What We're Hearing

Former Fannie Mae chief Jim Johnson is nobody's fool. He and his wife Maxine Isaacs have been a Washington "power couple" for as long as anyone in this town can remember. He became chairman and CEO of Fannie Mae early in the last decade and stayed until 1998 before the "Franklin Raines" era began. Mr. Johnson got the Fannie job because of his political connections. He was a former top aide to Sen. Walter Mondale, a one time presidential candidate. One of his chief achievements as Fannie CEO was gaining the confidence of Countrywide co-founder and CEO Angelo Mozilo and roping that lender in as Fannie's top customer. The relationship of Messrs. Mozilo and Johnson are explored, to some degree in a chapter of the upcoming book, "Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis," published by John Wiley & Sons. I'm one of the co-authors of the book along with Mathew Padilla of The Orange County Register. (I'll tell you more about the book next week but for now you can view the cover by visiting: http://www.chainofblame.com/). Unlike Mr. Raines, Mr. Johnson's reputation as both a political operative and businessman remained intact until it was revealed that he received preferential loans from Countrywide under the now well-publicized 'Friends of Angelo' program. (In our book we discuss, briefly, the FOA program.) Mr. Johnson's FOA loan became national news for one primary reason: he was an advisor to Barack Obama in regard to that candidate's search for a VP. Republicans linked him to Mr. Mozilo for two primary reasons: Mr. Mozilo -- whether he likes it or not -- is now the poster child for America's mortgage crisis. The other reason: Countrywide, which has flirted with bankruptcy, is the subject of multiple investigations of its lending practices. Anyway, as I noted, Mr. Johnson resigned from the Obama campaign within 24-hours of the FOA story first breaking. He's that smart. The same cannot be said of Senators Chris Dodd and Kent Conrad, who are still trying to explain how they were recipients of FOA loans and falling all over themselves in the process. As most mortgage industry veterans know, FOA loans are not new. They've been around for years. I know of at least one other top 15 lender that had a "friends" program. Are such programs illegal? Answer: I don't think so unless there's some fine print in the 'quid pro quo' language. Does it look bad for an elected official to get preferential treatment on his or her home mortgage? You bet it does. The daggers are out. It's an election year...

In case you missed it, the first quarter edition of National Mortgage News' Quarterly Data Report is out. There are roughly 50 tables in the report which covers the nation's top lenders and servicers with breakouts on channels, delinquencies and much more. Here's one interesting stat from the "composite table": retail loans accounted for almost 51% of all loans originated in the industry, the highest level ever recorded by NMN/QDR. To order the report, email: Deartra.Todd@SourceMedia.com...

IN CASE YOU MISSED IT: Super jumbo lender Thornburg Mortgage is once again flirting with bankruptcy. The publicly traded REIT's share price is down to 25 cents. It has offered to buy back its preferred stock for $5 a share. However, investors who bought the stock when it was first issued paid $25. It has scheduled a conference call for next Wednesday to discuss some of its options. There are hardly any mortgage lending REITs left in operation. Thornburg is one of them...

Many mortgage lenders REITs were taken public by Friedman Billings Ramsey and its CEO, Eric Billings. (Mr. Billings gets a whole chapter in our book.) While, we're on the subject of FBR, the Wall Street firm had this to say about the housing market in California: "We visited the Merced, Modesto, Stockton, and Sacramento MSAs and met with housing investors, realtors, and home builder representatives. The tour produced both good and bad surprises, but the degree of the price declines in these markets was our biggest takeaway. Sacramento is by far the worst hit of all the above mentioned markets, and unfortunately, it is also the largest market we visited. On a positive note, housing inventories are beginning to move across all the areas, and some houses are even getting multiple bids, but at prices 30% to 70% below FY05 peak price levels"...

Orange County was home to Ameriquest Mortgage, its "sister" wholesale company Argent and many other subprime giants. But now those firms are no more with some of its former employees still looking for work. According to a report in The Orange County Register, a UCLA economist did an analysis of the current "structural transition" in Orange County's economy, concluding that, "it will be around 2012 or 2013 before Orange County has fully regained the employment it lost in the home mortgage implosion"...

According to one source, some top executives at Washington Mutual "supposedly have had their contracts modified to allow for a more rapid departure with fewer benefits in the event of a change of control"...

Even though some firms are exiting the wholesale arena entirely, others are thriving. According to the just-released 1Q issue of the Quarterly Data Report, the top wholesale gainers during the period were: U.S. Bank Home (up 176%), Franklin American Mortgage (up 96%), Flagstar Bank FSB (up 45%), Fifth Third Mortgage (also up 45%), and Amtrust Bank (up 32%). See the upcoming issue of Origination News for rankings...

WASHINGTON NEWS: The Bush administration is threatening to veto a major housing bill, but efforts by Senate Republicans to gut a controversial FHA refinancing program for troubled homeowners were soundly defeated, signaling that the Senate may pass the bill by a veto-proof majority. A statement of "administrative policy" issued by the White House budget office says it supports provisions that modernize the Federal Housing Administration mortgage insurance programs and strengthen regulation of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. However, the administration "strongly opposes" the way a Senate bill taps Fannie and Freddie affordable housing funds to pay for the FHA foreclosure rescue program. For the full story see Brian Collins' story on National Mortgage News Online in our print edition on Monday.

DATA NOTICE: Coming soon: the brand new edition of the 900-page Mortgage Industry Directory complete with rankings and contact information (and analysis) on America's top (and surviving) lender/servicers. Meanwhile, if you need an accurate ranking of the top 100 lenders and servicers in 2007, including subprime, order the new Annual Data Report which comes in Excel. Send an email to: Deartra.Todd@SourceMedia.com.