By now, Freddie Mac chief Dick Syron must be scratching his head, wondering why he ever left Boston to take the helm of the GSE. Mr. Syron is a big Boston Red Sox fan. Since moving to the D.C. area the Sox have dominated the American League East and won two World Series. And what has the "local" team, the Washington Nationals, done? Answer: floundered in last, and looked miserable. What does all this have to do with Freddie Mac? Hard to say. We listened on Freddie's hour-long conference call. One thing stuck out - CFO Buddy Piszel's comment that 90% of the "marks" that the GSE is taking "will flow back to us." I'm not going to pretend to be an expert on all the arcane accounting rules facing Freddie and every other mortgage company. But if it does get to recapture those "hits" that would be good news for the company and the nation's remaining seller/servicers. Meanwhile, Freddie needs to raise $5.5 billion in new capital. As I write this, Freddie's market cap is just under $5 billion (share price multiplied by common). How do you raise $5.5 billion when your company is worth $4.9 billion? There is one answer: sell your stock to the Treasury Department. Getting back to the Nationals and Mr. Syron. Maybe one day this awful baseball team - one that only MICA's Jeff Lubar can love - will finish first and maybe even make it to the World Series. If there's hope for the Nationals, perhaps there's hope for Freddie Mac. The government is not going to let this company go down. I repeat: the government is not going to let Freddie go down. Short sellers, take note. On CNBC Wednesday, Mr. Syron hinted there could be a slight glimmer of hope that the housing market may have reached bottom. He went no further than that. Stay tuned. For more analysis read Monday's National Mortgage News. Don't subscribe? Call: (800) 221-1809...
Of course, Mr. Syron and Freddie Mac was Thursday's news. On Friday Fannie Mae posted a stunning second quarter loss putting its CEO, Daniel Mudd, on the hot seat. The only thing missing from this drama was Sen. Chuck Schumer of New York offering his opinion of the two. Despite all the gloom, there is one bright spot for the GSEs: presumably all the new loans they are putting on their books are likely of pristine quality. The two also are charging their seller/servicers higher guarantee and related fees which goes straight to the bottom line. I would guess the higher fees are being passed on to the consumer...
In case you're wondering, Freddie Mac did not cause the current mortgage crisis. When Freddie and Fannie were flat on their backs with their accounting scandals in 2003/2004 Wall Street stepped into the breach, pumping up the nonprime sector. Here's a taste from the book "Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis." The chapter is called "A Conspiracy by Merrill?":When a mortgage trader from Wall Street gets on the telephone and calls the manager in charge of originations at a residential shop, he doesn't have time to ask about the lender's sick mother or how his kids are doing. It's not that kind of relationship. It is - and always has been - about getting the lender on that particular day to sell as many loans as possible (product) at the best possible price to the loan trader's firm. That's what mortgage trading is all about. Trading loans on Wall Street is, for the most part, a male-dominated business, and always has been. As sexist as it may sound, it's not a business fit for women "unless they have ..." Read the introduction at
Meanwhile, the investment banking firm of Morgan Stanley - which closed its subprime unit earlier this year - is the latest financial services company to tell its clients that it is freezing or reducing their home-equity lines of credit. Morgan is still smarting from the collapse of Saxon Mortgage, a publicly traded subprime lender that it bought two years ago...
According to one press report, more than 40% of mortgage brokers in Indiana no longer have a license to do business in the state. Indiana Secretary of State Todd Rokita recently revoked licenses for 393 of the state's 950 mortgage brokerages for failure to comply with a new state law...
The Federal Deposit Insurance Corp. hopes to sell IndyMac (now a ward of the government) in one piece. But if it cannot, it will auction off its pieces, likely using Lehman Brothers as its broker. According to the Quarterly Data Report, IndyMac ranks eight among servicers with a $200 billion portfolio of receivables. To see a sample of the QDR e-mail
This past week was the one-year anniversary of American Home Mortgage of Melville, N.Y., filing for bankruptcy protection. At the time the publicly traded REIT was a top 10 lender and No. 6 ranked wholesaler. One former manager at the company told us that "our board members were calling the Fed to try and get help. Then over the following few weeks the Fed began to act." But it was too late for AHM, a non-depository...
Who says the home equity market is dead? I just received a mailer from the mortgage department of Branch Banking & Trust pitching me on a home equity loan where the CLTV can be as high as 95%. Of course, this is from the Bethesda, Md., branch of the bank. To date, the Washington housing market has yet to crumble like California's...
WASHINGTON NEWS: Seller-funded downpayment assistance on Federal Housing Administration loans could get a second life under a bill introduced by Rep. Al Green, D-Texas, that also authorizes the FHA to charge risk-based premiums. The Green bill would repeal sections of the recently passed housing bill that bans seller-funded downpayment assistance and institutes a 12-month moratorium on risk-based pricing starting Oct. 1. For more details see Brian Collins' story in NMN.STUFF YOU MAY NOT KNOW (Courtesy of BrokerUniverse): "Did a cursory Google search and found a Q&A that said FHA will insure properties that are zoned agricultural but appraisal can only be for the first 10 acres and the home." - OHlo61 Aug. 7, 2008. BrokerUniverse can be found at
DATA NOTICE No. 2:: With the mortgage industry in the throes of a historical correction you need up-to-date data on which firms are left standing. You need hard numbers on their servicing and production volumes, including executive names and telephone numbers. All of this contained in the brand new Mortgage Industry Directory and the Web version of the production, the eMID. The book and e-book provide 1Q 2008 information plus full-year 2007 stats. For more information e-mail
