The Fannie/B of A Divorce: What About the Kids?

Ah, the morning after a bitter split. Late yesterday Brian Moynihan of Bank of America walked into Fannie Mae's bedroom and told that secondary market hussy that the marriage was over. “No more loans for you,” Moynihan shouted as he left the boudoir, suitcase in hand and a one-way ticket to Virginia where his new best friend, Freddie, awaited. (Okay, I made that part up but you get the drift.) But many questions remain about the bitter split such as: what about all those mortgage servicing rights that B of A processes on behalf of the GSE? Will Fannie buy any more product from the bank – like the $74 billion of MSRs that it took in last fall? Who knows, but it would appear that the mortgage industry has just entered a new level of the Twilight Zone.