Credit Crisis Spawns 243 Mortgage-Related Failures
Friday, October 17, 2008
Since the beginning of the credit crisis in 2006, 243 mortgage-related operations have collapsed or closed down, according to data tracked at MortgageGraveyard.com, a journal of failed, ailing, and acquired lenders. So far this year, the number of failed entities is 74, according to the Mortgage Graveyard, which is maintained by MortgageDaily.com.
The biggest casualties are wholesale lending units -- which mortgage brokers depend on to fund their business. The latest wholesale operations to close this year include those of Accredited Home Lenders Inc, Homecomings Financial LLC, and Wachovia Corp. As DSNews.com reported last week, CitiMortgage recently slashed its wholesale operations as well.
Among the largest recent mortgage-related collapses are Fannie Mae, Freddie Mac, IndyMac, and Washington Mutual.
While the number of pure-play mortgage entities to fail this year is on track to drop significantly from last year, the number of bank failures is on the rise, Mortgage Daily said. Through October 10, a total of 15 banks insured by the Federal Deposit Insurance Corporation (FDIC) have failed this year.
Also on the rise are acquisitions. Among the highest profile acquisitions were Bank of America's purchase of Countrywide and MetLife Bank's acquisition of First Horizon National's mortgage operations. In addition, Wells Fargo & Co. recently agreed to acquire Wachovia Corp.
In 2006, only 18 mortgage-related failures were recorded, and 19 companies acquired. By 2007, those numbers jumped to 151 and 43, respectively. As of October 14, 2008, 74 mortgage lenders have failed and 33 have been acquired during the year.
According to Mortgage Daily, several companies are still ailing or near collapse. Among them are Impac Mortgage Holdings, which has suffered through a string of losses and raised doubts in May about its ability to continue in business; GMAC's Residential Capital LLC, which has announced massive layoffs; and Thornburg Mortgage Inc., which continues to warn about its ongoing viability.
The government's Troubled Asset Relief Program (TARP) is expected to arrest the rising number of failed financial firms by removing crippling mortgage assets from lenders' balance sheets. Treasury's most recent actions of recapitalization are likely to help kick-start the secondary mortgage market. And the Housing and Economic Recovery Act, signed into law this summer with several provisions only recently becoming effective, should also help mitigate mortgage-related losses through its foreclosure prevention initiatives.
The biggest casualties are wholesale lending units -- which mortgage brokers depend on to fund their business. The latest wholesale operations to close this year include those of Accredited Home Lenders Inc, Homecomings Financial LLC, and Wachovia Corp. As DSNews.com reported last week, CitiMortgage recently slashed its wholesale operations as well.
Among the largest recent mortgage-related collapses are Fannie Mae, Freddie Mac, IndyMac, and Washington Mutual.
While the number of pure-play mortgage entities to fail this year is on track to drop significantly from last year, the number of bank failures is on the rise, Mortgage Daily said. Through October 10, a total of 15 banks insured by the Federal Deposit Insurance Corporation (FDIC) have failed this year.
Also on the rise are acquisitions. Among the highest profile acquisitions were Bank of America's purchase of Countrywide and MetLife Bank's acquisition of First Horizon National's mortgage operations. In addition, Wells Fargo & Co. recently agreed to acquire Wachovia Corp.
In 2006, only 18 mortgage-related failures were recorded, and 19 companies acquired. By 2007, those numbers jumped to 151 and 43, respectively. As of October 14, 2008, 74 mortgage lenders have failed and 33 have been acquired during the year.
According to Mortgage Daily, several companies are still ailing or near collapse. Among them are Impac Mortgage Holdings, which has suffered through a string of losses and raised doubts in May about its ability to continue in business; GMAC's Residential Capital LLC, which has announced massive layoffs; and Thornburg Mortgage Inc., which continues to warn about its ongoing viability.
The government's Troubled Asset Relief Program (TARP) is expected to arrest the rising number of failed financial firms by removing crippling mortgage assets from lenders' balance sheets. Treasury's most recent actions of recapitalization are likely to help kick-start the secondary mortgage market. And the Housing and Economic Recovery Act, signed into law this summer with several provisions only recently becoming effective, should also help mitigate mortgage-related losses through its foreclosure prevention initiatives.
