THIS JUST IN: JPMorgan Chase has agreed to buy certain "intellectual property" assets belonging to the residential warehouse division of Washington Mutual. Job offers are being extended to certain WaMu warehouse executives in Texas where the unit is based. For the full story see Monday's edition of National Mortgage News. Don't subscribe? Call: (800) 221-1809. The story only appears in the print version...
The subprime business is dead but that doesn't mean people who need "hard money" loans are going without. Over the past few weeks we've heard several anecdotal stories about how "hard money lending" is back. Who's buying these loans? Answer: doctors, dentists and lawyers. The mortgages are backed by homes that actually have equity in them. Back in the 1960s and 1970s, subprime lending was dominated by consumer finance companies that only made loans where the LTVs were 60%, maybe 65% max. If you know any individuals or hedge funds that are buying these newly originated hard-money loans, drop us a line at
Mike Perry of IndyMac Bancorp, a thrift, made a bold prediction concerning Countrywide this past week, telling our sister publication, American Banker, "Countrywide was a very fierce competitor as an independent company, and I think they'll be less so now that they're part of B of A." IndyMac has an interesting history. Two decades ago it was actually started by Countrywide founders Angelo Mozilo and David Loeb as a jumbo conduit -- and as a REIT no less. (Mr. Mozilo, who grew to hate REITs, quickly de-REITed the thing.) Eventually CFC spun-off IndyMac into a non-bank publicly traded company and Mr. Perry (very smartly) converted it to a depository. (Mr. Mozilo was a huge admirer of Mr. Perry's talents.) IndyMac posted a fourth-quarter loss of $509 million but Mr. Perry believes the company will be profitable in 2008...
As for Mr. Mozilo, he's on the verge of officially announcing his retirement while assisting CFC in its sale to BoA. Over the years he often liked REITs (mortgage REITs, that is) to two different animals. If you know what those animals are, drop me a line at
Veterans of the bank and S&L messes of the early 1990s will remember the phrase "good bank/bad bank." On Friday bond insurer FGIC Corp., shorn of its top credit ratings, said it will split into two firms -- one that insures municipal bonds (its core, traditional business) and one that takes on those wild and crazy consumer loans, including -- you got it -- subprime. (Of course the market for securitized subprime loans is history.) Meanwhile, New York Gov. Eliot Spitzer on the nation's troubled bond insurers: "The clear preference is a re-capitalization of the companies, something that could happen at some point. We would hope shortly"...
Executives and analysts who worked for contract underwriting firms (who, in turn worked for Wall Street reviewing subprime loans) continue to offer us intelligence on what went wrong. This one comes from an industry veteran who requested his name not be used: "I can tell you from first-hand observation that the 'diligence reviews' were random samples -- one in 10, one in 15, even one in 20. I have witnessed heated exchanges between diligence personnel and traders who were trying to jam loans into securities to be issued the next day"...
In case you missed it: President Bush signed the "stimulus package," which means Fannie Mae and Freddie Mac have a new loan limit (high-cost areas only) of $729,750...
We've been hearing a lot about servicers getting "jingle mail," whereby the homeowner (with a hefty mortgage he/she cannot pay) mails in the keys and is never heard from again...
MEETINGS NOTE: CFC's Mr. Mozilo has cancelled his speech at Dick Pratt's upcoming Midwinter Housing Conference in Park City, Utah. No reason was given for the cancellation. However, former Ownit and First Franklin owner Bill Dallas is scheduled to speak on Saturday March 1. Mr. Dallas' panel is entitled "What the Hell Happened? (It wasn't my fault I just moved here.)" Under pressure from Merrill Lynch on loan buybacks, Ownit closed its doors in December 2006. First Franklin -- which Mr. Dallas had departed from several years earlier -- was bought by Merrill a year ago. It's safe to say that at $1.3 billion, Merrill overpaid for First Franklin. The seller was National City...
WASHINGTON NEWS: The NAHB to Congress: Drop Dead! As reported by NMN's own Brian Collins on NMNOnline this past week, the National Association of Home Builders has frozen all political contributions out of frustration with the Bush administration's and Congress' feeble efforts to stabilize the housing market and stimulate homebuying. "More needs to be done to jump-start housing and ensure the economy does not fall into recession. This action (to cease all NAHB Build-Pac contributions) will remain in effect until further notice," NAHB president Brian Catalde said. (It's a good thing that in this country politicians don't regularly rely on large donations from the industries they regulate. Otherwise, the U.S. might turn into one of those nations where only the rich corporations have a say in policies and laws. And if that happened America would turn into a society very much like the one portrayed in the movie "Rollerball" (the James Caan version).
MUST-ATTEND MORTGAGE MEETINGS: SourceMedia will hold its second annual Mortgage Servicing Conference at the Westin Park Hotel in Dallas on April 17 and 18. The keynote speaker is Paul Bennett, chief economist for the New York Stock Exchange. For more information visit
DATA NOTE: According to the Quarterly Data Report, there is $1.2 trillion in outstanding subprime loans, 23% of which are in some stage of default. (To order the QDR send an e-mail to
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
