Loan Think

Certain Luddites and ignoramuses in Congress believe we should go back to the ‘Good Old Days’ when our banks and thrifts held mortgages in portfolio. They don’t quite understand the whole concept of a mismatch between assets (mortgages) and liabilities (deposits.)

Investor, speculator and short seller David Einhorn is ponying up $200 million to buy a minority stake in The New York Mets baseball team. Why is this mortgage news?

As we all know, subprime securitization will return – someday. Of course, none of us know when that day will be. When it comes to creating mortgage bonds out of loans made to consumers with poor credit, many folks I’ve talked to think we’re looking at three to five years, at least.

At the end of March mortgage servicers were processing $9.5 trillion in residential loans, a 4% decline from the same period a year ago. (Figures courtesy of National Mortgage News and the Quarterly Data Report.) Now, 4% may not seem like a huge number, but then again, you have to consider historical trends.

When it comes to the social media, one of the themes I have consistently written is that you just can't have a policy of throwing things against the wall and hoping that some, if not all, of it sticks.

We were talking to MBS inventor Lew Ranieri this morning and he had some interesting things to say about rates. He noted that if Spain cannot solve its debt woes (I assume you saw the protests in Madrid last week) that bond holders worldwide may flock into Treasuries, which means rates would fall even further in the U.S.

Homeowners can use a little known but increasingly popular provision of the bankruptcy code to eliminate second mortgages and avoid foreclosure. Statistics are hard to come by, but the provision has been used effectively on hundreds, if not thousands, of cases during the past two years.

Is the subprime industry poised for a rebound? Now, I know what some of you are thinking: “Paul, the Rapture is coming and it’s finally damaged your brain.” Maybe, maybe not. From all those CCD classes I attended as a kid, I know that when the Big Man comes it will be like a “thief in the night.”

As most readers of National Mortgage News know, Freddie Mac appears to have returned to profitability, while Fannie Mae still struggles with the red ink. It’s unclear when Fannie will finally turn the corner, but with all the great quality loans it’s been buying the past two years, certainly that day will come. It’s just a matter of when.

The new MBA delinquency numbers are out and the news is both good and bad. Late payments rose slightly but foreclosures fell. But why are foreclosures falling, really? Therein lies a story, perhaps.