UBS Home Finance - Wholesale

Update - 2008-01-30: In an article by BusinessWeek.com, UBS AG, will write down U.S. subprime investments another $4 billion, bringing a total now to $18 billion:

"UBS's foray into the U.S. mortgage markets has turned into an absolute nightmare."

Update - 2007-12-10: In an article by the Wallstreetexaminer.com, UBS AG, Europe's largest bank by assets, said it will write down U.S. subprime investments by $10 billion:

"Turns out the b.s. never ends with these guys, as their losses far exceed what they reported. I think this will be the way the banks prefer to let out the bad news - in recurring increments."

Original Article - 2007-11-14: UBS Home Finance is shutting the doors on Wholesale Lending tomorrow. Employee's and AE's will be notified by phone in the morning. It appears this info is already available at their Tampa office.

Employing about 70 people nationwide, they peaked out this year at 150 million per month in business. How they brought their pipeline to an abrupt halt (perhaps hoping people would just leave) is unbelievable.

UBS increased it's costs on their Traditional 30-year conforming fixed rate product by a whooping 1.70% in 3 days.

We obtained two rate sheets, one from Monday of this week, and one from today (Thursday). On Monday, a 6.375% 30-year fixed rate conforming loan would have a 'cost' (without taking into account adjustments) of 0.936%. By Thursday this 'cost' had increased to 2.636%!

To put this in perspective, another Wholesale Lender is providing the same unadjusted Fannie/Freddie product for a rebate of 1.118%. The net difference is over 3.75% cost!

To put the technical jargon aside, pretend you are a used car dealer. Put a big $100,000 price tag on every car, stick the salespeople outside on the lot, and tell them not to come back without a deal!

Here are some facts from the web site about the company:

UBS is the leading global wealth manager, a top tier investment banking and securities firm, and one of the largest global asset

managers.

In Switzerland, UBS is the market leader in retail and commercial banking.

With headquarters in Zurich and Basel, Switzerland, UBS operates in over 50 countries and from all major international centers.

UBS employs more than 80,000 people.

What we saw is a pricing policy that was designed NOT to sell. The rate sheets we viewed were available online. You can view the rate sheet itself for Monday, November 5, 2007 here, and the Thursday, November 8, 2007 sheet here. The rates we used for comparison are here. The rate sheets are not meant for consumer distribution.

The strategy above may be a new wrinkle in the art of downsizing. How long can someone hang on with this type of pricing? Tips we received suggested it was a matter of days. Now it's final.

Was the writing on the wall in August? There are 25 AE's out there that had to sign new contracts in August that limited their severance package... Severely limited it.

They don't get one, according to our sources.