Loan Think

THIS JUST IN: One mortgage executive close to Morgan Stanley's Saxon Mortgage group saidthe Wall Street firm is talking to Fannie Mae and Freddie Mac about selling loans to the two GSEs.The loans, in theory, would be "subprime" in nature but would be underwritten to standards the GSEs wouldbe comfortable with. A Morgan spokesman said, "We are not exiting subprime but we are being smart about it."On Thursday Saxon suspended originations of two subprime products "ScorePlus" and "ScorePlus2."It's all there on its website…

If you thought that yield-spread premiums might be outlawed by Congress, think again. In an interview with NationalMortgage News this past week George Hanzimanolis, president of the National Association of MortgageBrokers, said the trade group has gone over the YSP issue with Rep. Barney Frank, chairman of the HouseFinancial Services, and believes Rep. Frank finally understands YSPs and how they benefit consumers. "Heunderstands the need for it," said the NAMB chief. For the full story see the Monday edition of NMN.Don't subscribe? Call: (800) 221-1809…

Addendum:

Over the past 12 months, roughly 200 mortgage banking firms and/or channel platforms have closed, accordingto estimates made by National Mortgage News. But what about loan brokerage firms? According to currentresearch being done by NMN's staff in Washington, on a sample of firms that were active earlier this year,the closure rate is about 15%. If you apply that to the 53,000 firms that were open in late 2006, that's an uglynumber...

If you're looking for ground zero in the foreclosure crisis it's not necessarily California, though the GoldenState, indeed, has its fair share of problems. This past week I had the opportunity to interview Jim Rokakis,the treasurer of Cuyahoga County, Ohio, home to the Indians, the Rock 'n' Roll Hall of Fame and PereUbu. What Mr. Rokakis said wasn't pretty and the statistics he gave me on bad loans funded by Argent Mortgageraises many troubling questions. Here's just two startling facts: Homes funded in Cuyahoga County by Argent havenegative equity of $230 million and 25% of the homes funded by Argent (11,075 units) have gone into foreclosure.Loan brokers were major players in this mess and Mr. Rokakis is mad -- and rightfully so. Of course, Argent isno longer the problem of its past owner Roland Arnall, the U.S. ambassador to the Netherlands. Citigrouprecently bought Argent, reportedly for a song. I just hope the folks at Citi don't live to regret the deal. Thestatistics compiled for Cuyahoga prompt me to ask this one question: Where were the state AGs when they were probingthe lending practices of Ameriquest, Argent's sister company? Did they ever look at Argent? For the fullstory see the Monday issue of National Mortgage News, which will be distributed at the annual conventionof the Mortgage Bankers Association in Boston...

While lenders aren't going to hold hands around the campfire singing Kumbayah, there is something to be said for attending industry events, sharing stories and gaining a new perspective on what might be established thinking.

THIS JUST IN: Deutsche Bank on Tuesday trimmed staff at its alt-A/conventional mortgage affiliate.For the full story visit http://www.nationalmortgagenews.com.

Last week, we reported how loan brokers were getting blamed for the nation's current mortgage mess. I receiveda ton of e-mails, several with epithets aimed at consumer advocate Bruce Marks of Neighborhood AssistanceCorp. of America who before Congress likened brokers to a pest commonly found in several Jersey City apartmentsthat I rented in my youth. Let's just say many brokers were offended by Mr. Marks' comments. And, Mr. Marks, ifyou're thinking of attending any broker shows over the next few weeks, I wouldn't. Anyhow, this e-mail responsefrom “Lennie” shall serve as a rebuttal to Mr. Marks' comments: "In 14 years I never, nor anyone that hasworked for me, crossed the line of illegal activities to get a paycheck and when those crazy ass investors cameout with things like the stupid interest-only (loan) I refused to sell them and anyone that wanted one I told themno and if they went elsewhere to get it I'd say call me when you see what you got into.This type of program wasstupid and greedy created by investors not brokers." Thanks, Lennie. Now, I would like to ask readers this:if you have any enlightening stories concerning Wall Street account executives looking the other way, or caringmore about volume than loan quality, send them my way. I've heard some already, but I'm all ears. I will keep yourname confidential, if you want. My e-mail address is Paul.Muolo@SourceMedia.com…

What a week in Washington! In Capitol Hill testimony on Thursday loan brokers were portrayed as the Great Satan of the subprime crisis. This is what housing advocate Bruce Marks had to say: "Brokers are like cockroaches. Once you step on them, there are five more." He told a House committee that a "massive" amount of Americans will lose their homes in the coming year, adding, "Economic terrorism is what's going on this country." He also bashed Countrywide's lending record. On Wednesday, on the Senate side, Martin Eakes of the Self-Help Credit Union suggested that yield-spread premiums should be prohibited which is more, or less, like saying loan brokers should be put out of business. (The way things are looking brokers might be out of business anyway.) All of this raises an interesting question: How did loan brokers come into being? As I recall -- and I'm going by memory -- the broker movement started in the wake of the S&L crisis 20 years ago. When hundreds of thrifts went bust, laid-off loan officers became "freelancers" for Anaheim Savings, Guardian Savings, Countrywide and others. If you have any recollections about the evolution of brokers drop me an e-mail at Paul.Muolo@SourceMedia.com...

On the heels of President Bush's speech last week, I think it's important to define exactly what a new direction means and why one is required. Simply ending the surge because we can no longer support the current troop level is not a new direction, it's just trying to use the same old failing plan in the hopes that it will succeed this time around.