Subprime lender Xceed Mortgage lost $4.5 million in 2007, despite its volume increasing 30.6%. The company’s biggest challenge might be finding low-cost sources of funding.  The ABCP market is still frozen so Xceed has had to rely on it’s more expensive Deutsche Bank AG warehouse credit facility to fund new business. 

Regarding the state of ABCP, CEO Ivan Wahl says, “We’ve no idea what’s gonna happen in the Montreal Accord…nor does anyone else in the marketplace I suggest.”

Like so many other injured subprime lenders in 2007, Xceed has turned to insured mortgages to generate revenue.  Xceed’s diversification into CMHC insured prime mortgages has been slow, however, and volumes are relatively small.  Moreover, prime mortgages are much less profitable than subprime mortgages in general. 

On the upside, CEO Ivan Wahl says, “We’ve taken steps to improve our profitability, namely increasing our pricing and eliminating some products.” Moreover, Xceed’s default rate is still pretty reasonable at 2.62%.  

Transcript courtesy of Seeking Alpha.

Last modified: April 25, 2014