The number of mortgage lenders willing to touch mortgages that aren't plain vanilla prime mortgages for under $417,000 continues to dwindle.
After the market closed last night, Capital One
In the last two weeks, any mortgage that cannot be sold to Fannie Mae
Capital One decided to cut its losses and move on, and I think it's a move that makes plenty of sense. The company has a very strong credit card business and is still working to get its acquisition of North Fork Bank under control. The company will take a $2.15-per-share charge to exit the business, but expects that it will still earn $5.00 a share in profits this year. That's a decline from last year's $7.62, but a clear indication that the rest of the business is still sound. It isn't worth damaging the franchise for a cyclical, noncore business that is bleeding money.
Capital One focusing on the core of its business makes sense. But it does make me wonder how many will be left standing in the nonconforming mortgage business, and what the rules of the mortgage game will be after the dust settles.
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Nathan Parmelee thinks the general sell-off in financial services is creating some great opportunities and has made a couple of purchases, but he has no ownership stake in any of the companies mentioned here. The Motley Fool has an ironclad disclosure policy.