Loan Think

Look for the Lehman Brothers-owned Aurora Loan Services of Colorado to ramp up wholesale subprimeproduction in 2003 and to add quite a few people...

The 19 or so Capital Hill staffers who were paid $200 each (for one hour of work) giving their opinions on FannieMae ads are now being asked to give the money back. Duff Stewart, evp of GSD&M, Fannie'sad agency, told National Mortgage News that he and his client were concerned enough about the matterthat he telephoned the House Ethics Committee to get its opinion on whether accepting the $200 for servingon a focus group violated House rules. It seems unclear whether a Hill staffer who serves on a focus group andis paid for his/her time is in violation of House rules. Whether a violation occurred will be determined by whois ultimately paying for the focus group (in this case Fannie) and whether the one paying the money (Fannie throughresearch group OMR) has any business before Congress. NMN first wrote about the matter in its December9 issue. More to come on MortgageWire this week...

Based on some of the bigger "stock-related" stories of thepast week, it appears as though mortgage rates will stay at their current low levels for at least the first quarter,probably longer. Bad news for stocks means good news for low rates. Among the negative reports: Ford Motorreporting a 17% drop in sales, AOL reporting a weak online ad market, and retail holiday sales looking decentbut soft. Late last week, the 10-year (which mortgages are pegged to) was yielding 4.11%...

Mortgage Scene

The M&A market for "name" mortgage firms has been mostly dead of late (everyone's too busy makingloans to even ponder the thought of selling) but one investment banker said recently that "there's a ton ofsmall firms" out there available for purchase. This year, according to the Quarterly Data Report, theindustry will fund $2.5 trillion in loans, but next year looks like a $1.5 trillion to $1.8 trillion year, whichis still darn good. Many mortgage professionals think the good times will last for another year. If you're lookingto sell, it's always best to sell now, while volumes stay high...

In the mortgage industry, it doesn't get any better than this. Then again that's what we were hearing last year. According to the brand new third-quarter issue of the Quarterly Data Report, residential funders originated almost $730 billion worth of loans in the three-month period ending Sept. 30. Leading the pack was Wells Fargo Home Mortgage with $89 billion in total production (retail, wholesale, correspondent). Washington Mutual ranked second with $75 billion, and Countrywide third with $63.6 billion...

UBS Paine Webber has been quietly building a retail mortgage effort to provide residential loans to its brokerage customers. The investment banker declined to discuss details of its plans, but may open up about it next year. Merrill Lynch operated a mortgage affiliate in Florida that did the same, but it is now outsourcing the business through Cendant Mortgage...

Refis forever? Some days lenders scratch their heads wondering just when -- if ever -- the refi boom will end. On Wed. November 6 the Federal Reserve will meet to discuss lowering the overnight Fed funds rate. A handful of economists, including MBA's Doug Duncan, think a 50 basis point cut could be in the cards. Stay tuned...

B>Rep. Richard Baker, R-La., wants OFHEO to brief him on what it knows about Fannie Mae shifting $135 billion in assets from "held to maturity" status to "held for sale" status. The shift apparently resulted in Fannie increasing its shareholder equity by $4 billion in the most recent quarter. The timing is interesting because the quarter just ended is the first in which Fannie (as well as Freddie Mac) must comply (for the first time ever) with OFHEO's much maligned risk based capital rule. (See National Mortgage News' MortgageWire affiliate on Monday for an update.) Fannie's stock price got knocked around a bit on Thursday...

The Federal Home Loan Bank of Chicago's "Mortgage Partnership Finance" program appears to be doing well. Or is it? MPF originations totaled $6.1 billion in the third quarter (thanks to refis, no doubt) and outstandings are ready to crack $35 billion. But there appears to be some dissention among the ranks, the "ranks" meaning other participating FHLBs. According to this Monday's edition of National Mortgage News, the FHLB-Atlanta, an active participant in MPF, is creating its own program and other FHLBs may follow suit, sources say. Technically, Atlanta will still offer MPF to its thrift and bank members, but some say it's just a matter of time before it bolts the program entirely. One observer familiar with MPF, says Atlanta's departure is "significant in terms of politics." He says there are differing opinions among FHLB presidents in regard to how much control Chicago exerts over the program. He predicts that other FHLBs that might follow Atlanta's lead include Boston, Dallas and maybe New York. Stay tuned...