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People's Choice Files Chapter 11

Another Subprime Lender Collapses

March 21, 2007

Living in a Bubble? Mortgage Crisis? Act Now to Avoid Foreclosure • Avoiding Foreclosure Takes More Than Hope --- • Mortgage Applications Surged 112 Percent Last Week • GAO Calls for Better Bailout Oversight • Homes Lose More Value In Third Quarter • Home Prices Post Record Decline • Fed Throws $800 Billion Lifeline to Consumers • Existing Home Sales Drop in October • When in Doubt, Leave Nothing Out • Fannie Mae and Freddie Mac Suspend Foreclosures • Consumer Prices Plunge in October • Paulson Rejects Bailout Money for Detroit • Another Glimmer of Hope in The Housing Market • Buyers' Beware Market • FDIC Backs More Aggressive Loan Modification Plan • Housing 2009 Forecasts Mixed, But Mostly Grim • Foreclosures Up Five Percent in October • Feds Shift Gears On Bailout, Puts Focus On Consumers • More Homeowners Under Water in Third Quarter • Feds Mount New Effort to Help Struggling Homeowners • Lenders Embrace Workouts for Struggling Homeowners • Obama Can't Quickly Raise Homebuyers' Hopes • At Last: Bailout Trickling Down to Struggling Homeowners • New Home Sales Rise in September • How to Appeal Your Property Tax Bill • Existing Home Sales Rise in September • Administration Considers More Help for Homeowners • Foreclosure Activity Drops in September • Southern California Home Sales Surge 65 Percent in September • HOEPA: New Hope for Outlawing Abusive Mortgages • FDIC Chief: Not Enough Help for Homeowners --- • More ...

Another subprime lender is seeking bankruptcy protection from its creditors, as the house of cards built on risky mortgages continues to collapse. People's Choice Home Loan Inc., has asked a bankruptcy court in Santa Ana, California, to give it time to reorganize.

The Irvine-based lender is the fourth subprime mortgage company to file for bankruptcy protection since December. It joins the ranks of Ownit Mortgage Solutions, Mortgage Lenders Network and ResMae Mortgage.

At the same time, other subprime lenders, such as New Century Financial, Fremont General and NovaStar Financial, have suffered heavy losses in the last 12 months.

People's Choice and its subsidiaries report about $100 million in both assets and liabities. Creditors include mainline banks and brokerages houses Wachovia Bank NA, Bear Stearns Mortgage Capital and Merrill Lynch Mortgage Lending.

Last week People's Choice pulled a registration statement it had filed with securities regulators, a sign that its snowballing financial problems had reached critical mass. The Online publication National Mortage News quotes sources as saying the company is talking to a potential investor about a sale.

Subprime lenders make loans to consumers whose credit is not good enough to get a so-called "prime" loan.

While that can be helpful, many subprime lenders developed increasingly exotic mortgages, encouraging consumers to purchase more house than they could actually afford. As a result, many homeowners -- many of whom made no down payments -- are now defaulting on their loans.

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