My Way Lending

Lehman Brothers, the ailing Wall Street I-bank, is cutting up to 1,500 jobs in the face of the ongoing credit crisis. Not surprising as Lehman made the biggest bets in subprime during the boom and has massive exposure to further losses on its loan portfolio.

From the Wall Street Journal (subscription req’d):

An investment bank announcing layoffs in the current capital-market slump may not raise a lot of eyebrows.

But in the case of Lehman Brothers Holdings Inc. such news might carry a bit more weight. The company has been struggling to keep up with the losses it had to take in marking to market its mortgage assets, and is in talks …

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Buried in the new Housing Bill (The Housing and Economic Recovery Act) is some very good news for seniors whose main asset is the family home. The new law makes it easier and less expensive for seniors to access the cash value of their homes on a tax-free basis through a Reverse Mortgage. And it expands the amount that can be borrowed.

Let me make it clear that ReverseMortgages had nothing to do with the mortgage mess! They are a safe and easy way for homeowners age 62 and older to maintain control and ownership, while tapping their home equity for taxfree cash.

Now there will be a higher borrowing level on FHA reverse mortgages - with $625,000 of home value as a cap and a $417,000 borrowing limit. And fees will be capped at 2 percent of the first $200,000 borrowed, and 1 percent on the balance - with an absolute maximum of $6,000 in fees.

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Post from: Reverse Mortgage Loan Blog

Good News for Reverse Mortgages

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Thornburg Mortgage, the company famous for buying prime (then) jumbo mortgages (above $417,000) is struggling to survive. The company’s CEO calls the situation “precarious” and they continue to try to fight off the effects of a $3.3 billion first quarter loss and a secondary market that’s all but vanished.

Thornburg is classic proof that Bernanke’s containment theory was flawed at best and fraudulent at worst. Thornburg bought high-credit quality mortgages and got hammered by the credit crunch. Poor loan performance (many jumbo mortgages were mid-length adjustable rate mortgages between 5-10 years) coupled with investors heading for the aisles left the company awash in losses.

From Forbes.com:

“Our circumstances are somewhat precarious, to put it mildly,” Thornburg Chief Executive Larry Goldstone said on a conference call.

Sante Fe-based Thornburg Mortgage reported earnings of $412.3 million, or 84 cents per share, vs. $78.1 million, or 66 cents per share, in the year-ago period. This is respectable considering the firm’s aggressive fund-raising tactics, which increased the number of outstanding shares to 484.6 million common shares in the 2008 quarter from 119.3 million in the 2007 quarter.

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Thornburg, which specializes in originating and investing in jumbo mortgages that are worth more than $417,000, has been hurting since the middle of 2007 when the U.S. housing market began to sour. In June, the firm admitted that regulators are investigating whether the firm can continue (see “SEC Probes Sickly Thornburg”) after it posted a $3.3 billion first-quarter loss.

Goldstone added that the mortgage securities market is not getting better, despite some speculation to the contrary.

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