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Special Reports
Nonprime Lending
Delinquencies, Margin Pressures Cause Fieldstone to Lose $45MM
Fieldstone Investment Corp., Columbia, Md., posted a loss of $45 million, or $0.97
per share, for the third quarter, compared with net income of $23 million, or $0.47 per share, a year earlier.
The company, structured as a real estate investment trust, is parent of nonconforming lender Fieldstone Mortgage
Co.
In a statement, Michael J. Sonnenfeld, president and chief executive, said the loss was because of increased reserves
needed to cover delinquencies of the newer loans in its portfolio and continued market pressures on sale margins.
Servicing initiatives include accelerated intervention on delinquent loans, engagement of a delinquency and loss
mitigation monitor for 2006 production, and elimination of high-delinquency products.
It is reducing yield-spread premiums and consolidation operations centers. "Our origination initiatives include
introduction of new alt-A products, a simplified rate sheet that reflects the actual rates at which we lend, and
a new commission plan based on a loan's net value to the company. We have not reduced our credit quality nor changed
our pricing discipline to increase originations, and we have eliminated the lowest-credit, highest-risk loans from
our guidelines. "While we will not realize the full benefit of these initiatives immediately, we are confident
that they will improve our competitive position in the marketplace," he said.
Fieldstone funded $1.4 billion of mortgages during the third quarter, a 5% decline from the second quarter and
a 26% decline from the third quarter 2005. Included in the $2.2 billion third-quarter 2005 volume was $376 million
originated in a discontinued conforming division.
Wholesale accounted for $1.2 billion of third-quarter 2006 production.
Sales premiums for its production fell from 2.1% in the second quarter to 1.8% in third quarter. Cost to produce
as a percentage of mortgage loan fundings was 2.69%, an increase from 2.58% in the second quarter.
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