SAN FRANCISCO (MarketWatch) -- Lehman Brothers said Wednesday that it's shutting its subprime-mortgage unit BNC Mortgage LLC, becoming the latest company to stop offering home loans to less-creditworthy borrowers. BNC was a top-20 subprime mortgage lender in 2006, originating more than $14 billion worth of home loans, according to industry publication Inside B&C Lending. Lehman said it will keep offering mortgages through Aurora Loan Services LLC, another unit that focuses on so-called Alt-A home loans. Alt-A mortgages are offered to more-creditworthy borrowers, but they often require less documentation. The closure of BNC will affect roughly 1,200 employees in 23 locations in the U.S., Lehman said. The move will cost the bank more than $50 million, it said. Charges, including severance, real estate and technology costs, will total roughly $25 million after taxes, Lehman said. Another $27 million in costs would stem from the after-tax write-off of goodwill, the company added. "Market conditions have necessitated a substantial reduction in ... resources and capacity in the subprime space," Lehman said in a statement. Lehman shares rose $1.03 to $58.57 during afternoon trading Wednesday. The stock is down roughly 24% so far this year. After mortgage lenders originate loans, they often package them up as mortgage-backed securities and sell them to institutional investors such as hedge funds, insurers, banks and pension funds. During the recent housing boom, the securitization of subprime mortgages and other home loans was a lucrative business for investments banks. It became so attractive that some firms acquired subprime mortgage lenders so they could originate loans in-house to package up and sell. http://www.marketwatch.com/news/sto...x?guid={1BEE3E7E-AEF2-43E4-AB33-CC572CEE41EB}
No comments on this one ?...Something like : "Ooopsss...we will see some accelerating layoffs in the housing / mortgage / real estate sector..." Or is it too obvious to talk about ?
It's actually bullish. LEH hadn't said a word about its exposure. If this is all there is, well, this thing's heading higher. Significantly higher. As are the rest of the financials. You can take that to the bank.