Let's talk about Cerberus Capital and its chief Steve Feinberg, the man behind the mammoth hedge fund. One source said Cerberus was exploring the possibility of buying IndyMac - the once-high-flying alt-A lender - now a ward of the FDIC. I'm not sure I believe the story is true but it would be an interesting play. Here's why: Cerberus owns 51% of GMAC Financial, which in turn owns ResCap, the nation's sixth largest residential servicer. Cerberus also owns Chrysler, which could go bust. And GM could go bust, too. If GM goes bust there goes all those guarantees it made to Cerberus when it bought 51% of GMAC. As soon as GM goes down, so, too will GMAC Financial and ResCap. (GSE regulator James Lockhart is monitoring the ResCap situation closely because Fannie Mae could be affected greatly if something happens to the mega-servicer.) Now just maybe, Cerberus is thinking that it will buy IndyMac, and receive TARP money and then roll GMAC Financial into that train wreck of a thrift. Sounds crazy, doesn't it? (This still won't solve the auto mess.) Meanwhile, we're told Leon Black's Apollo Group could be the leading bidder on IndyMac or that the deal could even fall apart. (The market is that insane. See National Mortgage News Online's Friday report.) For more about Feinberg, Cerberus and Aegis Mortgage read the book "Chain of Blame" which, as a holiday present to all readers, I'm promising never to promote again in this column. (Books, by the way, make great Christmas presents and they're easy to wrap.) As for a sequel to "Chain of Blame," which many of you have asked about...
We got us a refi boom, yeah! OK, not so fast, mortgage professionals. Some industry experts (their fingers and toes crossed) are already going ga-ga, predicting a coming refi boom, but not so fast, I say. Here's why: unemployment is rising rapidly and anyone who bought a house in the last four years likely is sitting on negative equity. You can't refi a $400,000 home that's now worth $375,000. And if you're dreaming of "cash-out" refis, tell Santa Claus I said hello. Remember that magic word, "cash-out" refis? The memories...
Meanwhile, National Mortgage News has just released its 3Q Quarterly Data Report. In the 10 years we've been producing the spreadsheet product, this quarter it took the longest time to finalize our rankings. The reason is simple: not only have many firms disappeared from the mortgage landscape but lenders and servicers just don't want to tell us their numbers which means our staff has to spend extra hours hunting down SEC filings and earnings reports, something I assist with as well. It wasn't fun. Still, we managed to provide in this issue the top 100 lenders and servicers with complete breakdowns on retail, wholesale (there are still some of those left), correspondent, not to mention company-by-company delinquency figures (where available). In case you missed our recent stories, lenders funded just $338 billion in home mortgages during the quarter, the lowest reading in eight years. Is this the bottom of the cycle? Based on the unemployment numbers we've been seeing chances are no. To order the QDR e-mail
Back to the refi boom: one of the biggest stories of the past week was Treasury's idea to create MBS supporting a 4.5% 30-year FRM. (Is socialism great or what?) But it now appears the idea is in trouble. For the complete analysis of the issue read the Monday edition of NMN. Don't subscribe? Call (800) 221-1809...
One last word on mortgages and unemployment. You've all been reading about the bailout, different governments plans to aid banks, revive the ABS market, blah, blah, blah. But the only way to begin a recovery is to curb job losses. Consumers will not buy a house (or car or much else) if they fear losing their jobs. It's as simple as that. And if companies (money losing or not) keep shedding workers at the rate they've been this crisis will not abate for many years...
And one last word on the mortgage mess. As a reader pointed out Friday, everyone was worried about "resets" on ARMs, especially 2/28 and 3/27 ARMs. Well, guess what? Rates have fallen by so much the monthly payment for many ARM customers should be going south. Or am I missing something here? If so, drop me an e-mail
I've been meaning to write about the New York Mets and CitiField for several weeks. I'm a Mets fan (since 1968) and it would figure that these loveable losers (the Mets, that is) would be lucky enough to have the ailing Citigroup own the naming rights to their new stadium in Queens. (Only the Mets would have a stadium located right next to a major airport.) Anyway, with Citigroup receiving so much federal money to stay afloat, maybe they should rename the stadium "Treasury Field" or "Paulson Park." Just an idea...
Servicers, check your loan portfolios for Northern California exposure. The San Francisco housing market is still holding up to some degree. But if you made any mortgages to workers of the once-high-flying Internet giant Google, keep this in mind: its stock price is at a three-year low and some 15,000 workers are now "under water" on their options. Google management is even considering getting rid of the free masseuse. Not the masseuse! Yes the masseuse. Could the free Starbucks be next?...
WASHINGTON NEWS: Federal Reserve chairman Ben Bernanke said Thursday mortgage servicers have been slow to add "capacity" to their loan modification programs. At a speech in Washington he also backed the idea of giving cash incentives to servicers that engage in loan restructurings. For more details see the upcoming issue of Mortgage Servicing News.
DATA NOTICE: 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 is contained in the brand new Mortgage Industry Directory and the Web version of the production, the eMID. The book and e-book provide 2Q 2008 information plus full-year 2007 stats. For more information e-mail
