Loan Think

This coming week National Mortgage News, Origination News and BrokerUniversewill jointly launch its first-ever "loan officer" survey for 2004. The aim of the survey is to get abetter handle on the LO market. Rankings on the nation's top LOs will appear later this year in these publications.If you're an LO for a mortgage banker, broker, or even a wholesale account executive, contact Elizabeth.Washington

Yet another Wall Street firm is entering the subprime market. This time around it's Friedman, Billings, RamseyGroup which is buying the Florida-based First NLC Financial Services, the nation's 31st largest subprimelender, according to the Quarterly Data Report. The purchase price is $88 million. FBR recently starteda mortgage trading desk, hiring a bunch of Freddie Mac employees. FBR, a busy bee in mortgage banking,also is taking subprime lender Fieldstone public...

After President Bush was re-elected we ran a story or two discussing the possibility that the Bush 2II might eliminate the mortgage interest deduction. Well guess what? On Friday Treasury secretary JohnSnow declared that when it comes to tax overhaul "everything is on the table." Everything means themortgage interest deduction...

Amid the financial and political meltdown of Fannie Mae, mortgage executives (as well as all financialservices executives) should take away these two important lessons: (1) A company cannot make a $9 billion accountingmistake and expect that its top executives will survive -- no matter what the excuse. (2) A financial servicescompany in trouble with its regulator should try and appease that regulator and work things out -- not battle andpublicly embarrass that regulator. Witness the Oct. 6 House subcommittee hearing held by GSE subcommittee chairmanRep. Richard Baker, R-La. At that hearing a defiant Franklin Raines (then the chairman and CEO ofFannie) vehemently denied all wrongdoing, portraying himself and his company as innocents. In short, Mr. Rainestried to make officials at the Office of Federal Housing Enterprise Oversight look like fools. Fannie Maepolitical crony Rep. William Clay, D-Mo., came to Mr. Raines' aid, decrying the hearing as the "politicallynching" of Mr. Raines. Then in November, Fannie's backers in Congress leaked to the press a HUD IG reportthat slammed OFHEO's conduct in regard to its investigation of Fannie's accounting practices. But in the end Fannielost -- it lost the game when the Securities and Exchange Commission ruled that the GSE's interpretation(not OFHEO's) of hedge accounting (FAS 133) was wrong. Who had asked the SEC to opine? Fannie Mae and Mr. Raines.Fannie has now unwound (or is about to) $9 billion in earnings dating back to 2001. Mr. Raines and CFO Tim Howardhave been shown the door. The board had to act. Why? Because OFHEO would've canned them as well. As we went topress the story was still unfolding and Christmas upon us...

Before we get to Fannie Mae, National Mortgage News has learned that a major subprime lender(very major) is once again toying with the idea of going public. To find out which one -- and how much it mightraise -- read the Monday edition of NMN. Don't subscribe to NMN? Dial (800) 221-1809. It makes agreat Christmas/Holiday gift...

Christmas is coming a little early this year to shareholders in title insurance giant, Fidelity NationalFinancial. The company is paying a special $10-a-share cash dividend. Yes, that's not a type-o: $10 bucks ashare. Just how is Fidelity doing this? It's recapitalizing its subsidiary, Fidelity National Information Services,which is securing a $2.8 billion senior secured credit facility from a consortium of bankers. FIS will repay allof its outstanding debt using the credit line and then distribute $2.7 billion to parent Fidelity National. Fidelitywill then take $1.8 billion of the $2.7 billion and give it to shareholders. Talk about a sweet deal. If you own1,000 shares in FNF stock, that's a cash windfall of $10,000...

Thanks Fannie Mae. Just when housing finance reporters thought they could take it easy during the holidayseason, the mortgage giant's name has surfaced in regard to a new/old swindle -- this one involving $6.5 millionin funds that Fannie got from a scamming mortgage banker based in North Carolina. How did this happen? Fannie,as usual, isn't talking, but it appears Fannie itself was defrauded and instead of blowing the whistle on the bogusloans it bought, instead it made the mortgage banker (First Beneficial Mortgage) buy the loans back (orat least compensate it for the loans). Follow so far? Good. This, according to court records, is what happenednext: FBM repaid Fannie by taking cash it received from Ginnie Mae pools and transferring that cash to aFannie account at Branch Banking & Trust. Fannie then transferred the money over to its account at theFederal Reserve Bank of New York. All these transfers took place back in 1998-1999. The government believes"high level" officials at Fannie knew the money it received from FBG was "fraudulently" obtainedfrom Ginnie. (How, exactly, Fannie officials knew this has yet to be explained.) Fannie Mae VP of single-familyoperations Samuel M. Smith testified at trial in the original FBG case. (FBG's owners were convicted twoyears ago.) The government now wants the $6.5 million that Fannie received from FBG back. How come you haven'tbeen reading about this in the press? Because prosecutors have sealed the record. Why would they do this? Accordingto court records, to prevent the $6.5 million from being "transferred to other accounts or locations."Who could potentially move the money in question? I would assume Fannie. To boot, three key subcommittee chairmenare steamed and want an explanation. Could a congressional hearing be next? Stay tuned...

Even though residential loan volumes have been dropping -- at $663 billion the third quarter was the secondworst of the past nine quarters -- mortgage rates haven't fallen a whole lot, which is strange. The FederalReserve has hiked short-term rates 100 basis points this year but the yield on the 10-year Treasury is at avery low 4.18%. What does this mean? Answer: that the yield curve is flattening and that many lenders (if thathaven't already) are experiencing a rise in their cost of funds. It stands to reason that if lenders are payingmore for liabilities (liabilities fund mortgage assets) that in time funders will be forced to increase the ratesthey charge for mortgages. But this hasn't happened yet. Already, we're hearing reports of margin compression inthe prime sector and to a lesser degree, in subprime and alt-A. It will be interesting to see what all these newnonconforming Wall Street conduits do when pricing pressures translate into weaker-than-anticipated profits...

Remember that $8 billion servicing portfolio that Guaranty Residential Lending of Austin, Texas, was peddling? The firm that bought it is a top-five servicer. To find out which one, read Monday's edition of National Mortgage News . Also in Monday's NMN is a story about a top-ranked Fannie Mae DUS lender that is for sale...

Remember that $8 billion servicing portfolio that Guaranty Residential Lending of Austin, Texas, was peddling? The firm that bought it is a top-five servicer. To find out which one, read Monday's edition of National Mortgage News . Also in Monday's NMN is a story about a top-ranked Fannie Mae DUS lender that is for sale...