Even though residential loan volumes have been dropping -- at $663 billion the third quarter was the secondworst of the past nine quarters -- mortgage rates haven't fallen a whole lot, which is strange. The FederalReserve has hiked short-term rates 100 basis points this year but the yield on the 10-year Treasury is at avery low 4.18%. What does this mean? Answer: that the yield curve is flattening and that many lenders (if thathaven't already) are experiencing a rise in their cost of funds. It stands to reason that if lenders are payingmore for liabilities (liabilities fund mortgage assets) that in time funders will be forced to increase the ratesthey charge for mortgages. But this hasn't happened yet. Already, we're hearing reports of margin compression inthe prime sector and to a lesser degree, in subprime and alt-A. It will be interesting to see what all these newnonconforming Wall Street conduits do when pricing pressures translate into weaker-than-anticipated profits...
And it case you're wondering: the top subprime lender in the third quarter was Ameriquest/Argent. Thetop second-lien servicer? That would be Chase Home Finance with Bank of America a close second. Thestats are courtesy of the Quarterly Data Report...
What accounting scandal? Take a look at Fannie Mae's loan purchases for October. It was the mortgagegiant's fifth-best month of the year. The company bought $61.7 billion in loans and grew its portfolio by $8.7billion. With the company facing a possible $9 billion (downward) earnings restatement and with its regulator forcingit to raise more capital, it was assumed that Fannie would slow its growth. Apparently not...
American Mortgage Network is launching a new correspondent division. The company will purchase loansfrom small to midsize mortgage banks, credit unions and community banks...
Existing home sales held up well in October (6.75 million units), holding essentially steady from September'sreading, which was just shy of the all-time high set in June...
WASHINGTON NEWS: A special thanks to Rep. Barney Frank, D-Mass., for posting to his website (thoughnot for long) the much anticipated HUD IG report on OFHEO. The 94-page report (more or less) detailshow OFHEO turned into Charles Atlas after having sand kicked in its face by Freddie Mac. (OK, sothat's a gross oversimplification of the IG report but by now you've read the details on MortgageWire.)Last week Sen. Chris Bond, R-Mo., who asked for the IG probe, accused OFHEO of waging a public relationscampaign to embarrass Fannie. Sen. Bond wants OFHEO director Armando Falcon Jr. and his deputy SteveBlumenthal fired -- and fast. Keep in mind that the senator has received thousands of dollars in campaign donationsfrom Fannie Mae officials. Is this merely a coincidence? Another question: despite what OFHEO's intentions mayhave been, does this mean that every allegation levied at the company by OFHEO is false? Within a few months theSecurities and Exchange Commission will provide us with some answers, at least in regard to Fannie's hedgeaccounting.
MORTGAGE DATA/RESEARCH NOTICE: The year is almost up and if you want to know who the mortgage "moversand shakers" of tomorrow might be check out NMN's new "20 (Mostly) Private Mortgage Firms toKeep an Eye on in 2005." For more information about the report contact
@ThomsonMedia.com
@ThomsonMedia.com
