The large regional bank that is contemplating exiting the warehouse lending arena is National City Corp. of Cleveland. Sources tell us that NatCity likes the business (has for years) but its new owner, PNC Bank of Pittsburgh, isn't so sure. NatCity officials have been told to clam up and PNC isn't saying much about the issue. Early last week one NatCity source close to the matter sounded understandably upset about a possible shutdown. But there appears to be some hope for NatCity and its non-bank customers. One advisor told us this week that because PNC has accepted Troubled Asset Relief Program money it may delay the warehouse shutdown or stay in the game. Officials at Treasury and the Federal Reserve supposedly are aware of the current warehouse crisis - as in a lack of providers - and would not look kindly on PNC/NatCity exiting warehouse. At press time the situation looked a bit cloudy...
Like I said last week, the failure of U.S. Mortgage of Pinebrook, N.J., is going to get interesting. First of all it's now official: the FBI is investigating its collapse, which affected more than three dozen credit unions. One of the credit unions is the Treasury Department's own Treasury FCU. The largest creditor: the government-owned (more or less) Fannie Mae with $99 million. The largest shareholder is a publicly traded broker/dealer in downtown New York, LaBranche & Co., which says it was a passive investor in U.S. Mortgage...
I'm not sure who ticked me off more last week, CNBC reporter Rick Santelli or former Texas Sen. Phil Gramm, a former top economic advisor to former presidential candidate Sen. John McCain. Smartly, Sen. McCain dropped Gramm after he made a crack about the "mental recession" we're suffering from. (I guess all those dead mortgage and homebuilding firms and banks are just a figment of our imagination.) First up Gramm. This past week Texas Phil (not to be confused with Punxsutawney Phil) wrote a letter to Forbes magazine saying the U.S. government "as a matter of policy pressured banks to make subprime loans or lose their ability to expand or grow. First by law, and then by regulation, Fannie Mae and Freddie Mac were systematically forced to increase their purchase of subprime loans to 56% of their holdings." Really? Funny, I remember that during the hey day of subprime, non-banks like Ameriquest, Argent, First Franklin, New Century, Option One, BNC Mortgage, Accredited and Delta ruled the subprime market. And I don't remember Fannie and Freddie buying subprime loans and packaging them into bonds. That would be Wall Street - firms like Bear Stearns, Greenwich Capital and Lehman Brothers. Oh, and UBS where Phil used to work. Bear, Greenwich, Merrill and Lehman are not commercial banks. It can be argued that Fannie and Freddie added liquidity to the subprime ABS market by purchasing some of the "end" bonds but that didn't start happening until the subprime boom was well underway. And keep in mind that FanFred did not create the subprime loan programs. Wall Street and the non-bank wholesalers did. Just how stupid is Phil Gramm? I guess he's been spending way too much time getting his business news from Fox TV. And don't get me started on his wife Wendy, who used to head the Commodities and Futures Trading Commission which was a Keystone cop with the SEC when it came to regulating credit default swaps. Wendy was also on the board of Enron. Phil, go back to sleep. As for Rick Santelli, he tried to pull a Norma Rae by ranting (on CNBC) on the floor of the Chicago Board of Trade, "This is America! How many of you people want to pay for your neighbor's mortgage that has an extra bathroom and can't pay their bills?" Pit traders as revolutionaries? Yeah, if it weren't for all those deadbeat borrowers who tricked both the wholesale lenders and all those kind Wall Street firms that securitized their loans. Evil, evil borrowers. Give me a break. I guess Rick is feeling sorry for all of CNBC's former Wall Street advertisers and Maria Bartiromo's buddies who they won't be seeing in the Hamptons this year. CNBC is part of the problem. It's the American Idol of finance. Get on the show and tout your stock picks, baby. CNBC's reporters don't report the news, they interview each other about what they think the news is. It's not news, it's entertainment. Watch Bloomberg TV and American Banker TV instead. If Charlie Gasparino were smart he'd get out of there and go work for a real news organization. If you're not up on Wall Street's role in this historic debacle visit:
If it's late February that means it's time for the 38th annual Midwinter Housing Finance Conference in Park City, Utah, where the mortgage industry's movers and shakers gather for three days of skiing and industry gossip. The conference ends on Sunday and the keynote speaker is the nation's top GSE regulator James Lockhart. In attendance is NMN correspondent Lew Sichelman who said he's having dinner at the meeting with Adam Bass, once the vice chairman of Ameriquest Capital Corp. During the height of the subprime boom ACC controlled both Ameriquest Mortgage and Argent. It was almost three years ago that Ameriquest agreed to pay $325 million to the states to settle allegations that its retail loan officers engaged in abusive lending practices. (Critics should keep that in mind when blaming loan brokers for the mortgage mess.) Ameriquest was the brainchild of the late Roland Arnall. (Arnall is a central character in "Chain of Blame.") By the way, Ameriquest used to sell and securitize its subprime loans through Greenwich Capital, which in turn is owned by Royal Bank of Scotland, which (now) is 70% owned by the British government. Greenwich now employs some former mortgage traders from Bear Stearns. Funny world we live in...
Some good news: PHH Corp. of Mount Laurel, N.J., said its mortgage production segment was profitable in December, allowing that unit to break even for the fourth quarter. There is some bad news though - its mortgage servicing segment lost $382 million in the three-month period due to $445 million of valuation adjustments on mortgage servicing rights...
In case you missed it: the government will exchange up to $25 billion in emergency bailout money it provided Citigroup for as much as a 36% equity stake in the struggling bank, which is the nation's fourth largest residential lender and servicer, according to the Quarterly Data Report. To order the QDR e-mail
Don't forget: Next Friday, March 6, is U-Day. That's when the Department of Labor releases the newest unemployment numbers for the month. Hang on tight...
If this doesn't revise the housing market in California, then nothing will: California Gov. Arnold Schwarzenegger signed a bill allowing for new homebuyers to receive a maximum tax credit of $10,000. And here's the kicker: buyers can use both the California credit and the new federal tax credit for a total benefit of $18,000. Tax credit means that if a consumer owes Uncle Sam and the state $18,000 the bill would be, well, zero. Is this a great country or what?...
The Friedman Billings Ramsey Group of Virginia (as in Eric Billings, as in the subprime mortgage crisis, the REIT division) is changing its name to Arlington Asset Investment Corp. But does it really matter? Its shares trade for about 16 cents a pop. During the height of the subprime boom Mr. Billings was the king of subprime REITs...
MORTGAGE NEWS NOTES/BOOK CORNER: I'm now writing a weekly column for National Mortgage News called "Inside Take." It only appears in the print edition though. To subscribe to NMN and its website call 800-221-1809. HBO is bringing the financial meltdown of 2008 to the small screen. The media company has acquired rights to a book that according to Variety just sold for seven figures. Huh? Its authors are Joe Nocera and Bethany McLean. Also, NMN editor Mark Fogarty has a new book out called "Went to See the Gypsy." It's about his remembrances of rock 'n' roll bands both obscure and famous. It's a good read...
MORTGAGE PEOPLE: Mortgage technology provider Lender Processing Services has named Pete Maselli senior vice president of strategy and business development. Mr. Maselli will represent LPS regarding matters related to the GSEs, HUD, the banking agencies and other groups. Mr. Maselli worked for Freddie Mac for 15 years and is best known in the industry for his role in developing that GSE's Loan Prospector automated underwriting program. He also has worked for Overture Technologies and LandAmerica Financial Group.
MUST ATTEND CONFERENCE: National Mortgage News/SourceMedia's third annual servicing conference. The show will be held April 6 and 7 at the Marriott Dallas/Fort Worth. Larry Litton of Litton Mortgage and many others are speaking. Topics include REO, loss mitigation and much more. For more information call 800-803-3424.
DATA NOTICE: The Mortgage Industry Directory is still available as well as the online version of the book, the eMID. If you need rankings on the top 400 lenders and servicers, loan brokers and much more this could be your product. Order the MID and receive a free Quarterly Data Report too. The MID/eMID also provides executive names and telephone numbers, mailing addresses, delinquency info - and news updates (the eMID only). Buy the book and receive a free Quarterly Data Report. For more information e-mail
