“I fear that with Fannie and Freddie reporting earnings again the whole debate on reforming them will fall apart,” one senior mortgage insurance official told me this past week. That was on Thursday, the day after Freddie Mac reported its first true net profit in almost two years, earning $676 million in the first quarter. The key to understanding Freddie’s earnings is to realize that it made the $676 million after paying the U.S. Treasury a $1.6 billion dividend on the preferred stock it owns. But if any “Friends of the GSEs” thought that perhaps Fannie Mae would turn in a similar performance for 1Q, those dreams were shattered late Friday afternoon when Fannie (a former true “Friend of Countrywide”) posted a whopping $6.5 billion loss for the quarter, and asked Treasury for $8.5 billion in taxpayer money to keep its capital position in the black. Indeed, if anyone is looking to understand why Fannie keeps bleeding red ink, here’s one word you need to understand: Countrywide. That now-defunct lender (incased inside of Bank of America and causing plenty of damage there, still) was Fannie’s best customer for a decade running and sold the GSE all sorts of toxic alt-A, payment-option ARMs and other products. Take Countrywide out of the equation and Fannie returns to profitability. It’s no wonder that some people in the industry (and outside) believe that B of A pulled off a major coup last year when it agreed to pay Fannie a lump sum to settle buyback claims. Perhaps, the Federal Housing Finance Agency should step in and rescind that deal—or so some have suggested to me…
And while we’re on the subject of Fannie, it’s interesting to note that the GSE is the one driving the debate over how servicing compensation should be changed. We’re told that it hopes to lower the minimum fee to at least 12.5 basis points (from 25) but really wants it to be 5 bps. Fannie apparently feels that by allowing mortgage firms to capitalize their servicing rights this has fed rampant industry consolidation. A recent Fannie white paper on this issue notes: “The creation of a capitalized MSR (mortgage servicing rights) may have contributed to consolidation in the mortgage servicing industry.” Have any thoughts on this? Drop me a line at
So, whatever happened to the National Association of Mortgage Brokers fight against the Federal Reserve and the loan officer compensation rule? Good question. NAMB has been quiet lately but we understand the trade group is moving ahead with its appeals. The National Association of Independent Housing Professionals has bagged the idea of using the courts, and has a plan to fight the rule—but isn’t quite ready to share details. Stay tuned…
DATA STUFF: If you’re looking for a full year ranking of all the top-ranked correspondent loan buyers and wholesaler funders (and more) that information is in the new Annual Data Report, which is published by National Mortgage News. The ADR, an Excel spreadsheet, also includes the nation’s top 100 retailers, servicers and much more. If you need telephone numbers and contact names that information can be found in the new edition of MortgageStats.com. For more on the ADR and M-Stats drop an e-mail to
IN RETIREMENT: Wells Fargo & Co. said late Friday that Mark Oman, senior executive vice president and head of its Home and Consumer Finance Group, is retiring after five decades in the business. (He started in 1979.) The “Anti-Angelo” (as he’s known in some quarters) built Norwest (then Wells) into the nation’s premier mortgage banking gorilla. Enough said.
IT’S ALL ABOUT JOBS: It’s no surprise that mortgage lenders (banks, thrifts, nonbanks) have been shedding thousands of jobs since early February as applications continue to ebb. I would wager that 99% of the cuts have come on the lending side of the business with servicers actually adding positions as more megabanks try to prove to the state AGs that, “Yes, Sir, I’m really trying to help our troubled customers.” Of course, with the yield on the 10-year falling to 3.14% Friday maybe some mortgage lenders will call back all those processors and underwriters they canned…
One last note about the national job report: state and local governments shed 22,000 workers during the month of April. I would guess that over the next two years state and local job losses will average 15,000 to 20,000 per month as governors and legislatures try to match revenues and outlays. Hopefully, none of those let go have big mortgage obligations. Yeah, right…
WASHINGTON NEWS: Calling the foreclosure process "fragmented," the Government Accountability Office recommended that banking regulators and the new Consumer Financial Protection Bureau develop plans for regulating mortgage servicers that would include standardizing foreclosure practices. In a new report, GAO also said that while federal laws include mortgage-servicing provisions, they are largely focused on consumer protection at the time of origination, not foreclosure requirements.
DATA STUFF: With residential loan volumes becoming a challenge this year, you need to know which firms are on top and thriving. Get a leg up on the competition by checking out NMN’s Quarterly Data Report, an Excel spreadsheet and database product that tracks the top 100 every quarter without fail. To view a sample or order the QDR send an e-mail to
KEY CONFERENCE YOU NEED TO ATTEND: On June 16-17 SourceMedia will hold its annual Distressed Assets Conference in the Big Apple. Upcoming: SM’s 3rd Annual Best Practices in Loss Mitigation Conference. That show is in Dallas. SourceMedia is the publisher of NMN, Origination News, Mortgage Servicing News, Credit Union Journal, U.S. Banker and other assorted financial publications.
CALLING ALL LOAN OFFICERS: We want to know how you did in 2010 and your outlook for this year. NMN's new LO survey can be found at
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THE LAST WORD: Need to see a good movie? Check out “Win Win: with actor Paul Giamatti, Bart’s kid.
