National City to Sell Subprime Loans

Though mortgage applications have seen a brief revival over the past few weeks, National City has announced that they are considering selling some of their mortgage units to reduce its exposure the subprime lending. The company states that, though interest in mortgages seems to be on the rise, a mass sell may be needed to remain competitive in the current market. If National City decides to sell, some of the units could be moved as early as the end of this summer.

Analyst forecast that the subprime industry might consolidate as smaller lenders shut down and larger lenders tighten their profit margin. In response, National City states that the units that may be sold are in the subprime category. Three areas of the company would be affected including the direct-to-consumer division, NationPoint. A final decision is expected within the next 30 days and would first affect First Franklin, a residential lending division. Ameriquest, the nation’s top subprime lender, announced that they would be consolidating with layoffs, strengthening the belief that subprime consolidation may be in the near future.