THIS JUST IN: Who says super jumbo lending is dead? Directors Financial Group of Aliso Viejo, Calif., is telling customers it can fund mortgages of up to $5 million. Its partner is a Japanese bank. The mortgage banker will fund 30- and 15-year loans and even 40-year notes. However, only California homes are eligible which means our nation's movie stars are in luck. Will the product wind up in a jumbo securitization some time? Answer: Probably not, but we continue to hear reports that more firms —besides Redwood Trust —are continuing to work on private-label deals. Then again, we've been hearing that line for months. Message to these conduits: come out with a deal already or shut up...
Meanwhile, because of their (rare) jumbo MBS deal of the spring, we understand that Redwood officials are held in high regard in certain Washington circles. The publicly traded REIT is based in California. Several months back National Mortgage News published a story a about how REITs might actually become large players in residential finance. First off, they don't have to deal with bank regulators. Who knows: maybe Eric Billings will come out of retirement. Any thoughts? Drop me a line at
And now for a word about interest rates. I jokingly mentioned in an e-mail blast Friday morning that the way the U.S. economy is going we could see a 30-year FRM at 3%. But is it really possible? If the yield on the 10-year Treasury falls to 2.5% or lower will some lender go out there and fund such a mortgage (provided a point or so is paid upfront)? And think about the ramifications for servicing rights. A 30-year FRM at 3% should (in theory) never prepay. It might even save some marriages. Follow my logic here: a married couple with a 30-year FRM at 3% who are having relationship problems might come to their senses. I can hear the husband now: "Honey, who cares about the kids. But for the sake of our 3% loan let's stay together." Just a thought...
THE BIG PICTURE: I know this sounds silly, but Fannie Mae lost "just" $1.2 billion in 2Q. And that was after it paid Treasury a couple of billion in "dividend" payments which is really a joke when you think about it. Fannie gives Treasury money each quarter and Treasury pumps it back in when Fannie's regulator asks to plug the red ink oil leak. Freddie Mac earnings are due any moment and it's entirely possible that it could earn a profit (pre-dividend payment). It stands to reason that these two mortgage giants (now in conservatorship for almost two years) have taken all the "hits" they are going to take. And as I noted several months back: if they keep jamming delinquent loans back to seller/servicers, it should have a major effect on their red ink flow. (We may see $20 billion in GSE buybacks this year.) Personal to Ed DeMarco: Where is all the buyback money? Can we have a public accounting? Then there's the mortgage insurance companies. MGIC, PMI, Genworth, Commonwealth, RMIC and the rest of the gang have been paying some hefty claims for two years now. It has to add up eventually. So will Freddie enter the black? It should, some day. Meanwhile, Treasury will hold a public forum in mid-August on Fannie and Freddie. Early next year the White House will release its blueprint on the future of the GSEs. I think it's safe to say that whatever's eventually decided —and I'm not sure anything will be decided legislatively —that the future of this industry will lie in the balance. In short, what Congress (and the White House) ultimately decides will shape how mortgages are made for the next (say) 50 years. (Of course, if an asteroid hits the planet all bets are off.) As I write this, factions are already forming and alliances are being struck. From what my industry sources tell me, the megabanks are already jockeying for position, trying to get the Treasury's ear on how they should write the 5% risk retention rule for private label MBS. Stay tuned...
Is the National Association of Mortgage Brokers going "green"? That's one way to look at it. The trade group recently vacated its office space in McLean, Va. NAMB CEO Roy DeLoach told us that even though it doesn't really have a main HQ anymore the group has "executive office space in Fairfax for back office and staff needs. Not sure if there is a story here just being wise with money. We are just using the new Web-based office operations (cloud computing) to save members money and make staff happy to work for NAMB. They all have an extra hour or two of their lives back because there is no commute. You can say NAMB is going green." OK...
No wonder why Wilbur Ross wanted to buy United Guaranty, AIG's mortgage insurance unit. UGI posted pretax net income of $226 million in the second quarter. Reporting by NMN's Bradley Finkelstein...
As part of its case against former Countrywide CEO Angelo Mozilo, the Securities and Exchange Commission is now deposing certain officials quoted in the book, "Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis." We have no more details on the situation but stay tuned. Meanwhile, a new report from Bloomberg says Mozilo said the SEC now admits the home lender wasn't hiding from investors that it was originating risky mortgages. Mozilo, in a recent court filing, asked a federal judge to rule on the SEC's fraud allegations, saying the "undisputed evidence" shows there was no wrongdoing. Anyone who read National Mortgage News during the "go-go" housing years knows that. The question now might become: Just how inept is the SEC?
WASHINGTON NEWS: The Federal Housing Administration is rolling out its special refinancing program to help underwater homeowners take advantage of the historically loan mortgage rates. "Very soon, we will be introducing the new FHA Short Refinance program —an expanded refinancing option for non-FHA borrowers who are underwater and owe more on their home than it is worth," Housing and Urban Development secretary Shaun Donovan said. The secretary spoke at a foreclosure prevention and housing counseling event in Riverdale, Md., on Friday morning. Reporting by NMN's Brian Collins.
I CONTINUE TO BE SORRY ABOUT THAT: The outsourcing firm working on Web stuff for this column (how's that for technical talk) are still trying to fix the comment function. Hang in there. It should be operational soon. In the meantime, you can e-mail me directly at
QUOTE OF THE WEEK: This comes from another blogger/Web columnist but it's a good one: The quote of the day/week/month is from the CEO of homebuilder D.R. Horton. On a recent conference call with analysts, CEO Donald Tomnitz said, "I don't want the tax credits (homebuyers) to be re-enacted or be recreated or extended. We want to get back to a normalized market. It's a lot easier —designing your business with the current demand as opposed to having any kind of stimuluses or incentives to create abnormal demand."
DATA STUFF: As I noted recently, the 1Q edition of the Quarterly Data Report is now out. (We are now busy working on the 2Q edition.) The QDR provides industrywide composite data on loan production and servicing and specific figures on the top 100, including delinquencies. A new feature for the QDR is our ranking of the nation's top FHA lenders. If you're looking for jumbo production numbers try the Alternative Products Quarterly Data Report. For more info on both drop an e-mail to
OUR RESEARCH REVEALS: The top warehouse lender in the nation is Bank of America. For the complete ranking see the Quarterly Data Report.
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THE LAST WORD: "This week, FGIC shuffled off with the parent companies of other monoline bond insurers into the oblivion dictated by a bankruptcy proceeding. The lack of drama attendant to its demise stands in sharp contrast to the systemic risk resulting from the discovery in the fall of 2008 that these seemingly regulated insurers had bet the farm on complex structured-finance instruments about which they had nary a clue." — analyst Karen Petrou.
