Investor wariness about earnings in the subprime mortgage sector put a damper on Headlands Mortgage's initial public offering.

Headlands' shares opened Thursday at $12 and closed unchanged. The lender sold eight million shares, a 43% stake, and raised $96 million. The company's market value is about $220 million.

The company, which disclosed in October that it would go public, had expected to raise $14 to $16 per share. But since then, several subprime mortgage lenders have taken charges related to aggressive accounting assumptions, depressing stocks throughout the sector.

Observers said Headlands suffered from the misperception that it is a subprime lender because it originates and securitizes "alternative A" loans. Such loans do not meet Fannie Mae or Freddie Mac guidelines for purchase, but are generally made to creditworthy borrowers.

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