Capital One's Closing of GreenPoint Mortgage Extends Tenure of Rating Outlook.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. said Tuesday that Capital One's (COF) decision to shut-down mortgage origination operations at GreenPoint Mortgage (GPM GPM - General Purpose Macro-generator ) will not have any near-term impact on COF's ratings. However, Fitch expects that the resolution of the Positive Rating Outlook will be extended beyond 12- to 18-months, in order to fully assess the impact of the North Fork North Fork, river, c.100 mi (160 km) long, rising in the Ozarks, S Mo., and flowing S, into N Ark., to the White River. Near its mouth is Norfolk Dam (completed 1944), which impounds Norfolk Lake and has a power plant. acquisition and the GPM wind-down, as well as the affect market factors will have on credit quality at all business units. COF expects to record after-tax costs of $860 million associated with the closure of GPM in 2007, composed of $650 million in the write-down of goodwill, $100 million in restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , and $110 million in valuation adjustments related to ongoing operations. While Fitch understands capital ratios will be negatively impacted over the near-term, tangible capital is expected to remain relatively stable. The closure of GPM is not a positive rating factor, but Fitch appreciates management's decision was made in light of its ability to profitably operate in the Alt-A mortgage market over the long-term, given uncertain conditions in the secondary market. Additionally, while Fitch believes GPM has had a good presence in the mortgage market, we do not believe that COF's decision to purchase North Fork Bancorporation was motivated by the acquisition of the GPM subsidiary. Therefore, we did not view GPM operations to be a core operating strength of the company. COF will continue to originate mortgages through non-broker channels at Capital One National Association and Capital One Home Loans. The Positive Rating Outlook continues to reflect benefits expected to be achieved from the company's product and funding diversification, as it integrates its largest acquisition to date. Fitch believes a smooth integration of North Fork combined with stable operating performance in all business segments could support rating momentum. Conversely, ratings could be constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. by significant integration issues, weakening credit quality beyond Fitch's expectations, and/or material deterioration in the U.K. card portfolio. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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