NEW YORK -- U.S. mortgage roadkill is fresh and ripe for the picking.
Countrywide Financial Corp demonstrated that on Tuesday when it announced plans to buy five retail mortgage branches from HomeBanc Corp, which is exiting the business after its stock was delisted last week for trading around 30 cents a share.
Countrywide, the largest U.S. mortgage lender, said it was not paying a cash premium for the HomeBanc assets. Meanwhile, HomeBanc of Atlanta said it was no longer funding loans or taking mortgage applications.
Fresh casualties in the mortgage industry continue to pile up amid a rising wave of late payments and foreclosures. Banks around the world are feeling the reverberations as they scramble to reduce exposure to U.S. residential borrowers and tighten lending standards.
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UBS is only buying mortgages whose borrowers have documented their income and other important information, according to a memo obtained by Reuters.
But it is not just borrowers with the weakest credit who are missing payments.
Impac Mortgage Holdings Inc, whose executives have complained about their company being lumped with struggling subprime lenders, said it has suspended funding Alt-A mortgages. Those loans, which are not as risky as subprime, but not worthy of prime status, have been Impac's chief product.
The company will only fund loans that are eligible for sale to government-sponsored entities such as Fannie Mae and Freddie Mac. The Irvine, California-based company has cut expenses and workers nationwide.
"While this is a difficult and painful decision, we believe that it's a prudent strategy in light of the current business environment," Impac Chairman Joseph Tomkinson said in a statement.
Typical Impac borrowers include self-employed workers who have decent credit, but do not qualify for prime lending rates because their income may be seasonal or uneven. In a March filing, the company said 91 percent of the loans it transferred to its portfolio last year were Alt-A mortgages.
American Home Mortgage Investment Corp, which also made Alt-A loans, filed for bankruptcy protection on Monday after Wall Street lenders cut off funding.
Impac said it is meeting margin calls, but its stock fell 36 percent to $1.09 before trading halted Tuesday morning.
Standard & Poor's Ratings Services said Tuesday it might downgrade about $914 million worth of securities backed by Alt-A mortgages. The rating agency cited rising delinquency rates among the loans.
Last week, American Mortgage Acceptance Co had to issue a press release after its stock symbol was confused with that of American Home Mortgage.
Anworth Mortgage Asset Corp shares fell 17.5 percent to $4.94 in late afternoon trade as investors widely punished mortgage-related stocks.
Shares of RAIT Financial Trust, whose investment portfolio includes $4.3 billion in mortgage loans, fell 26 percent on concerns over its exposure to bankrupt American Home Mortgage. On July 31. RAIT reported net equity exposure of about $95 million to American Home.
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