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Our company, as a correspondent lender, had 1 closed loan scheduled to be purchased by New Century when they announced the cessation of fundings due to their internal meltdown. We now have to find a home for that loan and with all of the underwriting changes we’ve struck out so far.
We’re now in the process of finding a scratch and dent home for this loan and will take a substantial loss on the file.
Take the above scenario and multiply it by hundreds of loans at hundreds of different correspondent lenders. I talked to one company who has close to $10 million in unsellable loans and their company is smaller than ours.
This will close many of the smaller broker/lenders as these loans come back to the place they were originated.
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