Friday, July 13, 2007

GE bails out of subprime market

GE confirmed today that it is selling WMC Mortgage as the subprime sector is at a near collapse from massive increases in defaults . GE bought WMC just three years ago, and since then has gone from 1,200 to 700 employees.

From Bloomberg: “‘The mortgage industry has greatly changed since the purchase of WMC,’ Laurent Bossard, chief executive officer of the division, said in an e-mail to employees yesterday. ‘The current subprime market environment has made a significant negative impact on the business.’”

“GE's decision to divest WMC comes as more than 60 mortgage companies have halted operations, gone bankrupt or sought buyers since the start of 2006, according to Bloomberg data. The contraction in the subprime industry caused the near- collapse last month of two hedge funds run by Bear Stearns Cos. and the downgrading of almost $12 billion of mortgage securities by ratings companies.”

“‘GE's been in and out of the mortgage business before,’ said Angelo Mozilo, chief executive officer of Countrywide Financial Corp. His Calabasas, California-based company, the country's largest home lender, has said it expects to benefit as weaker rivals or competitors less dedicated to mortgages disappear during a difficult period for the cyclical business.” read more >>

2 comments:

Portland Real Estate said...

Subprime is a mess. I sure hope its going to be over soon.

Wesner Philo. Sci Blogs said...

There should be more opportunities to prevent foreclosures. That would do it. Its as if there are more assistance for Foreclosure Notices than there are before it occurs!

Avoid Foreclosure