Loan Think

Are some loan brokers millionaires? According to a recent Wall Street Journal article, in 2002,some brokers earned north of $1 million and a few almost $2 million. The WSJ also cited mortgage brokerageresearch done by National Mortgage News, which we greatly appreciate. But are brokers really loaded?According to a recent posting on NMN's "Grapevine" Internet site, the average broker is making$60,000 or less. Then again, one broker posting on Grapevine boasted 2002 earnings of $400,000. Of course, theGrapevine is totally anonymous and there is no way of verifying any of the information posted...

Fannie Mae caused a bit of a stir late last week when it confirmed that it had made a $70 million "floor"bid on the servicing platform of Conseco Finance, the largest player in the manufactured housing space.(Conseco's parent is in bankruptcy.) A Fannie spokeswoman quickly shot down speculation that the congressionallychartered mortgage giant wants to become a servicer. And of course, readers of National Mortgage Newsare aware that a few years back Fannie was talking to Alltel about buying its mortgage servicing operation.But hey, Fannie doesn't want anything to do with servicing, right? Yes, that's right. That's what the company said.Got that? Perhaps, Fannie fears that a new servicer could jack up the servicing fee on the underlying loans/ABS?(Roughly, 70% of Fannie's $10 billion in MH ABS is serviced by Conseco.) Perhaps, Fannie is concerned that Conseco'sservicing will fall apart in the hands of a new owner. One mortgage banker told us that if Fannie is so concernedabout the quality of the servicing, "I can recommend 10 good subservicers including HomEq, Wilshire,and a few others."...

In the fourth quarter, subprime giant Household International sold $3.8 billion worth of B&C servicingrights. The secretive Household, which is in the process of being sold to foreign bank HSBC Holdings, wouldnot disclose the price it received for the servicing or the identity of the buyer...

After years of trying (but not trying too hard), Alltel finally sold its mortgage/financial servicesunit this past week. Fidelity National paid a little more than $1 billion for the technology division. Atleast four firms looked at the unit over the past few months, sources say. One source said Fannie Mae "wasnosing around the deal." But a Fannie Mae spokesman said to the best of his knowledge the secondary marketgiant was not a suitor. "We may've been asking some questions because so many of our customers are on thesystem, but we weren't a bidder," said a Fannie Mae spokesman,,,

After years of trying (but not trying too hard), Alltel finally sold its mortgage/financial servicesunit this past week. Fidelity National paid a little more than $1 billion for the technology division. Atleast four firms looked at the unit over the past few months, sources say. One source said Fannie Mae "wasnosing around the deal." But a Fannie Mae spokesman said to the best of his knowledge the secondary marketgiant was not a suitor. "We may've been asking some questions because so many of our customers are on thesystem, but we weren't a bidder," said a Fannie Mae spokesman...

What future is there for the Mortgage Partnership Finance program if the examination of the bank(s) promotingit is weak? It's an interesting question. Although the MPF program is not mentioned by name, a draft copy of aGeneral Accounting Office report raises questions about the Federal Housing Finance Board and itsability to examine the 12 FHLBs it regulates. Critics of the MPF and FHFB also might read into the report thatcurrent FHFB chairman John Korsmo has politics in mind (not that there's anything wrong with that) whenit comes to FHLB public interest directors. The percentage of public interest director appointees who made politicaldonations prior to their initial appointments now stands at 75% (under current FHFB chair Korsmo) compared to 56%for former chair Bruce Morrison. The American Banker reported on Friday that two FHFB boardmembers plan to introduce an amendment to agency rules that would weaken chairman Korsmo's authority. Stay tuned...

Depending on what happens with the governor and the state legislature in Trenton, subprime lenders might soonbolt New Jersey. It all depends on pending legislation in the state, legislation that is intended to crack downon predatory lenders. "It could bring about a radical change," says attorney Wright Andrews. NewJersey is one of the largest production states in the nation...

Not since the heydays of Salomon Brothers and Lew Ranieri has Wall Street gone so ga-ga over themortgage business. But this time around the Street is focusing not just on securitization, but on production. Casein point: Morgan Stanley is about to make a big announcement on hiring an executive director of mortgagelending. The salary, we are told, is in the "upper six-figure" range. For more details see the Monday,Jan. 13 issue of National Mortgage News...

Here are some indicators to watch in the months ahead: Oil is now at $32.65 a barrel, and the 10-year Treasuryis at 4.05%. Mortgages are tied to the 10-year. Goods and products -- including lumber and gypsum board which gointo new homes -- are shipped via rail and truck. If oil keeps rising can U.S. home buyers (potential mortgageapplicants) anticipate a rise in new home prices? If yes, the average new mortgage will rise in terms of dollars.The stock market was off to a roaring start on January 2 which means bonds went the other way. Of course, overthe past three years most rallies have turned out to be nothing more than "bear" traps...

The Federal Reserve thinks MBS issued by Fannie Mae and Freddie Mac are consideredto be "of high credit quality" but still, the central bank, doesn't want to invest much of its moneythere. According to a recently released study by the Fed, Alan Greenspan and crew are concerned that ifthe Fed starts loading up on GSE debt and MBS it would have the effect of "inappropriately" fosteringFannie and Freddie's ability to expand their operations. "This expansion could further affect creditallocation and increase systemic risk," the Fed writes. The study was released before Christmas butwas actually penned two years ago when the Fed was concerned that there might not be enough Treasury instrumentsaround for it to purchase. Now that the economy is in the tank and the Federal government is back to runninghuge deficits (which means it will be issuing more Treasury bonds) the whole point is moot. (It's unclearwhy the report was released two years after being circulated internally at the Fed.) The Fed report notes thatat September 30, 2000, the GSEs, along with the Government National Mortgage Association had outstandingdebt of $1.575 trillion. The Federal government, today, has about $6 trillion in outstanding debt, and growing...