The Federal Reserve thinks MBS issued by Fannie Mae and Freddie Mac are consideredto be "of high credit quality" but still, the central bank, doesn't want to invest much of its moneythere. According to a recently released study by the Fed, Alan Greenspan and crew are concerned that ifthe Fed starts loading up on GSE debt and MBS it would have the effect of "inappropriately" fosteringFannie and Freddie's ability to expand their operations. "This expansion could further affect creditallocation and increase systemic risk," the Fed writes. The study was released before Christmas butwas actually penned two years ago when the Fed was concerned that there might not be enough Treasury instrumentsaround for it to purchase. Now that the economy is in the tank and the Federal government is back to runninghuge deficits (which means it will be issuing more Treasury bonds) the whole point is moot. (It's unclearwhy the report was released two years after being circulated internally at the Fed.) The Fed report notes thatat September 30, 2000, the GSEs, along with the Government National Mortgage Association had outstandingdebt of $1.575 trillion. The Federal government, today, has about $6 trillion in outstanding debt, and growing...
Oak Value Fund is a mutual fund that invests in "value" stocks. However, the fund isdown about 24% this year. One of the fund's worst investments is Household International. Accordingto one wire report, the fund bought Household at $40 a share. Recently, the stock has been trading at about$28 which is the price that HSBC Holdings has agreed to pay for the $50 billion subprime servicer. About a week ago HSBC finally released the much anticipated merger agreement it inked with Household...
Countrywide Home Loans apparently loves the correspondent channel. For several years, ChaseManhattan Mortgage dominated the channel, but according to the Quarterly Data Report, Countrywide isnow the largest correspondent lender in the business...
MORTGAGE PEOPLE: FM Watch chief Mike House likes to say that when someone leaves governmentservice to go work for Fannie Mae or Freddie Mac they're going to Valhalla. The newest Valhallaite is MicheleDavis, assistant secretary for public affairs at Treasury. Ms. Davis has been named vice president ofregulatory policy at the GSE...
IN CASE YOU MISSED IT: The Homeownership Alliance (created to counter FM Watch) says mortgagerefinancing activity now accounts for 20% of the country's "real gross product growth." Of course,all the money consumers are saving on their monthly mortgage payments, will soon be given back as many states raisetaxes to plug gaping holes in their budgets. A few states/municipalities that could be in for hikes: Maryland,New Jersey, New York City and Virginia. What one hands gives, another takes away... and with that thestaffs of Weekend Briefing and National Mortgage News would like to wish you a happy and safe NewYear!
