US Mortgage Liquidity Crisis Spreading to Private Equity

If you are trying to track your own lenders’ involvement (or the lender to your lender) in the subprime market, here are some helpful stats from Marketwatch (via Calculated Risk):

Top U.S. Subprime Mortgage Lenders

Rank/Lender/Location/Q4 2006 originations, in U.S. billions

1 HSBC Finance (HSBC) Prospect Heights, IL $12.3
2 New Century Financial (NEWC.PK) Irvine, CA $12.2
3 Countrywide Financial Calabasas, CA $10.1
4 WMC Mortgage (GE) Burbank, CA $9.0
5 First Franklin (Merrill Lynch) (ML) San Jose, CA $7.8
6 Wells Fargo (WFC) Home Mortgage San Francisco, CA $7.4
7 Option One (H&R Block) (HRB) Irvine, CA $6.1
8 Fremont Investment & Loan* Santa Monica, CA (FMT) $6.0
9 Washington Mutual* ((WM) Seattle, WA $5.7
10 CitiFinancial (Citigroup) (C)* Baltimore, MD $5.0

It isn’t a certainty, but what are the chances that corporate credit (or the credit offered to BDCs and specialty finance companies that borrow heavily and then relend to corporates themselves) is going to become more accessible over the coming months at the firms above?

Just yesterday, in fact, a private equity shop principal mentioned that the credit market was already causing them some concerns as they look for financing on a current large U.S.-based deal that they’ve got under a LOI.

Has the tightening already begun? Time will tell.

Comments

[Tom B:]

I have a fully-conforming ARM with HSBC-- I assume there is no reason for me to be concerned as a customer? Maybe they end up selling my loan to another lender, if they need liquidity?

2007 Mar 16 12:35 PM

[Fred W:]

The fun has only just begun.
When the first national tract builder files for BK, the new class of real estate investors, that has been created over the past decade, will all run for the door. Prices will be crushed.
"free" money is never really free.

2007 Mar 17 11:58 AM