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DEC 21, 2012

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What We're Hearing

Nominee Process a Real Corker

DEC 21, 2012 4:55pm ET
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WE’RE HEARING Senate Republicans plan to make it even tougher to get nominations through in President Obama’s second term, and that includes the mortgage arena.

These hardball tactics may explain why HUD secretary Shaun Donovan made such a concerted effort to appease demands by Sen. Bob Corker, R-Tenn., to crack down on a popular FHA-insured reverse mortgage product.

To secure Corker’s support for the confirmation of acting FHA director Carol Galante, the HUD secretary agreed to place a moratorium on the fixed-rate, full-draw standard reverse mortgage.

President Obama appointed Galante acting Federal Housing Administration commissioner back in April 2011. Over 18 months have passed and she remains an “acting” commissioner because Senate Republicans have a hold on her confirmation.

But her status may change soon due to the administrative actions HUD officials agreed to take to stem losses in the FHA single-family and reverse mortgage programs. 

In a letter to Corker, the acting FHA commissioner pledged to implement the changes by Jan. 31.

Corker for his part immediately signaled that he will support Galante’s confirmation by the Senate. And it seems no-love-lost has now turned into a lovefest, to judge by his reply.

“Given the reforms she is committed to, I believe that having an accountable commissioner with her resolve and expertise will be in the best interest of the taxpayer,” the Senate Banking Committee member now feels.

WE’RE HEARING a new proposal about what to do about the taxpayers’ unwanted stepchildren, Fannie Mae and Freddie Mac.

Why not combine the two and put them under the control of their fellow but publicity shy GSE, the Federal Home Loan Bank System?

That would put the two of them into a cooperative structure and a little bit closer to the rank and file of the thousands of banks, thrifts, credit unions and insurance firms that make up the cooperative membership of the FHLBS, Alex Pollock maintained to us not too long ago—in other words, it would give Fannie and Freddie a little more skin in the game.

Pollock, former CEO of the Federal Home Loan Bank of Chicago and current fellow at the American Enterprise Institute in D.C., admitted that ultimately, taxpayers would still be on the hook via the implicit guarantee that Uncle Sam would bail the FHLBs out in a calamity (as he did with Fannie and Freddie).

Pollock, who started the MPF secondary market plan designed to compete with Fannie and Freddie, has a long view of history and a keen sense of irony. He refreshed our memory that Freddie Mac, at least, had strong kinship ties to the 12 FHLBs as both were under the control of the old Federal Home Loan Bank Board before the thrift crisis of the late 1980s. That includes the district banks getting stiffed by getting the Freddie stock they bought to seed the new GSE paid back at par after twenty years. Bet they would just love to see Freddie back under the FHLBS umbrella!

OH, THOSE GRAPEVINERS: Our multitudes of posters at mortgagegrapevine.com have something to say about absolutely anything. There are many recent postings about the Newtown shootings and the thorny issue of gun control, naturally. But Ravi Shankar’s passing gets a mention as well. (We won’t even go into our posters’ fascination with medical marijuana.) Occasionally they even try to do some business on the Vine. Here’s a link to an inquiry looking for a hard money lender in Nevada: http://www.mortgagegrapevine.com/thread/?thread=602494.

WHO’S NEW: If you want to get our attention and get into this column, expand your operation and hire new people. Net new hires, whether one, ten, a hundred or a thousand at a time, are the way the mortgage industry (and the national economy as well) will get out of its doldrums.

Blueberry Systems, a Colorado tech vendor, recently added about 30 years of industry expertise to its roster by hiring Kristi Watson as vice president of its project management office and Rick Schmitz as vice president of technology.

Blueberry CEO Wil Armstrong recently spoke at our Mortgage Technology Conference in Miami Beach, and we found out some interesting things about him by reading down to the bottom of his bio, the part very few people ever get to. And it turns out that Wil has worked as a volunteer in prisons and with Mother Theresa’s mercy operation in India. Way to go, Wil. That’s what we call outsourcing to India!

FINAL THOUGHT: If you’re reading this on the weekend, congratulations on surviving another Doomsday! If you floated off into space on Friday, well, never mind.

—  Mark Fogarty is editorial director of the SourceMedia Mortgage Group and has been commenting on the mortgage market since 1984. Brian Collins is the group’s senior editor and D.C. bureau chief. He has worked the mortgage beat since 1988.

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