Mortgage slump in the USA

15th Jan 08

Is the mortgage slump in the US here to stay for long, or is it just the beginning of a long economic recession? Large banks, who reported profit in billions in 06-07, have reported much bigger losses and write-offs this year. Citibank reported a $10 billion quarterly loss and a write-off of 18.1 billion to sourced mortgage investments and major cost-cutting initiatives.

Merrill may write down $15 billion and the Countrywide story has not been good for a while now. Countrywide USA‘s largest mortgage lender has been struggling since last year due to rising mortgage defaults, particularly subprime loans to borrowers with questionable credit histories. In fact, Countrywide Financial Corp. has even worked up the annual bonus awards for a handful of its top executives in an effort to retain them with the mortgage lender as it goes through the process of being acquired by Bank of America Corp.

But the Mortgage application volume saw a staggering increase for the second consecutive week in January 08, rising 28.4 percent during the week ending Jan. 11, according to the Mortgage Bankers Association's weekly application survey. This is not only due to the decreasing mortgage rates, but also increase in the number of foreclosures. Foreclosures have made house rates cheaper and hence more attractive.

The Mortgage processing and loan processing bpo‘s must be brimming with orders this time around. It‘s a good time for mortgage companies to look out of their own boundaries and outsource.