Subprime Mortgages

Subprime rankings and stock data:
Subprime Lenders	Subprime Servicers
Subprime Subservicers	Alt-A Lenders
Defunct Mortgage Firms and Units

U.S. Attorney Subpoenas Fannie & Freddie September 29, 2008

The U.S. attorney in New York has subpoenaed Fannie Mae and Freddie Mac as part of an investigation into whether fraud contributed to the demise of these now government-owned mortgage investing giants. According to public filings, Fannie and Freddie said they face ongoing investigations from both the U.S. attorney and the Securities and Exchange Commission. The two agencies are seeking information about their accounting, financial disclosures, and corporate governance. Freddie said the subpoena it received involved matters for the period Jan. 1, 2007, to the present. Both companies -- which are operating under federal conservatorships -- said they will cooperate with the investigations. Besides the Fannie and Freddie probes, the FBI has launched preliminary investigations into the downfall of Lehman Brothers and American International Group. In addition, more than 20 subprime firms are the subject of criminal investigations by the government. The government seized control of Fannie and Freddie on Sept. 7.

As Economy Weakens, Resales Fall Again September 24, 2008

Existing-homes sales totaled 4.91 million units in August on an annualized basis -- a 2.2% decline from the level recorded in July -- as mortgage financing became more expensive and Americans continued to worry about their jobs. According to figures compiled by the National Association of Realtors, resales fell 10.7% from the level of a year earlier. The bad news on home sales came as Federal Reserve Chairman Ben S. Bernanke told a joint committee of Congress that U.S. "economic activity appears to have decelerated broadly," adding that new unemployment claims "are at elevated levels." Noting that the national unemployment rate is now 6.1%, the Fed chairman added that "real after-tax income has fallen this year." Traditionally, mortgage lenders rely on strong employment to drive home sales. The NAR and other trade groups believe that the government's bailouts of Fannie Mae and Freddie Mac have already caused interest rates to fall, which will make home financing more affordable. "With higher [loan limits for the government-sponsored enterprises and the Federal Housing Administration] and a beefing up of the FHA program, all the mechanisms have been falling into place to increase mortgage availability," said NAR chief economist Lawrence Yun.

BNY Mellon Servicer Rating Upgraded September 24, 2008

The master servicer rating of The Bank of New York Mellon has been upgraded from RMS2-plus to RMS1-minus by Fitch Ratings. Fitch attributed the action to BNYM's "strong oversight and monitoring of its primary servicers, its continued investment in enhancing its technology, and its increasing use of automation." The company's master servicing operation is based in New Albany, Ohio. Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating. The rating agency can be found online at http://www.fitchratings.com.

Index: 12-Month Home Prices Off 10.9% September 24, 2008

Nominal home prices were down 10.9% nationally in July from the level recorded a year earlier, according to the latest LoanPerformance Home Price Index. Los Angeles-Long Beach-Glendale topped the index's list of statistical areas experiencing 12-month home price declines, recording a 27.95% decrease. Oakland-Fremont-Hayward (Calif.) ranked second with a 27.28% decline, and Riverside-San Bernardino-Ontario (Calif.) finished third at 26.93%. "The recent price trend is similar to the Massachusetts and Texas house price declines in the 1980s and 1990s that took approximately two years to bottom out," said Mark Fleming, chief economist of First American CoreLogic, the Santa Ana, Calif.-based company that compiles the index. "In both cases there was stabilization in the rate of decline before the lengthy recovery in price levels." The LoanPerformance HPI provides monthly home price indices and median sales prices covering 7,575 ZIP codes and 676 counties in all 50 states and the District of Columbia, the company said. First American CoreLogic can be found online at http://www.facorelogic.com.

Senate Panel Seeks Assurances on Bailout September 23, 2008

Before the Senate Banking Committee approves a $700 billion bailout of the credit and mortgage markets, some of its members want assurances that the government will not overpay for subprime MBS -- plus promises that taxpayers will get warrants in companies that sell to the government. At a hearing Tuesday -- attended by every senator on the committee as well as a noisy faction from ACORN that was silenced by committee Chairman Christopher J. Dodd, D-Conn. -- several elected officials wanted to know at what price the government would purchase mortgage-backed securities. "How will the assets be priced?" asked Sen. Robert Menendez, D-N.J. "If the seller doesn't like the price, will the taxpayer be asked to pay a premium?" The question was aimed at Treasury Secretary Henry Paulson, who has been putting together the bailout plan over the past few weeks. Committee members expressed dismay at having to spend so much of the taxpayers' money to help bail out Wall Street. "It's financial socialism," said Sen. Jim Bunning, R-Ky. "And it's un-American."

SEC: 50 Subprime Probes Pending September 23, 2008

The Securities and Exchange Commission revealed Tuesday that it has 50 pending subprime-related investigations involving residential lenders, investment banking firms, credit rating agencies, and other players involved in the securitization process. Speaking before the Senate Banking Committee, SEC Chairman Christopher Cox said commercial banks and broker-dealers who sold subprime mortgage-backed securities are also being looked at. "We are investigating whether mortgage lenders properly accounted for the loans in their portfolios, and whether they established appropriate loan loss reserves," he told the committee. The agency, which is responsible for overseeing bond disclosures on publicly registered securities, said it is investigating whether lenders adequately disclosed the risk profiles of the mortgages they were securitizing. In late 2006 Lewis S. Ranieri, the co-inventor of the MBS, criticized the SEC in a speech at the National Press Club, saying the agency needs to play a central role in forcing issuers to increase disclosures on bonds collateralized by nontraditional residential loans. At the time, Mr. Ranieri told National Mortgage News that "this isn't an indictment of the SEC," but added that "the transparencies are not what they should be."

AARP Spotlights Seniors' Foreclosure Problems September 19, 2008

Over 25% of mortgage delinquencies and foreclosures involve seniors, according to a study by AARP, and older homeowners with subprime mortgages are 17 times more likely to end up in foreclosure than their peers with prime mortgages. "The public perception is that older Americans are financially secure in their homes," said Susan Reinhard, director of AARP's Public Policy Institution. "But the reality is that while many are in fact secure, hundreds of thousands are not and face unsettling uncertainty over their futures as homeowners." The AARP study found that 28% of delinquencies and foreclosures that occurred during the second half of 2007 involved people 50 years and older. "Over 684,000 older Americans were either delinquent or in foreclosure at the end of 2007," the study says. "Of these, nearly 50,000 were in foreclosure or had already lost their homes." The study also picked up disparities between minorities and whites. Foreclosure rates for senior African-American and Hispanic homeowners were 0.51%, compared with 0.19% for senior Caucasians. African-Americans seniors hold over 6.8% of first mortgages in this age group, but represent 14.4% of the foreclosures among seniors.

Core Mortgage Risk Index Rises Further September 18, 2008

The third-quarter Core Mortgage Risk Index, which forecasts the relative risk of residential loan delinquencies, stands 12% higher than it did a year ago, according to First American CoreLogic, Santa Ana, Calif. The risk index has risen for 11 of the late 12 quarters, the company said. "The CMRI is currently 55% above the base period of the first quarter of 2002, a period near the end of the last U.S. economic recession," said Mark Fleming, the company's chief economist. "Although significantly higher now than during this base period, the CMRI is likely to continue rising nationally over the next 18 months." Mr. Fleming said declining home prices are the "primary factor" in the most recent rise in mortgage risk. CoreLogic, a provider of mortgage risk assessment and fraud prevention systems, can be found on the Web at http://www.facorelogic.com.

Applications Jump September 17, 2008

The Market Composite Index, an overall measure of mortgage applications, jumped from 496.2 to 661.7 on a seasonally adjusted basis during the week ended Sept. 12 as falling interest rates boosted mortgage demand, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.

MBA Mortgage Application Survey (Seasonally Adjusted Index Levels)
	Wk Ended Sept. 12	Wk Ended Sept. 5
Market Composite	661.7	496.2
Purchase Index	380.4	371.5
Refinance Index	2300.0	1222.9
Source: Mortgage Bankers Association

The Purchase Index rose from 371.5 to 380.4 on a seasonally adjusted basis, while the Refinance Index climbed from 1222.9 to 2300.0. Refinancings represented 51.6% of total applications, up from 36.3% the previous week, while adjustable-rate mortgages accounted for 4.0%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 6.06% to 5.82%, and points (including the origination fee) increased from 1.02 to 1.13 for loans with 80% loan-to-value ratios, the association reported. "Renewed financial concerns should keep long-term Treasury yields low and translate to lower mortgage rates in the near term despite some widening in mortgage spreads," said Orawin Velz, the MBA's associate vice president of economic forecasting. "We expect to see meaningful increases in mortgage demand in coming weeks on both the purchase and refi sides." The MBA can be found online at http://www.mortgagebankers.org.

Preston Vows to Push RESPA by Year's End September 17, 2008

Housing Secretary Steve Preston vowed Wednesday morning to implement permanent changes to the Real Estate Settlement Procedures Act by year's end even though industry groups are fighting the agency's proposals on consumer disclosures. Speaking at a luncheon in Washington, HUD Secretary Preston said, "Our goal is to get RESPA completed by the end of this year and then provide the industry with a full year to implement the rule." He added, "I firmly believe this will be a big step forward for restoring trust and transparency between the industry and homeowners." Industry trade groups do not like what the Department of Housing and Urban Development has proposed and want the department to work with the Federal Reserve on simplified disclosure forms. HUD's proposal is now under review at the Office of Management and Budget. Fed staffers have urged HUD to take a more coordinated approach in revamping consumer disclosures. HUD has made major modifications to its original proposal based on conversations with the Fed and other government agencies, as well as 12,000 comment letters HUD has received, according to a HUD spokesman. It sent the final RESPA rule to the OMB on Aug. 21.