Does this mean they are selling MBS junk to mom and pa?
I have to admit ignorance here but that is what it sounds like. http://biz.yahoo.com/prnews/070724/latu044.html?.v=101
"Subprime gain on sale margin improved substantially from the first quarter and year over year as a result of improved secondary market execution during the quarter and reduced price competition, especially in the wholesale channel. In addition, the Company experienced a channel mix shift toward the retail channel, which has traditionally carried greater margins. "
Delinquencies (1) Quarter Ended
Jun. 30, 2007 Mar. 31, 2007 Jun. 30, 2006
Total 90+ day Total 90+ day Total 90+ day
Conventional 1st liens 3.35% 1.02% 2.85% 0.82% 2.05% 0.49%
Government 1st liens 12.39% 4.39% 11.32% 4.41% 12.69% 4.59%
Prime home equity loans
(includes FRS) 4.56% 2.15% 3.77% 1.75% 1.77% 0.75%
Subprime loans 23.71% 9.45% 19.62% 7.82% 15.33% 5.35%
portfolio 5.73% 2.02% 4.90% 1.70% 3.85% 1.18%
(1) Delinquencies are based on outstanding loan balances and include
loans in foreclosure and are calculated using the MBA method. Using
the OTS method, total delinquency ratios would have been 3.12% at
June 30, 2007; 2.59% at March 31, 2007; and 1.88% at June 30, 2006.
In the OTS method, a loan increases its delinquency status if a
monthly payment is not received by the loan's due date in the
following month. In the MBA method, a loan increases its delinquency
status if a monthly payment is not received by the end of the day
immediately preceding the loan's next due date.
"Management anticipates that the second half of 2007 will be increasingly challenging for the industry and Countrywide. Absent a reduction in mortgage interest rates, production volumes are expected to fall and competitive pricing pressures are expected to increase. In addition, volatility in the secondary markets has increased significantly early in the third quarter and liquidity for mortgage securities has been reduced as a result. These conditions are expected to adversely impact secondary market execution and further pressure gain on sale margins. Furthermore, additional deterioration in the housing market may further impact credit costs.