RANCHO BERNARDO - Accredited Home Lenders, a North County mortgage company whose stock price plummeted by 26 percent Monday, said that more than 8 percent of its $11 billion loans to borrowers were delinquent at the end of last year.
Its shares fell during the day from $18.39 to $14.77, its lowest level in a year. In April, the stock was trading at about $58 per share.
The company employs 4,000 workers nationwide and 700 in North County. It makes almost all of its loans to subprime borrowers - that is, borrowers with weak or poor credit. It currently holds 65,000 subprime loans, or 95 percent of all its loans, Rick Howe, company spokesman, said Monday.
Accredited, along with other subprime lenders, saw its stock price tumble Monday on a series of reports about the troubled industry - which ranges from smaller companies such as New Century Financial Corp. of Irvine and NovaStar Financial of Kansas City, Mo., to major lenders such as Countrywide Financial Corp. and Washington Mutual.
The percentage of Accredited's loans that are delinquent -- with borrowers more than 30 days behind in making mortgage payments - has risen sharply in recent months. The company's delinquency rate of 8.26 percent in the fourth quarter of 2006 is up sharply from a rate of 5.44 percent in the third quarter, and from a rate of 2.49 percent for the fourth quarter a year earlier.
Accredited was one of at least a half-dozen companies specializing in subprime loans to suffer a hit to its stock price Monday. Howe declined to comment on the company's stock or on speculation about the future of the nation's troubled subprime market.
Most subprime mortgage companies "took an absolute shellacking" on Monday, said Bud Leedom, a San Diego stock analyst and publisher of the California Stock Report. He noted that Accredited's stock price drop was less than some others in the industry because it is viewed as well-run and the best of a troubled lot.
Leedom said that only the well-run will survive in today's cooling housing market. "This is sort of the first brick to come tumbling down," he said. "Some of these companies are going out of business."
Keith Gumbinger, a researcher with the mortgage research firm HSH Associates in New Jersey, attributed the problems in the subprime market to lenders who loosened their standards between 2002 and 2004 to compete in the heated housing market.
It is only in recent years that mortgage companies such as Accredited have specialized in marketing to the risky subprime market.
So it is difficult, said Gumbinger, to say how the subprime market will shake out in coming months: "The situation is still evolving. Nobody has slammed the door on subprime lending. The vast majority of borrowers are still making payments."
- Contact Business Editor Ann Perry at (760) 740-5444 or aperry@nctimes.com.
