Loan Think

The GOP is trying to keep the heat on the White House regarding the future of Fannie Mae and Freddie Mac. In short, the party wants something done this year. Rep. Spencer Bachus, Republican of Alabama, said the other day that 45% of respondents to a recent GOP poll voted to have the GSEs cut from the budget. The statement that Bachus released was poorly written, but the message translates into this: voters say no more taxpayer money should go to Fannie and Freddie. To date, the two have cost the Treasury at least $145 billion and I would guess another $50 billion might be shelled out over the next eight quarters. (It's all guesswork on my part.) In short, no one knows how deep the hole is there. (And it doesn't help that the two are paying out dividends to Uncle Sam every quarter. It's sort of like moving government money from one pocket to the other.) But there is one academic question legislators need to ask: if you liquidate the GSEs today, selling all their assets at "market value" would you break even, lose money, or come out ahead? It's an unanswerable question. You can't liquidate Fannie and Freddie. How many buyers are there for $1.6 trillion in MBS and related assets? China, perhaps?..

The other day, a loan officer asked me "what's the first thing you recommend that I do if I were to reinvent myself?"

The new GNMA servicer rankings are out and once again Wells Fargo leads the pack with $238 billion, which translates into a market share of almost 26%. Bank of America is a somewhat close second with $220 billion. It's a good thing that Congress and the White House are trying to eliminate 'too big too fail' because if these two ever go down — and there's nothing to indicate they will — that would wipe out almost half the GNMA market, at least in terms of issuers. (Because there are so many active issuers, I'm sure the survivors would pick up the slack.)

FHA WAIVES THE 90-DAY RESALE RULE SUCH THAT PROPERTIES MAY BE RESOLD WITHIN 90-DAYS OF THE ORIGINAL PURCHASE

Have you ever noticed that when you make up your mind to do something (I mean really make up your mind) that things just seem to start going your way? Why is that? Take a minute to think about it, because it directly relates to your reverse mortgage production.

There are plenty of things you can do which will allow your business to stay running in the near term.

It's all about Europe, isn't it? The stock market tanked in May and began what looked like a nasty skid Tuesday morning only to turn positive. The yield on the 10-year Treasury is at 3.28% and I'll repeat what I've been saying for several months: I don't see interest rates, the mortgage variety in particular, going anywhere this year. Investors will continue to buy U.S. Treasuries because there appears to be a (somewhat) widely held belief that the U.S. government will do whatever it takes to save our economy. And if employment comes back, the home buying outlook could be quite decent. Then again, this morning computer giant Hewlett Packard said it would cut 9,000 jobs. That's potentially 9,000 workers with a mortgage, though if you multiply the jobs number by the U.S. home ownership rate of 65% it comes to a mere 5,850. HAMP servicers, start your engines...

With all the attention recently on the effects of the tax credit for first-time homeowners, it's easy to forget there's one on the multifamily side as well. The Low Income Housing Tax Credit, after a bad couple of years, is poised to return to its former status as the premier production conduit for affordable multifamily housing.

Everyone should be familiar with the cliché "so much to do, so little time." And all of us have experienced days at work where we just seem to get bogged down by the number of things that are on our plate.

As we all know, the White House (and most Democrats) have punted on the Fannie Mae/Freddie Mac issue until next year. I would assume that once the "What is the Future of the GSEs?" discussion begins in earnest early next year, some Republicans will want to throw the mortgage interest deduction overboard too. Indeed, The Cato Institute's Mark Calabria today on CNBC raised the issue of killing the deduction, arguing that it's really an incentive for Americans to take on more debt. If Democrats go along with the idea of killing the deduction it likely will be in the name of reducing federal deficits. Meanwhile, some stock analysts are getting a bit bearish on Banco Santander, the Spanish bank that controls Sovereign Bancorp of Pennsylvania, one of the largest remaining thrifts. Not only is Sovereign an active residential lender in the Mid-Atlantic States, it has an active warehouse lending division. We're not sure how active the group is because Santander's executives seem to have a policy of not talking to the press at all about what Sovereign is up to...