Mortgage analysis firm enters cooperation agreement with AG's Office

Clayton Holdings Inc., a mortgage loan analysis firm has entered into an agreement with NY's AG in which it will provide information on how Wall Street firms had disregarded their warnings on quality of mortgage loans being sold to investors.

Clayton is country's biggest due-diligence firm which is hired by investment houses for ensuring that loan blocks are as per seller's own standards.

The firm has entered into cooperation agreement with AG's Office & will give details of what it knows about how firms had sold MIs (Mortgage Investments) even after they warned that the loans were not upto required quality standards.

In a statement released by the firm they have stated that they have also been asked regarding mortgage loans which had exceptions to seler/lender guidelines & were purchased by mortgage backed security issuers.

Citigroup writedowns and Washington Mutual Layoffs

Citigroup has recently announced a substantial $18.1 billion writedown. From its inception 10 years ago, for Citigroup it was the first quarterly loss & was basically due to losses from subprime lending.

WaMu has also released bad news; it is going ahead with 2600 job cuts from their home loan section & another 550 from support & corporate positions. Company spokesman have also released information that they are expecting loan related losses to the tune of $1.8 to $2 billion in the first quarter of 2008.

Job cuts by National City Corporation

National City Corporation is going to eliminate 900 jobs and has also announced suspension of brokered mortgage operations.

This is going to be 2nd major layoff in little over a year & is going to affect one-seventh of its mortgage staff. In 2006, 2500 positions were cut when their mortgage lending and home equity operations were merged. They are also cutting its common stock dividend to .21 from .41 & have also planned seeking more capital for coping with credit market fluctuations.

Countrywide to be purchased by Bank of America

BofA is in the process of buying Countrywide. According to Reuters & Wall Street Journal, Bank of America is preparing for an outright purchase of Countrywide.

BofA has offered $4 billion in stock for the purchase. Shareholders of Countrywide will get 0.1822 of a share of BofA stock for every share owned in Countrywide. The purchase is expected to be completed by third quarter of this year.

If this purchase is successful Bank of America will become the biggest lender & servicer in the country.