One industry expert called the Alt-A market "wambly"*, and rumors are rampant about warehouse lenders
putting restrictions on originators selling loans to companies like American Home and Indy Mac. Last week we
had Wells Fargo shutting its nonprime wholesale lending business, laying off 144 workers and reassigning
another 70, but will continue to originate subprime loans directly to consumers through its retail channel.
Countrywide had their third straight quarterly decline in earnings. HSBC announced that it is bracing itself against
$9 billion in adjustable-rate mortgages that are about to reset and earlier this year upped its loan-loss reserves
by $1.7 billion to cover exposure to the subprime mortgage market. IndyMac, rumored to be the target of
warehouse lender restrictions, said it was "likely there will be some further staffing realignment later this year
and into 2008 (after laying off 400 employees a few weeks ago). GMAC Financial Services said second-quarter
profits fell 63%, and blamed the drop on losses in its Residential Capital LLC home lending unit. The unit lost
$254 million during the second quarter versus a profit of $548 million a year earlier. GMAC's exposure to the
subprime mortgage market caused the company to post a $305 million net loss during this year's first quarter,
including a $910 million loss at the ResCap unit. Don't shoot the messenger...