What We're Hearing

As most mortgage professionals know, the subprime business is enjoying a bit of a renaissance these days. According to the Quarterly Data Report, lenders operating in the sector funded $106 billion in subprime mortgages in the first half and are on track to fund more than $200 billion this year. However, some industry executives say buyers of subprime product are reverting back to the "old days" (pre-fall of 1998) by paying as much as 106 and 107 for loans. But one saving grace is the yield curve (the difference between short- and long-term rates). Whether overpaying by some firms now will result in train wrecks later on is a matter of debate...

At least two subprime giants, Household Finance and Conseco Mortgage, are having their troubles. Household's stock is in the tank and Conseco's parent is a candidate for bankruptcy. A few years back, insurance conglomerate Conseco Inc. paid a stunning $7 billion for GreenTree Financial, the predecessor company of Conseco Mortgage. One investment banker told us that the Conseco deal will easily eclipse First Union's $2 billion-plus purchase of The Money Store as the worst deal in the annals of mortgage banking...

In the 2001-2002 election cycle, Fannie Mae chairman Franklin Raines has given (so far) a total of $3,000: $1,000 each to Rep. Ken Bentsen , Sen. Richard Shelby and another $1,000 to the "Friends of Rahm Emanuel." Emanuel worked in the Clinton White House. As you might recall, Mr. Raines was OMB director in the same administration...

The Federal Deposit Insurance Corp. has set an Oct. 2 bid deadline for its auction of $85 million in commercial and consumer loans. The assets belonged to the now defunct Connecticut Bank of Commerce...

IN CASE YOU MISSED: The top retail lender in the second quarter was Wells Fargo Home Mortgage with $26.5 billion...

AND FINALLY: In the second quarter, GE Mortgage Insurance reclaimed the No. 3 spot among MIs in terms of "new policies" written. It edged out Radian $10.26 billion to $10.14 billion.