Loan Think

A large bank that doesn't have a major presence in mortgages is on the prowl for acquisitions, at least that's what sources say. Which one is it? No one is being specific, but one thing is for certain -- plenty of mortgage companies have their ears open to offers. According to Don Henig of American Home Mortgage of Long Island, "tons" of mortgage firms are available for purchase. The publicly traded American Home hopes to be a buyer, but at the right price. American's Mark Filler (a former Prism Mortgage executive) is "aggressively" looking for deals, said Mr. Henig. For more details on deals see the Monday, Jan. 19 edition of National Mortgage News...

The Office of Federal Housing Enterprise Oversight thinks ousted Freddie Mac chief executive Leland Brendsel knows a bit about Wall Street's role in some of the questionable accounting maneuvers that are central to the company's $5 billion accounting scandal. But Mr. Brendsel -- who has never spoken publicly about the matter since being forced out in early June -- isn't talking. His stance has led to briefs and counterbriefs being filed in U.S. District Court in Alexandria, Va. In summary, OFHEO has subpoenaed his cooperation but he has fought back, questioning the agency's legal authority to do so. Unlike other federal banking agencies, OFHEO cannot file civil claims directly and instead must revert to the administrative law process. This hampers its ability to take tough action against alleged wrongdoers. But the OFHEO briefs filed in Virginia are interesting because it clearly shows that the agency is not done poking the coals of this scandal, in particular Wall Street's role in the alleged shenanigans. "Mr. Brendsel is needed to get a better understanding of the relationships that Freddie Mac had with the broker-dealers and how Freddie Mac worked with them to develop and execute the transactions," says OFHEO deputy general counsel David Roderer in one filing. OFHEO is investigating the role Morgan Stanley and other broker-dealers played. (As Deep Throat once told Bob Woodward: Follow the money.) Another question begs: will New York attorney general Elliot Spitzer eventually get involved? As long as he's mopping the floor with Wall Street, why not take a look at their role in the esoteric and virtually unregulated derivatives market? Mr. Spitzer reminds some of another (now former) crime fighter, Rudy Giuliani, who cleaned up Wall Street in the go-go 1980s. Mr. Giuliani successfully ran for public office. Spitzer is expected to take a run at governor...

So, what were the biggest mortgage-related stories in 2003? According to the informal reader survey that we conducted over the past two weeks the three biggest stories of the year were the Freddie Mac scandal, the production/refi boom and the RESPA saga. Interestingly, more than a few voters noted that another big story related to the Freddie Mac accounting scandal is the new "vulnerability" of Freddie Mac and his chief competitor, Fannie Mae. As one voter told us, "These two can no longer be looked upon as being untouchable. They are now vulnerable. They can no longer argue that they are well managed." Other mortgage stories that garnished votes as being big stories include the Fairbanks predatory servicing scandal, the financial meltdown of Capitol Commerce of Sacramento, Calif., and the anticipated volume decline of 2004. One wise guy voter said that Hanover Trade announcing the "successful installation of Hanover/Busch 7.0 at Wells Fargo" was a big story. That voter's identity is being withheld to protect his reputation in the industry...

So, what were the biggest mortgage-related stories in 2003? According to the informal reader survey that we conducted over the past two weeks the three biggest stories of the year were the Freddie Mac scandal, the production/refi boom and the RESPA saga. Interestingly, more than a few voters noted that another big story related to the Freddie Mac accounting scandal is the new "vulnerability" of Freddie Mac and his chief competitor, Fannie Mae. As one voter told us, "These two can no longer be looked upon as being untouchable. They are now vulnerable. They can no longer argue that they are well managed." Other mortgage stories that garnished votes as being big stories include the Fairbanks predatory servicing scandal, the financial meltdown of Capitol Commerce of Sacramento, Calif., and the anticipated volume decline of 2004. One wise guy voter said that Hanover Trade announcing the "successful installation of Hanover/Busch 7.0 at Wells Fargo" was a big story. That voter's identity is being withheld to protect his reputation in the industry...

The Pre-New Year's Edition:

The Special Holiday Edition:

The Special Holiday Edition:

If you have some spare time during the holiday season and want OFHEO's view on just what kind of accounting shenanigans Freddie Mac was up to the past four years, I strongly suggest you read the agency's new special examination report on the company's $5 billion re-audit scandal. (Some of the best nuggets are in the footnotes.) But here's just a sample of the goodies, some of which is my paraphrasing:

A top-10 mortgage banker is apparently on the auction block. To find out which one, read the Monday, Dec. 8 edition of National Mortgage News ...

Once again (and just a few days before Thanksgiving) the media Gods shone their light down on journalists covering Freddie Mac (and Fannie Mae.) Here's some of the highlights of the past week: Freddie admitted that it indeed under reported earnings for the past several years by a whopping $5 billion, but wait, it actually overstated earnings by $1 billion in 2001 and should've been taking (but wasn't) some massive writedowns on its derivatives. To boot, it fired its director of shareholder relations, Rob Weiss (a MortgageWire exclusive) and has spent at least $100 million (and counting) on fixing its accounting woes. Yes that's right -- $100 million. It has yet to report any earnings for any quarter in 2003. It revealed on Friday that 2003 earnings won't be ready until mid-year 2004. During the conference call announcing the long awaited earnings restatement, interim CEO Greg Parseghian said, in general, "the best is yet to come." We assume that this is not a tip-off to reporters that we'll have plenty more negative news to write about in the coming months...