Subprime mortgage lender shares fall sharply
February 23 2007: 3:12 PM EST
CNNMoney.com
NEW YORK (Reuters)
-- Subprime mortgage companies' shares plummeted
on Friday, extending more than two weeks of declines
and triggering broader economic concerns.
Friday's freefall was triggered
after a small home lender reported a $64 million
quarterly loss.
Impac Mortgage Holdings Inc. (down $0.20 to
$7.38, Charts), which like other subprime lenders
that make home loans to people with weak credit,
posted the loss amid defaults and writedowns
of mortgage holdings that generally appear to
have accelerated in the fourth quarter.
"There's so much fear and loathing and
panic in the subprime mortgage sector now," said
Howard Shapiro, a portfolio manager at KBW Asset
Management in New York, which has positions in
several mortgage lenders.
Similar weakness in results has hammered shares
of companies like New Century Financial Corp.
(down $0.64 to $15.90, Charts) and NovaStar Financial
Inc. (down $0.70 to $8.64, Charts), both of which
fell again on Friday.
Impac's shares fell as much as 5.3 percent.
NovaStar, which reported earnings on Tuesday,
fell as much as 9 percent on Friday and have
lost more than half their value this week.
Concerns about the mortgage
sector hemorrhaged into Treasuries, where benchmark U.S. 10-year
Treasuries rose as investors sought safer instruments.
Shares of Lehman
Brothers Holdings Inc. (down $2.70 to $79.33, Charts) and Bear Stearns
Cos. Inc. (down $4.91 to $161.17, Charts), investment
banks perceived as having large exposure to the
mortgage market, also fell.
Earlier this week, Federal Reserve Board
Governor Susan Bies said that most of the mortgage market
was doing fine. "It's isolated at this point," she
said.
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