Chilling originations reports and the death of one nascent takeover combined to give mortgage banking stocks a depressed week.
Most dramatic was Express America's announcement Wednesday that it would no longer pursue a sale of the company. The news sent the Arizona-based mortgage bank's stock hurtling downward by $3.50, to $6.75, a loss of 34%.
The situation of Express America may not be unique, observers say. Despite poor industry fundamentals, mortgage banking stocks have been in some measure supported in recent months by takeover speculation. If the outlook for bank takeovers darkens, prices of mortgage banking stocks as a whole may deflate.
Certainly the numbers are not encouraging. Last week saw a spate of mortgage originations reports, each one seemingly worse than the last.
Last Monday, American Residential Mortgage reported home loan originations for June that were 40% below those of June 1993. Its shares proved immune to the news, however, ending the week up $1.125 at $23 a share. The company is marketing itself and has said that it is reviewing preliminary bids.
Plaza Home Mortgage reported on Tuesday that its June originations were down 56%. Subsequently, Plaza established a new 52-week low of $5.50 a share before ending the week at $5.875, down 50 cents.
The same day, Hamilton Financial Services Corp., which does not report monthly originations figures, announced that its loan production was off 67% in the second quarter. It too scudded along just above 52-week lows, losing 25 cents a share to end the week at $4.50.
In contrast to mortgage banking stocks, shares of mortgage insurers enjoyed a good week. CMAC Investment Corp., the parent of Commonwealth Mortgage Assurance Corp., advanced by $1, to $26.25.
MGIC Investment Corp. also advanced, gaining 75 cents to close at $27.75. The company announced on Friday that profits had jumped 20% in the second quarter.
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