|
Mortgages News Tuesday 21st August 2007
Capital One set to close Mortgage armCapital One announced this past Monday (20th) the decision to close its mortgage lending subsidiary GreenPoint Mortgage, based in McLean, VA. This move comes as a result of the continuing problems experienced by lenders in the housing and secondary mortgage markets and was made at the close of the markets on Monday during which its shares fell $2.03 to close at $66.72. A further fall of 15 cents was recorded in after-hours trading.Approximately 1900 jobs are to be lost as GreenPoint closes 31 locations across 19 states. The company also added it will "cease residential mortgage origination" with immediate effect. Richard D. Fairbank, Chief Executive Officer for Capital One stated, "Over the past few months, we have experienced an unprecedented disruption in the secondary mortgage markets," in an internal memo to employees. He went on to say, "I made the decision to wind down the business with a heavy heart." GreenPoint specialize in Alt-A and no-documentation mortgages that target borrowers with a lightly better credit rating than sub prime borrowers. Gary Perlin, Captial One's Chief Financial Officer stated that, "The reductions in demand and pricing in the secondary mortgage markets make it difficult to operate our wholesale mortgage banking business profitably,". Customers with locked rates that have loans already in the pipeline will have their contractual obligations met, however GreenPoint will cease to make new loan commitments. Capital One's other business lines are said to be solid and the company will continue to market home loans through its bank branches and Capital One Home Loans. The company is set to take a hit of $860 million in charges as a result of the decision, approx $2.15 per share. A previous poll by Thomson Financial of analysts expected earnings of $7.05 a share. Due to the charges the company now expects earnings of $5 per share for the year. Other Mortgages Recent News and Articles |
|