What We're Hearing

First, let's start with some good news. According to the brand-new issue of the Quarterly Data Report, six of the nation's top 20 lenders actually saw residential originations increase in the fourth quarter. The six are Chase Home Finance, Taylor Bean & Whitaker, U.S. Bank Home Mortgage, Flagstar Bank FSB, Amtrust Bank and Branch Banking & Trust. To see their numbers order the Quarterly Data Report. Send an e-mail to Deartra.Todd@SourceMedia.com...

And now the bad news: In Q4 lenders funded just $6 billion in subprime mortgages. In 2005 -- the peak year for subprime production -- the industry originated $807 billion in A- to D loans. It's safe to say that the subprime industry has been wiped off the face of the map...

A mortgage banking source we know in Florida told us recently that a large money center bank did a study of delinquencies comparing broker-sourced loans to retail mortgages. The conclusion: that broker loans went bad at a much higher rate than retail loans. If you've heard about this study drop us a line at Paul.Muolo@SourceMedia.com...

In case you missed it, the White House wants all loan brokers to be licensed. That message from the Bush administration was delivered by Treasury secretary Henry Paulson, speaking at the National Press Club last week. During his press conference, Mr. Paulson let us in on what caused the mortgage crisis. Are you sitting down? Here's the short answer: it was "complexity." He blamed the credit crunch (in part) on the complexity of certain financial instruments, including CDOs, "CDOs-squared" and credit default swaps. (Don't ask what a CDO-squared is.) Will the Treasury ban or carefully regulate these instruments, which are used to both hedge and speculate in mortgages? Don't be silly. The Treasury secretary -- the former head of Goldman Sachs -- said that would stifle the "innovation" of financial instruments. This is what I think: we should go back to the old days when S&Ls and community banks made mortgages and placed them on their balance sheet. When it comes to mortgages Wall Street firms should only be allowed to securitize loans and carve them up into just four tranches. Ban CDOs and credit default swaps unless they're being offered by casinos (I figure the Nevada Gaming Commission would do a better job of regulating than Washington ) because that's what they were used for the past few years: gambling. We should ban the use of derivatives to hedge mortgages unless these instruments can be understood by a 10^th grader with a B average in math. If some guy in a lab coat at Morgan Stanley with a PhD in advanced calculus is the only one who can understand an instrument, then maybe it's time to rethink how the secondary market is supposed to work...

TRUE STORIES ABOUT ELIOT SPITZER: While I was at the Press Club last week I walked down the hallway into a gallery of speaker photos. I noticed the photo of former (and disgraced) New York Gov. Eliot Spitzer up on the wall. To the left of him was a photo of Rev. Pat Robertson. Below him a photo of Sen. Ted Kennedy. Matt Padilla of the Orange County Register was scheduled to interview Mr. Spitzer about the mortgage crisis for a story he was working on. Two weeks ago, out of the blue, Mr. Spitzer's PR lady cancelled.

A MUST-LISTEN EARNINGS CALL: Next Thursday Bear Stearns & Co. releases its quarterly earnings. This past week the investment banking giant was the subject of liquidity rumors, which it strongly denied.

WASHINGTON NEWS: House Financial Services Committee chairman Barney Frank, D-Mass., is proposing to provide up to $300 billion in Federal Housing Administration guarantees to refinance at-risk or delinquent homeowners into affordable FHA-insured mortgages. According to an outline of the bill that Rep. Frank is circulating, investors would be required to write down the principal to 85% of the appraised value of the property and extinguish all existing liens. (For more info read National Mortgage News or e-mail Brian.Collins@SourceMedia.com)

LOAN OFFICER SURVEY NOTICE: National Mortgage News has launched its new 2008 Loan Officer Survey. To participate (it's free) just visit http://data.nationalmortgagenews.com/surveys/losurvey...

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 http://www.sourcemediaconferences.com/MS08...

MORTGAGE BANKER/BROKER SURVEY NOTICE: National Mortgage News is in the process of surveying residential and commercial lenders, servicers and loan brokers for its annual Mortgage Industry Directory. To participate in the survey (1,000 industry movers and shakers see the book) send an e-mail to Deartra.Todd@SourceMedia.com.

DATA NOTICE: The Mortgage Industry Directory and the online version of the book are still available. (Mention this notice and receive a free Quarterly Data Report.) 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 Delores.Stokes@SourceMedia.com or Rebecca.Keen@SourceMedia.com.