THE VERY BIG PICTURE: First off, let's talk about the potential winners and losers if the White House plan to kill Fannie Mae and Freddie Mac is installed anywhere close to "as is." (Let's not mince words either. The man from Illinois wants to pull the plug.) And before we even go down the win/lose road let's state for the record that if the GOP takes control of the Senate in 2012 you can pretty much bet that the plan may be implemented as proposed. So here's the winners list:
• Jumbo conduits: I know of a few REIT guys on the West Coast who were drinking champagne this morning, and I'm not talking about Stan Kurland of PennyMac either. Stan's a REIT guy, too, and he has his sights on the jumbo market. With the jumbo limit falling to $625K in the fall of this year, and probably $100,000 a year after that, I would venture this market is now "wide open." As for what terms the consumer will be offered, let's just say this: Cash is king.
• The megabanks: Well played Wells Fargo (though I'm still trying to figure out why your CFO resigned this week). Phil Bracken and his lobbying crew take a bow. Bracken was a mover and shaker behind FM Watch (remember them?) and now the “mortgage bank of banks” is ready to reap the rewards. With Fannie and Freddie (eventually) out of the picture, this megalender can originate loans, then securitize and service them. Hey, isn't that what Fannie once dreamed of? (Funny, how life works that way.) And did I mention that Wells has an origination and servicing market share north of 20%. It's good to be king. (Cue up the Tom Petty song.)
• Apartment building owners, developers and lenders: Now that homeownership is no longer on the same pedestal as mom, apple pie and Toyotas (er, I mean Chevys), it seems all the word is rushing to say: You know, maybe renting isn't so bad. And maybe in time that theory will be proved correct. But with mortgage rates and downpayments assuredly headed north, it's a given that a whole lot less people will be out buying homes which means they have to rent. When rent time comes, just remember: the landlord is king.
• Hard-money lenders: Baby, your day has come again. Yes, I know this may sound crazy, but I know of more than a handful of executives eyeing this market. These professionals plan on extending credit to borrowers who either have a ton of equity but can't get credit elsewhere (for different reasons), or the “self-employed” market which has been abandoned by many lenders. These folks plan on holding the loans in portfolio but need money to do that. Still, there are high hopes that we will see a revival of "consumer finance" firms that are nonbanks, privately held, and who can tell most regulators to take a hike. (A king is born.)
And now for the losers. There are plenty of folks who potentially fall into this category, but there's only so much real estate on the Internet and I'll have to save some of my more poignant thoughts for the weekly print version of National Mortgage News. But here's at least three:
• The National Association of Home Builders: The fact that Obama (a Democrat) wants to drive a stake through the heart of Fannie/Freddie is proof enough that this trade group has lost influence and power in Washington. I guess that's what happens when so few new homes are being built these days. Anemic homebuilding figures means poor employment in this sector, which means there is few left to protect except the rich executives who run the publicly traded builders. (At least that's one GOP view.)
• The National Association of Realtors: Realtors had better start expanding their offerings to include rentals because my guess is that home sales will be weak for many years. I hope I'm wrong on this point, but it's not looking too good right now.
• The rank-and-file employees of Fannie Mae and Freddie Mac: These are the forgotten men and women of the industry—the folks who make the gears turn at the GSEs. I'm not talking about the decision makers in the executive suites. They have mortgages and families and I would venture no one cares about them. Many of these workers had their retirement money tied up in the stock of the GSEs and now it's all gone. Those on the left and right likely will continue to bash the GSEs without ever acknowledging that these rank-and-file workers deserve better. They get no coverage in The Washington Post, probably because that newspaper's financial coverage is abysmal.
• The Federal Housing Finance Agency: The things I can write here about regulators past and present. But I'm saving it for my book.
One last thought: Just how do you liquidate $1.5 trillion in GSE mortgage assets? To get an idea read the Monday paper edition of NMN. Don't subscribe? Call: 800-221-1809.
In case you didn't know it, early Friday morning NMN was one of the first media outlets to have the full and complete story on the Obama plan. Congratulations to NMN's Lew Sichelman for his hard work. Among other things, Lew wrote: FHA commissioner David Stevens told National Mortgage News that while there is "no arbitrary time-line" to close down Fannie and Freddie, the effort has to be "deliberate" and is likely to be "longer rather than shorter." But the administration's Housing Finance Reform white paper said that "as the market begins to heal and private investors return, we will seek opportunities, wherever possible, to accelerate" the GSEs' withdrawal. (Congrats to Brian Collins, too, and our Web crew of Georgi Lee and Andy Taylor.)
And now that it appears the jumbo (or non confirming market) may bloom you may need a ranking of the nation's top lenders in this sector. The list, and much more, can be found in NMN's Quarterly Data Report, an Excel spreadsheet and database product. To order the QDR send an e-mail to
MORE DATA STUFF: Although the lending sector faces challenges this year, there's plenty of money to be made in servicing. A ranking of the nation's top 100 servicers can be found in the Quarterly Data Report, an Excel spreadsheet and database product offered by NMN. The QDR also ranks certain firms by their cost to service. To order the QDR send an e-mail to
A MUST ATTEND SERVICING SHOW: It appears the MSR market is firming up nicely. (Thanks to rising rates.) But will banks dominate the sector or will it deconsolidate and move to nonbanks like IBM/Wilshire? To get the answer to this and other questions you may want to attend SourceMedia's fifth annual servicing show in Dallas April 5-7. Top servicing and subservicing executives will be there. For more information e-mail
I'm
THE LAST WORD: In case you thought the White House wasn't being clear: Obama wants the GSEs gone.
