Jan

2

National City Closes Residential Wholesale Lending

Filed Under Credit Crunch, Depreciation, Home Equity Line of Credit, Lenders With Problems 2007, Mortgage Layoffs, Mortgage News 
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National City Closes Residential Wholesale Lending

National City will reduce its quarterly dividend by 49 percent and cut 900 more jobs as it stops making home loans through their wholesale division.

The lender has cut its staffing by 3,400 positions in the past year, including the reductions announced today, as the credit crunch worsens.

National City will continue making home loans through its own staff, the bank said. The housing market “requires aggressive steps to overcome the near-term challenges”, Chief Executive Peter Raskind said in a statement today.

“It is clear that origination volumes will be lower going forward”, it appears that the type of mortgages offered by National City are no longer desired on the secondary market.

Mortgage companies who offer Home Equity Lines of Credit or ’second mortgages’ find themselves in a particularly awkward position in todays market. Millions of homeowners that have a Home Equity Line of Credit have little or no equity left on their home, many are in depreciating markets and even more have taken out the stated income or as they are also known as, ‘liar loans’. What makes this awkward for lenders is the fact that in the event of a foreclosure, which could be in the range of 2 million in 2008, the primary mortgage holder is financially compensated first and “IF” there is any remaining money available it goes to the second mortgage holder. Often times the second mortgage holder receives little or no compensation.

National City will pay 21 cents a share on Feb. 1 to shareholders of record on Jan. 14, the Cleveland based bank said. The dividend was previously 41 cents a share.

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