E-Trade & Mortgages...Not A Good Combo

Want more proof that some players should have never gotten in the game to begin with? We present to you E-Trade (ETFC) and their miserable third quarter earnings. I especially like the sentence referencing that they were going to allow their 2nd mortgages to "bleed off."

Yep, that is exactly what those loans are doing to E-Trade. Bleeding them and dearly. E-Trade would purchase 2nd mortgages up to 125% loan to value. They gladly to put you upside down on your home. See the problem?

E-Trade and so many borrowers thought that the good times would never come to an end. A 125% loan would be only 100% loan in 6 months and 85% loan in a year because home appreciation was out of control. And now, we see the trend reversing itself. So many of these 125% loans are now more like 140% loans in some markets. Not good.

And E-Trade can't sell their problems to someone else. Who is going to buy that? And borrowers, if they are in a jam would rather walk away than pay for a home that is worth only a fraction of what it was just 2 years ago. So E-Trade is left to "Bleed off" these loans.

The company is also closing their wholesale mortgage department and focusing on A paper mortgages. Just like everybody else. E-Trade should be an afterthought mortgage company, at best. The company should focus on their main brand and get out of areas they don't belong.