Centex Unit, Citing Rates, Drops Gain-on-Sale for Subprime Loans
DALLAS - The homebuilder Centex Corp. said its home equity unit is abandoning the gain-on-sale accounting method for its subprime loan securitizations.From now on, Centex Home Equity Corp. will use the portfolio method, in which income from a loan is booked as it is collected. Under the gain-on-sale method, the company would estimate and book the profit from a loan when it was securitized.
Centex said the unit's subprime loans have been performing as well as expected, or better. But higher interest rates and the expectation that they will continue rising forced it to increase the discount rate used to value future cash flows from its securitizations. That resulted in a $16 million hit to Centex Home Equity's earnings in the fiscal fourth quarter, which ended March 31.
Centex Corp. earned $70 million in the quarter, up 3%.
B of A, Wells, SouthTrust, Amsouth Start Alliance to Work with Freddie
JACKSONVILLE, Fla. - Bank of America, Wells Fargo Mortgage, SouthTrust Corp., SunTrust Banks Inc., and Amsouth Bank agreed to make $250 million of low-down-payment mortgage loans in a community lending effort here.The lenders, working with Freddie Mac, the City of Jacksonville, and community groups have formed the Jacksonville Homeownership Alliance, which promises down payments as low as $500. The program is intended to raise homeownership, promote economic growth, stimulate housing construction, and encourage historic preservation.
Freddie Mac, which would buy the loans, estimated that the campaign will help 2,500 families buy homes.
Ameri-Cap Agrees to Buy Anchor, Specialist in Home-Rehab Loans
PLANTATION, Fla. - Finantra Capital Inc. said its Ameri-Cap Mortgage Group Inc. unit has agreed to buy Anchor Mortgage Corp.Anchor specializes in loans to rehabilitate homes under the Department of Housing and Urban Development's 203(k) program. The Chicago company has 100 employees in nine offices and originated $200 million in its last fiscal year.
Finantra, which did not disclose the price, said it would pay for the acquisition with cash and stock.