Fieldstone halts loan applications

The Baltimore Sun

Fieldstone Investment Corp., the Columbia-based subprime mortgage lender that was acquired last month, has stopped accepting new loan applications from consumers and mortgage brokers as its new owner scrambles to overcome a liquidity squeeze and answer margin calls.

"We are currently facing some liquidity challenges stemming from the severe state of disruption in the credit markets," spokeswoman Lisa Brzezinski said yesterday. "These challenges have naturally required us to carefully evaluate current cash allocations."

The suspension of new loans is temporary, Brzezinski said. She added that Fieldstone would continue to fund loans on a limited basis, particularly of existing borrowers who want to refinance adjustable rate mortgages that are about to reset.

Fieldstone's fortunes have tanked with the subprime industry. It had hundreds of millions of dollars in troubled loans and margin calls from Wall Street lenders. Its acquisition by Credit-Based Asset Servicing and Securitization LLC may have averted a bankruptcy, analysts said.

Then, C-BASS disclosed troubles of its own this week. The New York firm, a joint venture of MGIC Investment Corp. and Radian Group Inc., reported Tuesday that it's trying to line up investors to provide liquidity after receiving an unprecedented amount of margin calls from its lenders.

C-BASS buys subprime loans and packages the debt for sale. MGIC and Radian said Monday that they might write off their stakes in C-BASS, once valued at more than $1 billion, as worthless.

Separately, federal regulators have found no basis for a whistle-blower complaint against Fieldstone, a spokeswoman for the Occupational Safety and Health Administration said yesterday. Fieldstone's former general counsel, Cynthia L. Harkness, complained that she was fired in retaliation for reporting alleged violations of securities and other laws by senior management.

R. Michael Smith, a lawyer for Harkness, said they would appeal the decision to an administrative law judge at OSHA, which has a whistle-blower program as part of the Labor Department.

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