Loan Think

THIS JUST IN: Credit Suisse late last week moved to consolidate several of its mortgage-related business, resulting in an untold number of layoffs, most of which were in New York . A source close to the company said these four businesses will be combined and report to managing director Michael Marriott: asset-backed securities, collateralized debt obligations, residential MBS and commercial MBS. For the full story see Monday's National Mortgage News. Don't subscribe? Call: (800) 221-1809...

THIS JUST IN: Look for an announcement from Credit Suisse late next week concerning its mortgage business. A spokesman there said it has nothing to do with its warehouse lending group...

THIS JUST IN: Friedman Billings Ramsey on Friday pulled the plug on its subprime mortgage division, First NLC Financial Services of Florida, a company managed by industry veteran Neal Henschel. One source noted that FBR's Rock Tonkel was on the scene to deliver the bad news. For the full story visit the premium content portion of National Mortgage News' website. Don't subscribe? Call: (800) 221-1809...

THIS JUST IN: Shabi Asghar, who founded subprime wholesaler Encore Credit Corp., has leftBear Stearns Residential Mortgage. In early 2007, Bear bought the money-losing Encore. Bear, as you mightrecall, had some loan buyback "disputes" with Encore. As the story goes, the two parties could not agreeon the damage. Instead of closing Encore down (Bear was warehousing them) Encore handed over the keys to the shop(and $7 million, maybe more). Mr. Asghar stayed on, that is, until last month...

One question some of you might be asking is this: if subprime volumes have screeched to a halt, what are all those traders on Wall Street doing? Good question. We're told that come January there will be a wholesale shakeup at several firms. Sources tell us that Deutsche Bank, Lehman Brothers and Merrill Lynch all are conducting reviews (or soon will) of their entire mortgage operations. As for where the most drastic changes might occur, Merrill Lynch might be a good bet. An account executive there told us recently about conditions at Merrill's First Franklin Financial Corp. He said many offices are not funding loans while awaiting training for Fannie Mae products. "So far, there's been no training," he told us. The AE, requesting his name not be used, painted a bleak picture, saying business is so slow that employees pass the day playing Scrabble and PlayStation on the conference room projector screen. He said FFFC AEs and executives keep asking Merrill why they can't just originate loans and put them on the balance sheet of Merrill's FDIC-insured bank. "We're not getting any answers," he said. For the full story see the Monday edition of National Mortgage News. If you don't subscribe call (800) 221-1809...

It probably won't be a merry Christmas for ex-Bear Stearns managing director Ralph Cioffi. A new lawsuit filed by Barclays Bank (against Bear) calls into question Mr. Cioffi's reputation in the mortgage business, as well as the reputation of Bear executive Matthew Tannin. Mr. Tannin remains as an employee of Bear's asset management group (BSAM) while Mr. Cioffi was given his walking papers last week. The two men are accused of fraud and self-dealing in managing the firm's two subprime hedge funds. Both collapsed this summer and the world knows little about them since the bankruptcy papers were filed in the super secret Cayman Islands. Barclays lent money and was an investor in one of the funds. The London-based bank charges that the men used one of the funds (the 'Enhanced' Fund) to "conceal from investors worsening liquidity problems" in the other fund. The lawsuit's most interesting revelation might be this: that in May 2007, when the funds were beginning to tank, Bear was contemplating selling them (are you sitting down) to Cerberus Capital. Cerberus, of course, owns 51% of ResCap/GMAC and recently walked away from Option One Mortgage. If you have any insights into this whole Bear mess drop me an email at: Paul.Muolo@SourceMedia.com...

If Fannie Mae and Freddie Mac keep raising their ‘g-fees’ they might just tick lenders off, sendingthem into the warm and loving arms of Wall Street firms that are sitting around like Maytag repairmen, waitingfor non-prime loans to come wafting through to their trading desks. That's the opinion of Office of FederalHousing Enterprise Oversight director James Lockhart. Okay, that's not exactly what he said this pastweek at the American Enterprise Institute but it was in the ballpark. Mr. Lockhart noted that if agencyg-fees “get out of line” loans instead might find their way to the Wall Street conduits. Of course, if these ‘loans’are non-prime in nature and Merrill Lynch, for example, wants to securitize them, they will need to create‘BBB’ pieces for credit enhancement, which I'm sure they will have no trouble selling to foreign investors or shovinginto CDOs...

The implosion in the subprime sector came home to roost in the third quarter with A- to D fundings falling tojust $28.5 billion in the period, a seven-year low, according to new and exclusive survey figures published byNational Mortgage News. Every single subprime funder (those that are left) was whipsawed with theexception of one: Chase Home Finance of Woodcliff Lake, N.J. For the full story see the Monday edition ofNMN. If you want to see the complete rankings — including production breakdowns — order the QuarterlyData Report by e-mailing: Deartra.Todd@SourceMedia.com...

The Mortgage Technology awards program this year was a huge success. Specifically, we got great applications, interest and participation. The actual Awards Ceremony held at the MBA Annual drew over 200 people including lending executives, vendors, consultants, marketing and public relations specialists and a variety of different service providers. Throughout this blog you'll see photos of me with friends that attended the actual ceremony.

As I continue to do research into the subprime crisis, time is at a premium. What I'm discovering will windup in future stories. Currently, I'm looking for any leads you might have on Bear Stearns & Co. — concerningits warehouse group, loan buybacks/early payment defaults and its trading desk. Send your e-mails (confidentialor otherwise to Paul.Muolo@SourceMedia.com)…