'The Downward Side' Of Mortgage Lending

A trio of reports provide an update on the home loan business. "ABN Amro Holding NV, the largest Dutch bank, may say fourth-quarter profit dropped as earnings from the U.S. declined and provisions for risky loans increased. 'The U.S. business is a risk,' said Patrick Leclerc. 'ABN Amro, like other commercial and retail banks in the U.S., is suffering from a flattening yield curve.'" "Paul Muolo writes at the NMN. "Here's how the big layoff went down at Aurora Loan Services last Wednesday: the 'suits' at Lehman Brothers arrived from New York that morning and the top brass at ALS were all dressed in suits and ties. (Normally it's a casual atmosphere at the Denver company.) A source familiar with the matter said 200 workers were let go. The alt-A giant also plans to wind down its Irvine, Calif., office over the next 90 days, resulting in another 100 or so job losses. Lehman would not comment for the record but a source familiar with the matter confirmed there were layoffs, blaming the cuts on reduced production volumes in the industry and the 'downward side of the mortgage cycle.'" "The MBA gave its members some really bad news last week. The trade group predicted that the yield curve, the difference between short and long-term rates, will be relatively flat the next two years. The forecast comes amid poor earnings reports (because of tight margins) and signs that a handful of midsized firms are heading for the exits. In the year ahead consolidation could eliminate scores of firms. In case you missed it: American Mortgage Network the San Diego-based wholesaler better known as AmNet, has officially exited the subprime business." And the Seattle Times reports on the reaction to the Ameriquest settlement in Washington. "State leaders say a settlement with Ameriquest Mortgage is an efficient solution that guarantees thousands of Washington homeowners will get some restitution money. But several local attorneys and a former senior assistant attorney general say the terms of the settlement in the predatory-lending case mean consumers may get much less than they deserve." "The states' investigation found that Ameriquest overvalued homes in appraisals and made up employment and income information to allow more people to qualify for loans. That's what Kelly Post of Auburn said happened to her. In May 2003, when she went to refinance, her husband was dying of Lou Gehrig's disease. Post said the Ameriquest lender pressured her to lie about her income and say she made $3,500 a month as a home caregiver. She agreed, even though the family made only about $1,100 a month from welfare and federal disability." "Post used some of the cash in the $139,000 refinancing loan to take her husband and two children on a final family vacation. They returned home to payments that were higher than promised, she said, and quickly fell behind. 'The guy seemed so nice and stuff when we did the refinance, and then it seemed like he didn't want to work with me at all afterwards,' she said." "Seattle attorney Melissa Huelsman has several clients who are suing Ameriquest. She won't recommend that they take the state's settlement. 'There's very serious problems with the AGs giving away essentially the whole farm in return for what we all agree is a very small sum of money,' Huelsman said. The settlement does nothing to get borrowers out of the loan terms they agreed to. It does, however, allow Ameriquest customers to use evidence of predatory lending to try to stop a foreclosure."