Here's something to think about: In the fourth quarter of 2007 Fannie Mae bought $203.3 billion in mortgages from its seller/servicers. Countrywide Financial Corp. originated $59.9 billion in conventional mortgages in Q4, selling a majority of them (so we're told, to Fannie) which means (if my math is correct) that Fannie depends on CFC for 30% of its business. Interesting. If you think that Fannie Mae CEO Daniel Mudd is not closely watching CFC's sale to Bank of America, then think again...
And now for a word abut the FBI and its mortgage fraud probes: Some media outlets have written their stories in ways that suggest that several Wall Street firms -- Bear Stearns, Merrill Lynch, Lehman Brothers, take your pick -- are the targets of these probes. But are they? We know the now defunct New Century Financial Corp. is the subject of a massive probe and maybe a few other subprime giants. I can tell you the name of at least one subprime lender (now dead) that should be the subject of a probe but that's a column for another day. If the FBI is looking into shenanigans concerning CDOs, SIVs, ABX shorts and credit default swaps, it will take their accountants several months to get up to speed on the topic -- you can bet on that. One investment banker pointed out to me recently that with all the layoffs on Wall Street, "the people" the FBI and New York AG Andrew Cuomo want to talk to "just went out the door." As for Clayton Holdings executives getting granted immunity by Cuomo, that's an interesting matter as well. (Clayton is a contract underwriter.) Immunity means they have dirt on Wall Street. But who? And won't the Street firms try to blame Clayton for all the not-so-great underwriting it (supposedly) did on the Street's behalf? Or was the Street responsible? What did the Street know and when did they know it? But like I said, the answers to all those questions lie in the minds of laid off investment bankers. When you work a criminal probe, the idea is to trade up. Who will the Street canaries rat on? Stay tuned...
The Center for Responsible Lending recently released its analysis of foreclosures by mortgage bankers. The group found -- after careful analysis -- that during the third quarter of 2007 mortgage lenders initiated foreclosures "seven times more frequently than they modified mortgages, and 13 times more frequently than they modified problematic adjustable-rate subprime loans." (Those are the words of CRL.) It also estimated that under the Treasury Department's voluntary plan, only 3% of homeowners (118,200) with adjustable-rate subprime mortgages are likely to receive a streamlined loan modification from their lender. In a defensive rebuttal, the Mortgage Bankers Association disputed CRL's findings. CRL says it stands by its findings...
Foreclosure experts start your engines: jobless claims for the week ending Jan. 26 surged by 69,000 to 375,000, the highest level since October 2005. No jobs means no mortgage payments since many Americans live from pay check to pay check. Meanwhile, politicians on Capitol Hill are carefully eyeing Sen. Chris Dodd's plan to start The Home Owners' Loan Corp. (an RTC-like entity) that would buy mortgages from banks and mortgage firms at steep discounts and work them out, saving (supposedly) some consumers the anguish of losing their homes. It also would alleviate banks of the pain of taking even larger writedowns because Uncle Sam would step in and create a true secondary market for bad single-family loans. RTC, by the way, stands for Resolution Trust Corp., the S&L bailout agency, which did a respectable job of managing and liquidating $300 billion in S&L assets...
The way things are looking there won't be many wholesale lenders left by the time 2008 closes -- which actually should be good news for the firms that are left: less competition. The latest firm to cut way back on wholesale is BankUnited Financial Corp. of Coral Gables, Fla. After losing $25 million in the fourth quarter, BUFC closed four of its nine wholesale offices, trimming 45% of the staff who worked in that division. In the fall Bank of America exited wholesale and recently National City. Who's next? Any hints? Drop us a line at
WASHINGTON NEWS: Sources tell us the Federal Deposit Insurance Corp. is gearing up to hire folks. "They are talking about staffing up parts of legal (consumer, bank activities, enforcement, and maybe resolutions)," said a source. Could it be the agency is expecting a wave of bank failures?
HEARING NOTICE: It was going to be the Congressional hearing of the year -- next week's panel before the House Oversight Committee, featuring Countrywide CEO Angelo Mozilo, and Stanley O'Neal and Charles Prince, the former heads, respectively, of Merrill Lynch and Citigroup. The topic: severance packages for CEOs of subprime shops. Instead of Feb. 7, the hearing has been moved to Feb. 28. All three are "invited" guests. A spokeswoman for the committee told us she expects all three to show up.
MORTGAGE PEOPLE: David Sambol, currently president and chief operating officer of Countrywide, has been chosen to lead the combined consumer mortgage business of CFC and Bank of America when the two merge later this year. Floyd Robinson, president of BoA consumer real estate, will continue to lead BoA consumer real estate and insurance services until the transaction is completed. AmeriFund Lending Group of California has named Todd Shillington as its new national sales manager, responsible for national development of its ILO (independent loan officer) network.
DATA NOTICE: The Mortgage Industry Directory and the online version of the book are still available. Besides listing detailed information on the top 400 lenders and 300 servicers in the U.S., the MID ranks the nation's top funders of commercial mortgages. There's also information on loan brokers. The book has valuable contact information on the top executives and department heads at each firm. For more information e-mail
