Loan Think

The government is proceeding with a vengeance in this attorney's opinion to prosecute fraud and to recover money where failed banks still had loans in their portfolio at the time of the failure. The FDIC “letters of inquiry,” subpoenas and lawsuits are just starting and I believe will escalate. The reason for this belief? The government is using private law firms for the most part in chasing the problems. You will note the letters indicate the delegation of authority if you have received one.

In the mid-2000s Orange County, California, was subprime Mecca. Just about every major subprime firm (and wannabe) was headquartered there or nearby, including Ameriquest, Option One, First Franklin and the like. And thanks to the collapse of those firms, there's plenty of cheap office space available in 'the OC.'

THIS JUST IN: John Nichols has left his job at BlackRock Financial, a firm which obviously has a future, and joined Fannie Mae as its chief risk officer for the capital markets division. Note: Nichols is not the chief risk officer for the company as a whole. That job belongs to Ken Phalen. We're told that Nichols had already been "on assignment" to Fannie, but now he's a full-time staffer.

It's not easy buying jumbo mortgages in the secondary market these days. Just ask Redwood Trust. The company, a REIT, has delayed its second jumbo MBS deal but is still optimistic about the market. (See the National Mortgage News website for the full story.)

We have all heard this statement: If I just knew then what I know now, I would be doing that; well are you? Have you made the change?How about this updated version: Everything you know now that you wish you had known then you need to take action immediately to adjust yourself to the new and current level of knowledge. Now!

It's all a crap shoot, really. We've had ultra low mortgage rates for 24 months, and still the housing market isn't improving a whole lot. (Then again, it's not falling off a cliff anymore either.) And how we have the Federal Reserve trying to stimulate the U.S. economy with $600 million in "quantitative easing."

If only Freddie Macdidn't have to shell out that quarterly 'vig' to the U.S. Treasury, perhaps its numbers would look better. In case you missed it, the GSE lost $4.1 billion in 3Q but that was after shelling out $1.6 billion in dividends to Uncle Sam. But if you look at Freddie's supplemental 3Q earnings statements, an argument can be made that the mortgage behemoth is turning the corner.

The Dodd-Frank Reform Act is an enormous piece of business. It may require over 300 separate rules to be promulgated—and then lenders are going to have to comply with all of them!

By now you've seen the news reports that the foreclosure mess has actually caused home prices to rise in certain (judicial) states because REO inventory has been pulled off the market, thus reducing the pool of homes that are for sale. But keep in mind that whatever moratoriums are still in place, won't be for long.

During my free time before the Mortgage Bankers Association convention last week in Atlanta, I had the opportunity to visit the new World of Coca Cola, a museum that is a tribute to the company's mostly successful marketing campaigns.