Fannie Mae and Freddie Mac, which last week were criticized by the nation's central banker as being too big to fail (among other things), bought seven out of every 10 conventional loans originated last year, according to figures compiled by National Mortgage News. The two also bought 57.4% of all home mortgages funded last year. For the complete story see the Monday edition of NMN...
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Meanwhile, Federal Reserve chairman Alan Greenspan pulled off a mortgage news "trifecta" last week. On Monday, Mr. Greenspan told credit union executives that fixed-rate mortgages are an expensive way to finance a home and that consumers with FRMs paid a high premium over the past 10 years for the right to refinance and to protect themselves from spikes in interest rates. Then on Tuesday he said Fannie and Freddie should be privatized, or at the very least Uncle Sam should curb their growth. On Wednesday, he said Social Security benefits should be trimmed. (Okay, the Social Security-mortgage connection is tenuous, but there are probably quite a few seniors who use their monthly government checks to pay the mortgage). I think it's safe to assume that once Mr. Greenspan retires he will not be asked to serve on the board of either Fannie or Freddie...
Mr. Greenspan is probably the most well respected Fed chairman the U.S. has ever had. However, he's not infallible. Keep in mind that back in the 1980s, when he was a private economist, he did some work for Charlie Keating, who looted Lincoln Savings. While Keating was pumping Lincoln up, Greenspan wrote to then FHLBB chairman Edwin Gray, telling the S&L regulator to stop worrying so much about the "direct investments" the S&L was engaging in. Luckily, Mr. Gray didn't listen...
In this column and others, I've criticized mortgage lenders for sending residential finance-related jobs overseas, even if they happen to be back-office call center/telemarketing jobs. My thinking is this: you need a job to buy a house and if the white-collar world continues to follow the blue-collar world in exporting employment overseas, who will make up the next generation of homeowners and mortgage customers? If America was creating enough real "new" jobs to replace the ones going to Asia and elsewhere I wouldn't care, but that doesn't appear to be happening. Now, Paul Craig Roberts, a respected economist in the Reagan White House has written a paper that says the U.S. is committing economic suicide by sending so many jobs overseas. (In the paper, available at www.vdare.com/roberts/
economy_offshore.htm , he singles out Asia.) Mr. Roberts notes that the U.S. Bureau of Labor Statistics "offers no evidence to support economists' claims that outsourcing production to Asia creates new and better jobs in the United States." Quoting government statistics, he predicts that over the next 10 years job growth will come from these sectors: waiters and waitresses, janitors, food prep, nursing, cashiers, post-secondary teachers, and general and operational managers. In other words, it looks like great news for subprime funders. But the jumbo market could be toast...
Remember Homestore.com, the scandal-plagued online realty information company that Fannie Mae and GE Capital were lucky enough to bail out of before the stock crashed? Homestore is once again trading on the Nasdaq. Its stock is just shy of cracking the $5-a-share barrier...
The fast-growing American Home Mortgage of Melville, N.Y., said it is "commencing a proposed offering of 10 million shares of its common stock" and has granted the underwriters an option to purchase from it up to 1.5 million additional shares to cover overallotments, if any...
You can't keep mortgage MBS godfather Lew Ranieri out of the news for too long. His Franklin Bank Corp. of Austin, Texas, earned $3.2 million for the year just ending, compared to the prior year's loss of $725,000. Meanwhile, Mr. Ranieri is chairman of the American Ballet Theatre in New York. A few weeks back, The New York Times reported that the troupe's cash reserves dropped by $3 million. Then last week, the newspaper reported that three new corporate benefactors had volunteered to provide financial aid to the ballet company. One of the three is C ountrywide Home Loans. Countrywide chief Angelo Mozilo is a Bronx native. Mr. Ranieri is from Brooklyn...
Greenwich Capital analyst Peter DiMartino notes, "Coming off a relatively strong issuance year in which the closed-end second-lien sector of the mortgage-related ABS market saw $8 billion in new supply, the sector appears poised to top that mark in 2004"...
Surpassing its previous January origination record of $1.1 billion (set last year), First Franklin Financial of San Jose said it funded $1.49 billion in January 2004. The subprime lender said its purchase business continues to dominate its total production...
This past Monday, subprime lender Aames Financial, announced that its board of directors is considering converting the company into a real estate investment trust. But the market apparently didn't like the news. In trading, its stock (OTC: AMSF.OB) lost almost 16% of its value...
The National Association of Mortgage Brokers said its membership has reached 20,000. The NAMB board has set a goal to grow that figure to 25,000...
E-Loan's Chris Larsen is apparently a "rainmaker," that is, a fund-raiser, for presidential hopeful John Kerry...
WASHINGTON NEWS: In case you were wondering, the Federal Home Loan Bank System was not left entirely out of the GSE debate in Washington this past week. Fed chairman Greenspan said the testimony/analysis he gave to the Senate Banking Committee applies to the FHLBs as well. He noted however that because the banks "can design advances to encompass almost any type of risk, they are more complex to analyze than other GSEs, and hence, raise additional issues."
House Financial Services Committee chairman Michael Oxley, R-Ohio, and ranking member Barney Frank, D-Mass., said they will hold hearings in the wake of a General Accounting Office report that projects that more than a quarter-million low-income units will be transitioned out of affordable housing stock as property owners who have government-backed mortgages with favorable financing finish paying off the loans or the loans mature. Once the mortgages mature, low-income tenants may be required to pay market-rate rents or find other subsidized dwellings. Hearings will be held within the next few months.
MORTGAGE PEOPLE: Allen L. Wehrhahn has been named president of Key Mortgage Services, Parsippany, N.J., a newly formed unit of Cleveland-based KeyBank's consumer finance group. Freddie Mac has named Jay Catalfamo vice president, multifamily business operations. American Mortgage Network has named Janice Papa-Minchenberg vice president, regional manager, Fort Lauderdale, and David Hennon vice president, Northeast Florida area manager for its Orlando office.
WATCH ON THE 10-YEAR: Late last week the yield on the 10-year Treasury note was at 4.004%.
MORTGAGE DATA INFORMATION: National Mortgage News has just completed and published a special white paper on " 15 (Mostly) Private Mortgage Firms to Keep an Eye on in 2004 & 2005." This 18-page exclusive report, which comes in a PDF format, is available for just $79 and includes summaries on some of the industry's more up-and-coming lenders. It provides addresses, telephone numbers and the names of key contacts at the firms. To purchase a copy or see a sample, contact: Elizabeth.Washington
@ThomsonMedia.com or call (202) 434-0328. Also, NMN has just published the fourth-quarter edition of the Quarterly Data Report. The QDR ranks the top 100 firms in many different mortgage sectors. For information contact Deartra Todd at Deartra.Todd@ThomsonMedia.com.
