Loan Think

The Federal Home Loan Bank of Chicago's "Mortgage Partnership Finance" (MPF) marked its fifth birthday recently. The bank sent out a press release noting the milestone, taking a mini-swipe at Fannie Mae and Freddie Mac: MPF "continues to offer FHLB members a better alternative than selling their fixed-rate loans to the secondary marketing agencies." Outstanding MPF loans now total $30 billion, a fraction of what Fannie Mae ($740 billion) and Freddie Mac ($520 billion) have on their books. Of course, the Chicago FHLB cannot (or should I say does not) securitize its production which limits its ability to be a true competitor to Fannie and Freddie. MPF is not open to mortgage bankers and brokers and the Chicago bank doesn't market the program to industry participants. The MPF program is the brainchild of current Chicago bank president Alex J. Pollock. General Electric Mortgage Insurance, Raleigh, N.C., is involved in "bulk" insuring some of the loans...

Business appears to be rocking at Nexstar Financial Corp., St. Louis, a provider of outsourced mortgage services. Founder and chief executive Richard (Rick) Thornberry visited with National Mortgage News this past week, bringing the news that he had recently hired Tom Wind to be the firm's chief financial officer. Tom joined the privately held Nexstar ( KKR is one of its chief backers) from Citicorp Mortgage, which like Nexstar, is based in St. Louis. Tom, like Rick, is also an alumnus of Prudential Home Mortgage which was sold to Norwest Mortgage (now Wells Fargo Home) in the mid 1990s. (Rick began toying with the Nexstar concept when he left Citicorp Mortgage in 1998.) So, how good is business at Nexstar? This year, its first full year of operation, it anticipates funding more than $1 billion in home mortgages. Roughly 75% of its production is conventional. ( Fannie Mae is a key business partner for the upstart.) By year-end, Nexstar -- which can fund in its own name or that of its clients -- hopes to have a "run rate" of at least $2 billion a year...

The Government National Mortgage Association is coming off a record year in which it securitized $163.5 billion in FHA and VA loans. That's the good news. The bad news is that its overall share of the production market is at a new low. According to figures compiled for the new Mortgage Industry Directory, Ginnie Mae's share of the overall production market fell to just 7.9% last year. Over the past five years, its high was 11.4% -- back in 1999. This could add fuel to those pushing GNMA 'Choice' legislation as one way to improve its future...

The biggest "current" mystery in mortgage banking is the identity of the buyer who won the bid for HomeSide's $13 billion in servicing (believed to be GNMA rights). On Monday National Mortgage News reports that it could be Aurora Loan Services, but late on Friday speculation began to shift to Midfirst of Oklahoma City. Stay tuned...

Is Fannie Mae ready to take over the subprime market? Not exactly but a recent research note by Morgan Stanley analyst Ken Posner points out that the secondary giant has shown "signs of success" in the niche. In the report Posner says Fannie purchased $9.5 billion in "expanded alternatives" in 2001. In case you're wondering "expanded alternatives" is Fannie's "nice" word for subprime lending. Morgan estimates that the subprime niche is $400 billion in size. (The Quarterly Data Report estimates the subprime market to be between $150 billion to $200 billion a year in terms of production, and $350 billion in terms of receivables.) In the research note Posner says that Fannie spent much of last year "training and certifying lenders in the intricacies of subprime marketing, underwriting, and processing." He adds: "In some regions of the country Fannie Mae has now achieved 80% penetration among its lenders for subprime products; this was not the case for 2001." The analyst made his comments after spending a day with Fannie's senior managers...

Mortgage brokers and wholesale funders take note: On Friday the yield on the 10-year Treasury (which most mortgages are pegged to) fell to 5.03%. Will the refi boom -- which is easily more than a year old -- get a new set of sea legs?…

Countrywide's stock crossed over the $50 a share threshold on Friday, just a tad shy of its 52-week high. The company is benefiting, in part, from takeover speculation. Now that Citigroup agreed to buy #13 originator Golden State Bancorp ( First Nationwide Mortgage is the mortgage sub there) gamblers, I mean investors, are betting that Countrywide is the next logical target. Sources note that Countrywide is not for sale. Analyst Mike McMahon of Sandler O'Neill believes the stock has risen lately because it's cheap. "If you want the premier mortgage banker in the country, Countrywide is it. This is a highly profitable company"...

It appears the Government National Mortgage Association has yet to commit any of its thoughts to paper concerning Ginnie Mae "Choice." Moreover, officials at the HUD-controlled unit have yet to say boo (at least publicly) about the proposed Choice program which needs an act of Congress to make it happen. Some factions of the mortgage insurance industry are lobbying hard for Choice as a low payment alternative to Fannie Mae and Freddie Mac. Choice likely won't see the light of day this year, said one lobbyist close to the situation. "But there's always next year," he said...

Ex-HomeSide Lending CFO Blake Wilson has been hired as CFO of Alliance Mortgage in Jacksonville. Apparently, Mr. Wilson was brought on board earlier this year. Alliance is privately-held and does not typically issue press releases on such matters. Last month former HomeSide president Kevin Race was hired as president of HomeBanc Mortgage in Atlanta...

The market for "flow" servicing deals is anemic these days, says MIAC's Dan Thomas. According to Mr. Thomas, quite a few originators are selling their newly originated mortgages "servicing-released" to the mega buyers instead of cutting separate flow deals...