Banks, Homebuilders Rise on Freddie, Fannie Seizures

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Sunday’s seizure of Freddie Mac and Fannie Mae was good news for many bank and homebuilder stocks early Monday, as investors boosted the price of several L.A. area companies on analyst upgrades.

The analysts, including James Abbot of Friedman, Billings, Ramsey, said the seizure of the mortgage giants should improve financing costs for average homebuyers and owners, resulting in higher sales of newly constructed homes and a better chance that banks will receive the full principal and interest on their loans.

Abbot raised his price estimate on Pasadena-based East West Bank from $12 a share to $18, along with several other regional banks around the United States with exposure to the mortgage crisis.

East West shares closed up 6.5 percent to $14.76 on the New York Stock Exchange. Other area bank stocks also benefitted, including: Nara Bancorp Inc. jumped 12 percent to $12.91; Anworth Mortgage Asset Corp. gained 11.5 percent to $7.36; City National Corp., rose 9 percent to $57.81; Cathay General Bancorp added 8 percent to $23.58; and Preferred Bank rose 4 percent to $10.49.

Los Angeles homebuilder KB Home gained 14 percent to $23.54, and Calabasas homebuilder Ryland Group Inc. rose nearly 11 percent to $26.31.

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