THIS JUST IN: Add the name of Goldman Sachs to the list of firms eyeing the jumbo conduit space. And possibly PIMCO. We've heard the Goldman name before, but more confirmations have come in on that one. (Keep in mind that Goldman owns subservicer Litton Loan Services.) When exactly Goldman will start buying product is anyone's guess. One mortgage executive explained the situation like this: Goldman has created funds to buy securities with yield, but they can't buy any jumbo MBS because there isn't any to buy. So what do they do? They create their own jumbo MBS and buy the end bonds through their funds. Makes sense. I think…
In Monday's NMN we have a feature on jumbo programs at Union Bank of San Francisco. The company this week rolled out a new 30-year loan and is taking applications on mortgages that can be as large as $5 million. (Brad and Angelina may want to give Craig Cole at Union a call. Nick Cage, on the other hand, may want to inquire at a hard money lender.) If you don't subscribe to NMN, a subscription to our newspaper/website makes an excellent holiday gift. Call 800-221-1809…
In case you haven't noticed, the yield on the 10-year Treasury is hovering at the 3.3% level, almost a full point above its 52-week low. Mortgages are NOT pegged to the 10-year but as the Treasury bond rises in yield, mortgages usually follow. The question I have for readers is this: Is the rise in rates affecting your business? Have you heard any stories of firms hedging the wrong way and getting hammered? If so, drop me a line at
THE BIG PICTURE: Lately, the complaints have been piling up about lenders having much too tight loan standards or heaping on extra fees, making the home buying process unaffordable. One industry veteran who I've known for years estimated that because of tight underwriting, upwards of 30% of potential home buyers are being priced out of the market. "If you want to clear out all this [housing] inventory we have, you can't have this," he said. "I don't think the government realizes what it's done," a comment that leads to the irony of the situation: Uncle Sam controls Fannie Mae and Freddie Mac, and therefore has the power to control what they do, but it's not the lenders who set the standards in the primary market, it's the secondary market investors. Of course, it can be argued that new management at the GSEs is trying to prevent future losses and must please the Federal Housing Finance Agency. This puts the White House in a position of praying for a recovery in housing (on one hand), a recovery that is dependent on the GSEs. But on the other hand, the White House is being careful to avoid new losses at the GSEs. It's no secret that the National Association of Realtors has slammed lenders for being too tough. But once a house is sold, what does a Realtor care? This is what we call a conundrum. One NPL investor I know thinks the government has badly botched the loan modification effort and believes regulators should install “RAP” accounting that would allow sellers of NPLs to write off their losses over many years. He thinks this will stimulate the sale of NPLs to private sector firms who can buy product on the cheap and work it out more effectively. Moral of the story: housing/mortgages are wedded to government subsidies. True, but aren't other industries as well?...
And we continue to hear reports that Fannie Mae is looking at the possibility of selling NPLs, but is merely exploring the idea. We'd like to stress that nothing is imminent in this regard…
Meanwhile on the data front: late this past week NMN and the Quarterly Data Report released its final 3Q rankings for residential funders. The biggest gainer among the top ten was none other than Quicken Loans of Livonia, Mich., which grew originations by a whopping 88%. For a complete ranking of the top 100 see the new QDR. If you don't subscribe drop an e-mail to
Bring the scuba gear on Monday as CoreLogic releases its report on underwater mortgages. Glub, glub…
WASHINGTON NEWS: Joseph Smith, the White House nominee to be the new GSE regulator, is getting dragged into the fight over whether Fannie and Freddie should participate in a principal reduction program managed by the FHA. At Smith's confirmation hearing, Sen. Richard Shelby said writedowns of underwater mortgages would result in increased losses to the GSE conservatorships and the taxpayers. Shelby asked Smith if he would resist White House pressure on Fannie and Freddie to join the FHA short refinancing program which helps borrowers who are current, but under water on their mortgages. The North Carolina banking commissioner said he knows what it is like to run an independent agency. And as the FHFA director, the nominee said, he would view the principal reduction issue through the "screen" of a conservator to protect taxpayers. (Reporting by Brian Collins.)
MOVIE OF THE WEEK: "The Company Men," in which Ben Affleck, Tommy Lee Jones and Chris Cooper get canned at the fictional Boston company GTX, and then start over. The New York Times writes: "…the movie is realistic enough to make all corporate climbers, but especially men over 50, quake in their boots." Then again, if you're looking for something with a Christmas theme that involves mortgages and has a happy ending I can suggest "It's a Wonderful Life"…
DATA ANNOUNCEMENT: As I noted earlier in this column, the new 3Q edition of the Quarterly Data Report is out (or on the verge of being out). We have 12 years of back issues. Many firms buy the QDR as a tool that aids them in making projections about the coming year. Site licenses also are available. Again, if you have questions drop an e-mail to
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THE LAST WORD: GE just hiked its dividend for the second time this year. Perhaps, its commercial real estate business is looking up?
