Loan Think

I caught the last two hours of HUD's "public" RESPA forum on Thursday. Here's a few takeaways thatdidn't quite fit in the stories published on MortgageWire and National Mortgage News:lenders cannot guarantee escrow amounts and partial interest payments prior to closing because most of them don'tknow what this cost will be -- especially if the closing date keeps moving; public interest lawyers want the consumerto have the option of comparison shopping but no one is in agreement on how to do it; Section 8, the anti-kickbackprovision, is needed to help consumers but also is a deterrent to developing a one-price settlement package; theNational Association of Mortgage Brokers does not support packaging and believes fraud occurs most oftenwhen there is a one-price package offered; few in the industry support a "black box" concept of a one-pricepackage. And that's not all. One lender told me that he is hardly a fan of consumer interest attorneys and believesthey have no clue about what they're talking about because they've never closed a loan in their lives. During theforum reporters were put in a separate room to watch the meeting via closed-circuit TV, but the agency did nothave a master list of participants so it was hard to identify all the speakers. In one audience shot, I thoughtI saw GSE critic Bert Ely, but I'm pretty sure it wasn't him. For the full story, read NMN. Don'tsubscribe? Call: 800 221-1809…

The general media is going ga-ga over interest-only loans and not exactly in a good way. Are these loans goodor bad for consumers? The Mortgage Bankers Association and many lenders we know have taken the positionthat the loans are just fine as long as they are properly underwritten. Still, some might consider IOs a bit ofa fad. Time will tell but while we're on the subject of lending fads, we dug up some old tables NationalMortgage News published on another loan fad -- the 125% high LTV mortgage. Remember that once hot product?Back in 1998 the top high LTV lenders in the nation were FirstPlus Financial, Empire Funding, AMAXIMISLending, Life Bank and Master Financial. Now, how many readers can tell me which of these shopsare still around? Hint: Life is (technically speaking) still around but under a different name. Send an e-mailif know the answer...

If you thought RESPA reform was dead, think again. On Monday June 27 Housing and Urban Development secretaryAlphonso Jackson will unveil the agency's roadmap for reforming the Real Estate Settlement Procedures Act.A conference call on the matter starts at 2 p.m. EDT…

Late this past week Wayne Lee resigned as chief executive of Ameriquest Mortgage and presidentof its affiliate, wholesaler Argent Mortgage. Together Ameriquest/Argent is the largest subprime/nonconformingfunder in the nation, according to the Quarterly Data Report. In a statement issued by the company, Mr.Lee said he is leaving after 15 years "to take on new challenges and explore new opportunities." Overthe past year there has been constant talk of an Ameriquest-related initial public offering (or a bond offering)but so far it hasn't materialized. Ameriquest and Argent are controlled by Ameriquest Capital Corp. SeeMonday's National Mortgage News for more details. Don't subscribe to NMN? Call: (800) 221-1809...

As we went to press this weekend the yield on the 10-year Treasury was at 3.98%, but on Thursday it dipped aslow as 3.8%. A month ago it would have been hard to imagine that the 10-year would fall below the 4% mark. On Fridaythe employment number came out and it wasn't pretty: new jobs grew by just 78,000 and Federal Reserve watchersnow are of the mind that the central bank may be done -- for now -- raising short-term rates...

If you're looking for an update on the shakeup at the Lehman Brothers - owned Finance Americaread the Monday edition of National Mortgage News. Lehman has put BNC Mortgage chief KellyMonahan in charge of FA. Don't subscribe to NMN? Call: (800) 221-1809...

Lehman Brothers, to some degree, has reorganized its Finance America wholesale subprime unit.Out in the cold is FA's chief executive, chief operating officer and the head of human resources. For the breakingstory see the Monday morning posting of MortgageWire, the daily website of National MortgageNews...

Despite what you may be hearing or reading, it appears that the Treasury Department (read the WhiteHouse) has no plans to cave whatsoever on the issue of portfolio limits for Fannie Mae and FreddieMac. Industry officials tell us that Treasury secretary John Snow is quite engaged in the issue andthat one of his biggest concerns is systemic risk of the banking industry. Officials say he fears that if a meltdownoccurs at Fannie or Freddie it could hammer the nation's depositories because banks hold billions of dollars inGSE securities. Treasury, we're told, is playing tough on GSE legislation and wants those portfolios reduced nomatter what. But the question remains: what is the "magic" number at which you cap the portfolios. Currently,the two hold $1.4 trillion in mortgage assets on their balance sheets...

Now, why the heck would investor Kirk Kerkorian want to own so much General Motors stock for?Could it be he thinks oil is going to come down in price and the SUV market -- which GM is hooked on like a junkie-- will revive? (Don't bet on it.) Or could it be that he really wants a crack at GMAC Residential Mortgage,RFC and GMAC Commercial Mortgage? Just as Standard & Poor's was downgrading GeneralMotors and GMAC to junk status, GM announced it had "restructured" GMAC Mortgage and RFC, placing themunder a new holding company called Residential Capital Corp. The holding company is talking to the threerating agencies about getting their own rating. Why would Mr. Kerkorian want the automaker's mortgage empire? Maybebecause it earned $1.1 billion last year. Of course, GMAC Commercial (which is not part of the new holding company)soon may be sold to investment banker Lewis Ranieri and his partners. Then again, the commercial unit hadthe weakest earnings of three mortgage groups, just $204 million compared to $629 million for RFC and $275 millionfor GMAC Residential. For the full story on GM/GMAC's downgrade to junk, see Bonnie Sinnock's story in Monday'sNational Mortgage News...

When in doubt bring in the experts. The Federal Home Loan Bank of Seattle has hired Black Rock Financialand a firm headed by former Comptroller of the Currency Eugene Ludwig to assist it in getting itsfinances and management practices in order. Working on the account for Black Rock is the Treasury Department'sformer Fannie Mae/Freddie Mac expert, Peter Fisher. Visit the National Mortgage News websitefor the full story...