FREDDIE MAC RESTATEMENT/ ACCOUNTING SCANDAL, WEEK #3: In the wake of the shakeup at Freddie Macand the uncertainty regarding its accounting practices, it would stand to reason that short sellers (those bettingon a decline in share price) would increase their positions in both Freddie and Fannie Mae. The big shakeuphappened on June 9, but short figures for June 13 show that speculators actually decreased their bets against bothcompanies. This could mean that these two stocks -- both bloodied since June 9 -- may not fall much more unlesssome major negative surprise pops up.
FREDDIE LOOSE-ENDS: If Freddie Mac is going to restate earnings by as much as $6 billion (before taxes),that means the U.S. Treasury is in for an unexpected windfall. At $6 billion, the Feds would rake in another$2 billion in corporate income tax. It would be nice if the extra $2 billion went to promote homeownership, butthat's up to the White House and Congress. Freddie Mac PR official Brad German took umbrageat MortgageWire this past week describing Freddie as a client of Federal Financial Analytics,a consulting firm that does work for FM Policy Focus (among others). FFA managing partner Karen ShawPetrou testified at the (Rep. Richard) Baker hearing this past week. Mr. German said the company subscribesto a FFA newsletter and that's it. On its website, FFA boasts 70 or so clients, listing Freddie, Fannie and theirarch enemy, you guessed it, FM Policy Focus. The Baker hearing, by the way, focused on changing the regulatorystructure of the GSEs. However, consultant Howard Glaser, a former HUD attorney, was not impressed withWednesday's panelists. He wrote in his newsletter that Baker's GSE subcommittee, "sought to have top administrationofficials testify. What they got instead was the financial services equivalent of the scene in the 'Star Wars'bar." Mr. Glaser's client lists include Freddie...
OTHER MORTGAGE NEWS: The Federal Reserve cut short-term rates by 25 basis points this past week.Fed rates haven't been this low since 1958. However, the 10-year -- which mortgages are pegged to -- hit 3.5%...
Fitch Ratings has affirmed HomEq Servicing Corp.'s residential primary servicer ratings for alt-Aand subprime products at 'RPS1' and its special servicer rating at 'RSS1.' The primary servicer ratings are basedon the company's ability to service, collect and liquidate alt-A and subprime residential loans...
MORTGAGE PEOPLE: FM Policy Focus PR chief Beneva Schulte went on maternity leave right beforethe big shakeup at Freddie Mac. On Tuesday June 10, she gave birth to healthy, six-pounder Anna Clare. (Shebegged us to include this in our weekend briefing.) Kent Colton, former head of the National Associationof Home Builders (and a consultant to Freddie Mac), has a new book out: "Housing In the Twenty-FirstCentury." He told us he doesn't think his book will be competing for sales with the new Harry Potterbook and the tome by Sen. Hillary Rodham Clinton. Former Resolution Trust Corp. executive DavidCooke has been named first chief learning officer and head of the Federal Deposit Insurance Corp.'scorporate university...
