What We're Hearing

Late last week Sandler O'Neill raised its price target on Countrywide Financial by $40 a share to $145. Yes, that's right -- $40 a share. Not $4, but $40. Not since the height of the dot-com boom has a Wall Street firm gone so gaga over a publicly-traded company. But then again, in the third quarter, Countrywide hit the ball out of the ballpark and then some. It earned $1.1 billion in the quarter alone, a stunning 187% gain over 2Q and a mind boggling 381% gain from the same quarter a year ago. Mortgage "bears" must be thinking this: Countrywide has peaked and the boom in residential finance industry is over. But calling a top in the market (or at a company) is never easy. .

Just ask Louis Meyer , the analyst at Oscar Gruss & Co. As we noted in last week's column, Meyer in early September issued a "reduce" rating on Countrywide. At the time, the company was trading for $68. On Friday CFC's shares were fetching $104. Ouch...

Once again it was Fannie/Freddie week inside the Beltway this past week. To quote just retired Mets announcer Bob Murphy (again), here's the "happy recap": Former Freddie Mac president David Glenn signed a consent order with the Office of Federal Housing Enterprise Oversight and is cooperating with its investigation of the company's earnings restatement scandal. He is the first former Freddie executive to do so. OFHEO confirmed that at least two other former Freddie executives -- Leland Brendsel and Vaughn Clarke -- are being, to put it nicely, less than cooperative and have been subpoenaed by the agency. A source told us that they aren't the only ones who have been subpoenaed...

Also last week, Sen. Jim Bunning , a tall and rangy right hander (Bunning is a former pro player who no-hit the Mets), his face turning red, warned at a Senate hearing that Treasury officials had better be careful about what they say in regard to severing Treasury's line of credit to Fannie and Freddie. The Republican fears that many small banks in his state will no longer be able to use GSE products if tighter supervision is bungled by Washington. The Senator noted that Kentucky only has "little" banks and they have a great deal of "fear" on this issue. "I want to make sure my little banks are not harmed," he said. Actually, my wife's family is from Kentucky and from my many trips to Louisville I can tell you the state has plenty of big banks too -- except, of course, they're all from out of state. As for the "fear" factor, it would appear that Fannie's lobbyists have gotten to the good Senator. (If I had my way, and I don't, I'd make interstate banking illegal but that's a topic for another week.) And if you're not already sick of all the Fannie/Freddie news, join the American Enterprise Institute on Monday, October 27. The group is holding a little forum on privatizing the GSEs...

Washington Mutual, the nation's third largest residential funder, cut 1,500 full-time workers in its mortgage division during the third quarter. If residential production volumes continue to fall more cuts could be forthcoming...

On the rise of late is the share price of Hudson City Bancorp of Paramus, N.J., which during the first nine months of the year earned $155 million. The thrift also is expected to file an application to convert to a federally chartered savings bank....

Another stock to watch, according to Sandler O'Neill, is Commercial Capital Bancorp, (symbol: CCBI), the holding company for Commercial Capital Bank , Commercial Capital Mortgage and other related entities. ComCap is a busy apartment lender in California. The company will release its earnings on Monday, October 27. Its chairman and CEO is Stephen H. Gordon...

More than 25% of the 33 servicer evaluation ranking actions taken by Standard & Poor's structured finance servicer evaluations group during the most recent quarter involved non-U.S. rankings, illustrating the increasing role and growth of servicing internationally...

WASHINGTON NEWS: According to MortgageWire, the leadership of the Mortgage Bankers Association prevented a major rebellion among its 2,700-member companies when it withdrew its support for HUD Secretary Mel Martinez's plan to allow dual packaging as part of his efforts to reform the loan-closing process. The annual Town Hall session that unofficially opened the MBA's annual convention in San Diego Oct. 19 was a short, sparsely attended briefing that was far tamer than usual. But it "could have been a bloodbath had we not acted when we did," a top MBA official confided to MW on Monday. Meanwhile, at least one observer believes Secretary Martinez must shoulder at least part of the blame for losing what little support he had for rewriting the Real Estate Settlement Procedures Act . Compliance attorney Robert Lotstein said indecision by the Department of Housing and Urban Development about how to proceed with the final rule "allowed undercurrents" to surface. At a Heritage Foundation speech this past week Mr. Martinez declined to take reporters questions about RESPA, or anything else for that matter. Meanwhile, MBA has officially shortened its name to the Mortgage Bankers Association. (It's "real" name was, previously, the Mortgage Bankers Association of America.)

MORTGAGE PEOPLE: Sterling Edmunds, president and chief executive officer of SunTrust Mortgage, Richmond, Va., has been named chair of the MBA's residential board of governors. The RESBOG is the governing body for MBA's residential/single-family members, responsible for identifying legislative and regulatory policies and positions on single-family residential lending.

The Treasury Department , a key player in any legislation to strengthen regulatory oversight of Fannie and Freddie, has hired Anne Womack Kolton as a director in its office of public affairs. Anne comes to Treasury from the Securities and Exchange Commission. She worked on George W. Bush 's presidential campaign.

UPCOMING MEETINGS: Thomson Media's Seventh Annual Mortgage Technology Conference will be held January 21-23 in Miami at the Hotel Inter-Continental. Speakers include Fannie Mae's chief technology officer David Flaxman , Bank of America president of consumer affairs Kevin Shannon , and David Rodgers , chief technology officer for Greenpoint Mortgage. (Thomson Media is the parent of National Mortgage News .)

WATCH ON THE 10-YEAR: As we went to press the yield on the 10-year Treasury was at 4.22% on Friday compared to 4.38% a week ago.