THIS JUST IN: One mortgage executive close to Morgan Stanley's Saxon Mortgage group saidthe Wall Street firm is talking to Fannie Mae and Freddie Mac about selling loans to the two GSEs.The loans, in theory, would be "subprime" in nature but would be underwritten to standards the GSEs wouldbe comfortable with. A Morgan spokesman said, "We are not exiting subprime but we are being smart about it."On Thursday Saxon suspended originations of two subprime products "ScorePlus" and "ScorePlus2."It's all there on its website
Merrill Lynch, which recently booked $8 billion in subprime-related writedowns and threw its CEO (StanO'Neal) overboard, took out an ad in The New York Times, entitled "Why Merrill Lynch isStill Bullish on Merrill Lynch." Maybe so, but we understand that it is now considering selling its subprimelending arm, First Franklin Financial of San Jose. (Earlier this year it cut a $1.3 billion check for FFFand two affiliates. The seller was National City.) A company spokesman said the firm doesn't comment onmarket rumors
Here's an interesting fact: In October Wall Street securitized just $3.8 billion in subprime mortgages, accordingto figures compiled by Friedman Billings Ramsey. This is a 91% drop from the same month a year ago. Alt-Asecuritizations fell to $6.1 billion, a 75% decline
The full House passed Rep. Barney Frank's anti-predatory lending bill on Thursday and loan brokers appearto be happy with the yield spread premium language. (See our 'Washington News' item below.) Of course, not allare happy. Rep. Tom Price, Republican of Georgia, called it the "Sarbanes-Oxley" bill of the mortgageindustry, which means executives who step out of line will be whacked out for bad behavior and sued by ruthlessclass action attorneys. Based on the emails I have receive about YSPs, many brokers fear that once Hilary Clintonbecomes president she will outlaw brokers and socialize the entire mortgage industry
Mortgage bankers have been hammered over the past year with 180 or so firms or platforms closing down, accordingto figures compiled by National Mortgage News. These don't include brokerage firms. See our websitefor an October/November casualty list
At June 30 of this year, the average amount outstanding on a home equity line of credit (HELOC) was $48,158,a 14% increase from the same period a year ago, according to a new study released by the Consumer Bankers Association.HELOCs classified as 'C' or 'D' with borrower FICO scores of under 630, dropped 13%
Gary Hoyer of Warehouse One Inc. reports to us that his company has exited the warehouse lendingarena. Last month the nation's largest warehouse provider, Washington Mutual, exited the space as well.However, there are still (believe it or not) warehouse providers out there. In fact, NMN is putting thefinishing touches on its 3Q warehouse survey. If you would like to provide figures send an email to:
One warehouse lender that's hanging in there is Horizon Bank of Michigan City, Ind. At the end of 3Q,it had $361 million in warehouse commitments, a slight gain from a year ago...
Politicians and their staffers are (finally) beginning to understand just how deep and damaging the currentmortgage/housing crisis is, one lobbyist told us. The lobbyist, requesting anonymity, predicted that the currentmalaise could be "worse than the Oil Belt crisis" of the 1980s. That debacle came just before the S&Lmess. In 1982 Ronald Reagan and the Democratic controlled Congress deregulated the nation's thrifts via'The Garn-St Germain Act.' Garn St-Germain gave S&L swindlers like David Paul and Charlie Keatinga license to print money. When the S&Ls cratered so did home prices, particularly in Texas
WASHINGTON NEWS: The National Association of Mortgage Brokers succeeded in getting language inthe bill (H.R. 3915) clarifying that a broker's fee can be financed into the loan. However, mortgage bankers areconcerned that this language might require the disclosure of servicing-released premiums for the first time. SenateBanking Committee chairman Christopher J. Dodd, D-Conn., said he will introduce a predatory-lendingbill soon. (See Brian Collins' story on MortgageWire/NMNOnline.)
QUOTE OF THE WEEK: "LOs need to be registered and tracked -- a 'three strikes and you're out' rulewould be nice too," -- Ed from Massachusetts.
LOAN ABUSE STORY OF THE WEEK: "I received a referral from our top account executive from a Floridabroker that worked with one of her company's AEs there. The Florida broker had customers who were buyinga property in Virginia, and started by saying he wanted to co-broker. I immediately let him know thatper Virginia law, no one whose company was unlicensed in Virginia could receive compensation for a Virginia mortgage. He said he'd have to think about it and hung up. He called back in a few minutes to tell me that he was goingto charge his Florida customers a 'mortgage consulting fee,' and that I would have to increase the rate sufficientlyto provide a credit to the borrowers equal to his consulting fee." -- TR from Virginia. (Have a loan abusestory. Email your stories to:
DATA INFORMATION: According to the eMortgage Industry Directory, Wall Street firms ownresidential servicers that control $115.7 billion in subprime loans or roughly 8.52 % of the market. Need annualrankings and profiles on the top residential lenders and servicers? Need commercial mortgage banking informationas well? Try the eMortgage Industry Directory, an online book that tracks the nation's top 400 lenders,300 servicers, top 85 subprime and much, much more. The ebook also provides a special analysis on America's subprimecrisis. To order email:
