Admin

Breaking News: Lehman Brothers Closes BNC Mortgage

By
Mortgage and Lending with Benchmark Mortgage of Louisiana

Lehman Brothers has just announced that they are closing their subprime mortgage unit, BNC Mortgage.  The move will mean the loss of approximately 1200 jobs in 23 locations.  They stated that current market conditions have forced them to reduce its resources and capacity in the subprime market.

The complete article is here.

Lehman Brothers also owns Aurora, a large Alt-A lender.  Could they be next?

 

Comments(8)

Show All Comments Sort:
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I think the trickle down effect of job loss may turn out to be another story.  I read Capital One closed its subprime mortgage company as well. 

Aug 22, 2007 07:33 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!

lehman brothers closed that entity because the product is no longer viable. it was a business decision done by choice.

that is no reflection on aurora who's products are marketable. 

Aug 22, 2007 12:12 PM
Gareth Bourriague
Benchmark Mortgage of Louisiana - Baton Rouge, LA
Benchmark Mortgage

Thanks for all the comments.

Jay - Aurora's products are quickly becoming non-marketable.  I priced this scenario today through Aurora:

48% loan to value; stated income/stated asset (self-employed 13 years); 662 middle score; owner-occupied single family residence.  The rate for a 30 year fixed, COSTING .50%, was 13% with a 3 year hard pre-payment penalty.  That's not a marketable product.  Aurora's bread and butter has been reduced documentation/stated income loans, and now they're pricing them so that no one will take them.  What does that say to you?

Aug 22, 2007 12:47 PM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!

Gareth,

stated income/stated assets in general no one in the market likes that loan.

throw in a 662 score and they like it even less.

it's not just aurora that doesn't like that loan.

whose option #2? and at what price?

jay 

Aug 22, 2007 01:01 PM
Gareth Bourriague
Benchmark Mortgage of Louisiana - Baton Rouge, LA
Benchmark Mortgage

I can do the loan in-house for 9.875% on a 30 year fixed; I also received a quote from Encore that was 9.35 on a 30 year fixed.

When a lender prices themselves out of the market like Aurora has done on these types of loans, it raises questions.  My local AE has been pricing first mortgages upwards of 13% and seconds upwards of 20%.  He is telling me that he's hearing the internal rumours that they may not stay in business, which brings me back to my original question - Is Aurora next?  He thinks they could be.

Aug 23, 2007 01:49 AM
Jim McGrath
Roseland, NJ
Their creditors dictated this one...The turned off most of their products over a month ago and have just been closing up their pipeline since then...Now they are saying 40,000 mortgage professionals have lost their jobs this year...
Aug 23, 2007 04:46 AM
David Avery
First Rate Mortgage - New Albany, IN
The market may be crazy, but I still love it.
Aug 23, 2007 04:48 AM
Gareth Bourriague
Benchmark Mortgage of Louisiana - Baton Rouge, LA
Benchmark Mortgage

Jim - that number will increase, I'm sure.

David - I'm in more of a love/hate relationship that is turning into like/hate.  =)

Shannon - you could be right about absorbing the costs of the BNC shutdown.  I just don't see them doing much business that way.  Who are you using for Alt-A?

Aug 23, 2007 06:22 AM