Subprime mortgage lender Accredited Home Lenders, bowing to the pressure of margin calls, has reached a deal to sell $2.7 billion of loans to an unidentified buyer at a sizeable discount. The sale, which should be completed over the next two days, is expected to result in a pre-tax charge of about $150 million. The loans to be sold are funded out of the company's warehouse and repurchase credit facilities, asset-backed commercial paper facility, and equity. Accredited will hold onto about $120 million of loans, most of which were originated on or after March 7, 2007. The company's shares have more than doubled over the past two trading sessions on rumor that Accredited was about to get either a capital injection or a takeover offer. The sale of the loans will give the company enough liquidity to continue pursuing such strategic options. Mortgage company shares gained yesterday after Bear Stearns -- the largest underwriter of mortgage-backed bonds -- said it is in the market for bad debt, including delinquent subprime home loans; and the Blackstone Group agreed to buy PHH Corp.'s home-loan business.
Sources: Reuters, Bloomberg, Digital50.com
Commentary: Subprime Lending Bust: Worst Crisis Since Enron? • Stifel: Subprime Mortgage Sector in 'Downward Spiral' • New Century Leads Subprime Lender Selloff as its Shares Plummet 70%
Stocks/ETFs to watch: Accredited Home Lenders Holding Co. (LEND), New Century Financial (OTCPK:NEWC), Countrywide Financial Corp. (CFC), Novastar Financial Inc. (NFI), Fremont General Corp. (FMT). ETFs: iShares Cohen & Steers Realty Maj. (NYSEARCA:ICF), iShares Dow Jones US Real Estate (NYSEARCA:IYR), Vanguard REIT ETF (NYSEARCA:VNQ)
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