Encore Credit Corp. of Irvine, Calif. funded its first loan back in March. In the second quarter, the firm originated a whopping $243 million in home mortgages, according to the upcoming issue of the Quarterly Data Report. If the firm's second-quarter run-rate keeps up, Encore will be doing $1 billion a year in no time at all...
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Late this past week FM Watch slammed Fannie Mae and Freddie Mac's record on buying first-time homebuyer (FTHB) loans. Fannie's PR bulldog Bob McCarson raised an interesting point: "Why don't you ask them how their members are doing on this issue?" OK, we will. FM Watch's member/backers include: J.P. Morgan Chase , Wells Fargo Bank and subprime giant Household Finance (among others). We'd like to officially ask these lenders how much of their production over the past six years entailed making residential loans to first-time homebuyers. We'd also like to ask GE Mortgage Insurance the same question: How much of the loans your firm insured over the past six years were mortgages made to first-time buyers? Please submit your answers to me for next week's Weekend Briefing...
To criticize Fannie and Freddie, FM Watch analyzed "Annual Housing Activities Reports" the two file with HUD each spring. These same reports contain some interesting nuggets of information, such as: in 2001 Fannie Mae bought about 123,000 (almost $10 billion) in FHA loans -- a 261% increase from the year before. This figure shows that Fannie, clearly, has an insatiable appetite for government-backed product... FM Watch's consultant on the FTHB project was Ed Rothschild of PodestaMatton...
If you think that interest rates (mortgage rates in particular) are ready to rise anytime soon think again. Here's why: the stock market is on its back and sinking deeper each week. That means new cash is staying on the sidelines. It also means that investors continue to put money into bonds which means bond prices will increase, but yields will decline. Since mortgages are priced off of bonds (the 10-year Treasury), there seems to be no engine out there driving rates higher. Because the economy is still weak (GDP advanced at a listless 1.1% seasonally adjusted annual rate during the April-June second quarter), that means Alan Greenspan and the Fed won't hike rates anytime soon. At the very least, the mortgage industry is probably looking at another six terrific months, maybe more...
AND FINALLY: Morgan Stanley is trimming its 2003 earnings estimate on IndyMac Bancorp, Mike Perry's shop. Morgan sees higher chargeoffs and expenses ahead.
