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Update: It’s verified. I’ve received a deluge of emails from numerous sources since posting this. Thanks everyone.
Here’s just one email I received:
Auroraclosed the Wholesale and Correspondent divisions today. I am telling you this because it has been a pleasure working with you. A few items to note (as far as I understand them):
- Loans need to registered and locked today and will have a 30 day close period (no extensions). If you have them, register them.
- Please call your team as usual for loan updates and hopefully they can help you complete the loans in the 30 day period.
- Enjoy life and try to get through this period in the business. If no, find more enjoyable work.
Here’s another:
I am writing today to inform you of Aurora’s decision to shut down its
Wholesale and Correspondent Lending divisions. Aurora will honor the
current pipeline as well as allow for any new submissions through end of
business tomorrow. Locks will be honored for the next 30 days.It has been a great pleasure to work with you. After 5pm today I will
no longer have access to this email account. If you have any questions
please be sure to contact me today.
Here’s a copy of the press release issued by Lehman:
Lehman Brothers Suspends Wholesale and Correspondent U.S. Residential Mortgage Origination Activities
NEW YORK, January 17, 2008 ? Lehman Brothers announced today that it will substantially reduce its resources and capacity in the U.S. residential mortgage origination space in light of the dislocation in the mortgage markets. As a result, the Firm is suspending its Wholesale and Correspondent lending activities at its Aurora Loan Services subsidiary. Aurora will continue to originate loans through its direct lending channel, and will maintain its servicing business.
This action affects approximately 1,300 employees and will result in the closure of Aurora’s regional operations centers in Lake Forest, CA, Sunrise, FL, and Florham Park, NJ. Aurora’s Colorado operations will be consolidated at its Littleton office. In connection with the suspension of its Wholesale and Correspondent U.S. residential mortgage activities, the Firm will record a one-time, after-tax charge of approximately $40 million for severance, technology and facilities exit costs.
Today’s traffic to our blog has been driven primarily by the search phrases “aurora loan services closing” and “aurora loan services layoffs.”
We’ve heard lots of unsubstantiated rumors that Aurora is indeed closing as of today; but we have not had anything substantiated from a verifiable source. If you have any information on the situation at Aurora please email me directly.
An email submitted to the Implode-O-Meter read as follows:
Dear brokers and loan officers,
It is with great regret to announce that Aurora Loan Services decided to close its doors effective immediately. The reasons behind this decision is more than evident considering the market situation.
Any files that have been submitted and locked with Aurora will be finalized. For those who want to submit a file, you will have until end of business day tomorrow to submit and lock the file for no more than 30 days.
Again, this is unverified; but there is a lot of activity around the company today out there on the web.
– Morgan
Its now on their web site:
https://www.alservices.com/
6-7 years ago they were fantastic on the correspondent side. Best jumbo fixed in the world. Alt A that made sense: No idiotic loans, and danged good pricing even for NINA’s if the LTV were low enough to eliminate all risk. All of the other Wall Street conduits started copying & then they all got stupider in an attempt to wrest business from each other. As soon as 100CLTV reduced doc loans came into existence, the fraudsters climbed out of the sewer & started finding straw buyers at the local bar. Three weeks later you’ve got one borrower buying 8 different “owner-occupied” properties all on the same day using different lenders who were all intending to sell to ALS. ALS would buy one or two of the eight and then figure it out, whereupon they refused to buy the other 6-7. That’s when the middle-men investors collapsed this spring & summer. Now ol’ ALS themselves is shuttered. What they were doing in 2002 was perfect, but they were part of the evolution of Alt A into something unsustainable, and for that they deserve to fail. Too bad, but no surprise.
Gee..moving to retail only..no wholesale or correspondent..wow how original!
Wait for the trickle down effect of this one within the week….
ALS has gotten a bad rep in the last year from their constantly morphing programs and underwriting. At one time they did indeed have good, responsible Alt-A and jumbo loan products. Moving to conforming to keep their head above water was the last straw. Its like asking a carpenter to build a concrete wall.
Tip: Expect a new company, Lehman Capital Mortgage, to rise from the ashes in four to six months with only the very talented being carried over from ALS.
They were a Alt A/Jumbo lender and these markets just doesn’t exist at the moment. This closure should not be a surprise to anyone. I give them credit for making it this long.
We were set up with them but never used them.
Its a conventional market. Fortuanately I still have 20 conventional lenders to compete with. Most of them have Alt A and jumbo paper thats better priced than Aurora could ever offer.
Regarding your tip Toby, I have also heard many executives from fallen lenders are working on setting up new shops.
Let me ask…is it just me or is business starting to pick up everywhere? I think the fed easing is finally starting to work. My companies pipeline tripled in a week. Business also picked up a week or two earlier in January than it normally does.
I think with the agressive rate cutting that will soon come our business will pick up more than some people suspect. I think things are actually getting better now which would mean that we have seen the bottom of this madness.
It would be nice because my shop has never been better organized, staffed with as such quality people and been more cost efficient.
According to a memo sent out to Flagstar Bank wholesale lending customers, effective tomorrow, the mortgage lender will be temporarily suspending its “Jumbo Fixed and ARM Program”.
Another one….
Mikew, Morgan, et al, regarding business picking up, this is what I heard, one lender I worked for funded $75 million in December, one that I just was laid off from in June locked $90 million in December. Not bad. Also, my last lender just brought back two people they laid off last summer.
Also, I have a neighbor down the street, and she has her license with a good broker in La Jolla. Her processor said to get ready, rates are good and refis are picking up.
Take that for what it’s worth. Also, I talked to one La Jolla RE agent that works the coast and he said he had a busy December working with prospects (buyers) who are getting ready to jump back in. I registered with as an agent at the sales office of a new condo complex in downtown San Diego yesterday, and the sales gal said the same thing, they’ve been busy with prospects and she said buyers are also getting ready to come back as properties become more affordable.
I’m not saying the dark days are completely over, but we may see a bit of sunshine coming through.
Anyone else heard anything???
Ok, this kind of back up about business picking up:
http://www.msnbc.msn.com/id/7148582/
I have to say that I’m having a great month, but it’s predominantly two things:
Streamline refis with no appraisal needed
Very high end custom construction jobs (very high end around here would be defined as 7 figures to the left of the decimal point).
Though I am sitting here working yet with 4 preapprovals sitting on my desk.
Do I think we’ve seen the bottom yet, based on all of the bad news that’s been reported, no I don’t. But for well positioned, well connected professionals with their customers best interest in mind, it’s going to be a good year.
Tom, I’m prospecting a construction loan for a small apt. building. I was trying to work a VA loan that would have been easy to do, but the borrower put it on hold because of family drama.
Regarding a bottom, it was reported on CNBC today that Merrill had the biggest loss in it’s history last quarter, but it wanted to get all the information out in the open so the market knows exactly what’s going on. Apparently, more brokerage houses are going to do the same. This should begin to calm things down if they really do it. We maybe seeing the very beginning of the end of the dark days, but I want to get past the summer when most of the resets happen before I start taking the Deep Sigh of Relief.
The mortgage business is picking up a little, due to refi’s, but buyers of properties in CA who think they’re at the bottom may get a rude awakening in another year or two. There are still a ton of SISA Option ARM borrowers who are upside down, for whom even add’l massive Fed rates cuts can’t make their re-cast fully-amortized payments manageable. They have not even started to go into foreclosure yet.
Then there are the newbie “investors” who want to buy foreclosed single family homes, give them a “shave and a haircut” and re-sell for a profit. They vastly underestimate the holding time to renovate, their carrying costs during that time, the costs of renovation and the selling costs. And they are overestimating the likely eventual sale price. Most of these guys are not buying at deep enough discounts to even break even. A year from now, I expect it to be the new “common knowledge” that buying foreclosed homes is a great way to lose money. That “common knowledge” will serve to dissuade other would-be speculators for another year or three.
I’m telling you, this is a “Fool’s Rally” in real estate prices. Speculating by buying at a 15% discount from the peak is for suckers. If you want to buy real estate to make money, wait until prices are low enough where it would cash flow well if rented out. In most areas, that means significant additional price declines. I’m guessing my 14 year old kid will still be able to get some good deals on fourplexes when he’s out of college.