THIS JUST IN: It appears that H&R Block has a buyer for the $62 billion subprime servicing portfolio of Option One Mortgage. For the full story see the Monday edition of National Mortgage News. Don't subscribe? Call: (800) 221-1809...
Many industry veterans are scratching their heads about the huge CDO hits Citigroup has taken over the past few months. But is it really all that surprising? Back in the late '90s it bought Commercial Credit of Baltimore. That was a Sandy Weill deal. Then in 2001 Citi bought Associates First Capital from Ford Motors, paying a stunning $31 billion in stock. (That's not a typo.) Then two years later it paid $215 million to settle predatory lending charges against Associates. And this fall it bought Argent and Ameriquest's servicing unit. Then it wrote down the CDOs (mostly subprime) by $17 billion. Let's just say it paid $500 million for Ameriquest/Argent. (The purchase price was not disclosed.) When you add it all up that comes out to a subprime investment of $48.7 billion, factoring in the losses. Citi, of course, may one day recoup some of those loss reserves but it certainly seems like a lot of money. Just who at Citigroup was responsible? Charles Prince? It's easy to blame the former CEO, sure. Any insights? Drop me a line...
As I continue to research the roots of the subprime mess, I'm exploring subprime lending REITs and Friedman Billings Ramsey. If you have any insights about Eric Billings and Rock Tonkel of FBR drop me an e-mail at
Deutsche Bank's net income before taxes in the fourth quarter fell 25% year-to-year but its results were viewed relatively favorably as it managed to avoid the mortgage-related net writedowns during the period. "We had no net writedowns related to subprime, CDOs or RMBS exposures," said Josef Ackermann, chairman of the company's management board. Deutsche Bank's traders -- as reported by several newspapers -- have made a killing by shorting the ABX Index, proving that if Wall Street can't make money by betting on the subprime business it (at least) can make money betting against it...
According to a source whose identity cannot be verified, at least one rating agency is "beginning a comprehensive review of all our rated transactions. The 'Portfolio Review Project' is intended to reassure the market that our ratings accurately reflect the underlying credit risk of each transaction in the current market environment. This review will touch 422 transactions and done in rounds by vintage. Everyone will be participating and has been assigned transactions to review"...
Since the beginning of August, 28 investment funds have raised $30 billion with the bulk of the money targeted to buying distressed real estate and loans, according to CoStar Realty Information and other industry sources. According to the Quarterly Data Report, there is $1.2 trillion in outstanding subprime loans, 20% of which are in some stage of default. (To order the QDR send an e-mail to
Here's some more insight from a former contract underwriter who worked for several Wall Street firms (Bear Stearns, Lehman Brothers, Merrill Lynch and others) reviewing subprime loan files. He says that once contract underwriters like Clayton and Bohan gave their reviews to the Street, managers there likely played games with the findings: "My hunch is that the Street played with the data given to the rating agencies to get better ratings on their issuances. I don't think they would be greedy enough to actually alter the data, but to make certain omissions would be just as dangerous"...
IN CASE YOU MISSED IT: Merrill Lynch has closed its Minneapolis-based mortgage conduit, Specialty Underwriting and Residential Financial, known in the industry from its acronym, SURF. A Merrill spokesman in California declined to comment. SURF was started years ago by Dick Pratt, who later this month holds his annual Midwinter Housing Conference in Park City, Utah. Speakers include Bill Dallas, Angelo Mozilo, Brent Beesley, Bruce Harting, Michael Jessee, John Oros, Tom Vartanian and many more. Strap on the skis...
POLITICAL COMMENTARY: Mitt Romney officially pulled out of the presidential race on Thursday. Most mortgage banking professionals are probably asking themselves this: Did we really want an investment banker in charge of the nation?
MORTGAGE PEOPLE: Metrocities Mortgage has named Tom Sherman senior vice president.
DATA NOTICE: The Mortgage Industry Directory and the online version of the book are still available. Besides listing detailed information on the top 400 lenders and 300 servicers in the U.S., the MID ranks the nation's top funders of commercial mortgages. There's also information on loan brokers. The book has valuable contact information on the top executives and department heads at each firm. For more information e-mail
