Aames’ Shares Plunge on Mortgage News

Los Angeles-based Aames Financial Corp.’s shares plunged 20% after the lender indicated it may reduce its bulk purchases of sub-prime mortgage loans from third-party originators, hurting earnings in the near term. Aames makes mortgage loans to people with bad credit. The company makes loans itself and also buys loans in bulk from other lenders. If Aames cuts back, “They’ll be making fewer loans, but fewer of the less-profitable loans,” said Michael Abrahams of Sutro & Co. Still, near-term earnings could suffer from lower volume. Aames stock plunged $3.125 to close at a 52-week low of $12.25 on the NYSE. The company reported quarterly earnings of 51 cents a share, up from 33 cents a year ago.