Allstate Home Loans Shuts Down Without a Peep
Allstate Home Loans, shortly after being sold, has quietly shut down without much in the way of an announcement. The reason for the shutdown becomes increasingly clear when one reviews the sort of loans they funded:
TheTruthAboutMortgage writes:
Allstate Funding specialized in Alt-A as well as some subprime loans, averaging $50 million a month in fundings, with a high of $70 million in its best month.
Most of the loans were high-risk, high-profit, with the bulk being stated income, 100% financing, investment properties, with credit scores as low as 620, competing with the likes of New Century, Fremont, and Argent.
That’s quite possible on of the worst funding strategies I’ve ever read about. 100% financing of investment properties based on stated (often inflated or false) information provided by a client with a low credit score.
Investment properties, particularly as their value declines, and rents fall, become incredibly speculative. Sadly, failed speculation often leaves investors no choice but to ’send the lender the keys’ as refinancing to a second mortgage just isn’t possible in most of their cases.
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