81 in Friday trading. Capital One, like M&T Bank, is starting to see its earnings pressured by problems plaguing the Alt-A mortgage business. The bank, which issues credit card, auto, and mortgage loans, told investors that its mortgage banking sub-segment posted a net loss of $12.6 million in the first-quarter. The business originated $6.8 billion in loans during the quarter, down $1 billion from first quarter of 2006 originations and down $2.5 billion in originations in the last quarter of 2006. Friedman, Billings, Ramsey & Co. analyst Scott Valentin told his clients that, while problems in the Alt-A mortgage space negatively impacted earnings, the U.S. card and auto platforms were also troubled. Capital One's U.S. card business reported that net income totaled $495.3 million for the first quarter, versus a record $602.8 million in the first quarter of 2006. Management's normal outlook for a cautious yet optimistic credit card space has now changed, Valentin noted.