THIS JUST IN: The Government National Mortgage Association might be open to providing (in some manner) warehouse financing to non-depository mortgage banking firms, helping alleviate the credit crisis in that sector. GNMA isn't ready to talk about it but there are rumblings out there. Meanwhile, some regional banks are warming up to the idea of becoming warehouse providers, one investment banker told us. These banks understand that the profit opportunities in warehouse could be quite good. "I know one Illinois bank that's looking at it but they only want to lend in their state," said a source. "They're telling me: 'If it's not in my backyard I don't want to do it.'" For the full story see the Monday edition of National Mortgage News. To subscribe to the paper and website call 800-221-1809...
The saying, "It's always darkest before dawn" comes to mind when analyzing the past week's news. On Monday NMN will publish its final production ranking for the fourth quarter. There were some surprises among the top 10: Minnesota-based U.S. Bank Home Mortgage is now the nation's fifth largest residential lender. Also moving into the top 10: SunTrust, Taylor Bean & Whitaker and Flagstar. Overall, depositories and non-banks (there are some left) funded a meager $273 billion in the fourth quarter, a 45% decline from the same period last year. The industry is hoping Q4 was the worst of it and everything will be up from here. To view the top 100 funders and servicers (and all the delinquency data) order the Quarterly Data Report by sending an e-mail to
Maybe there's some life out there in the economy after all. Yes, the mortgage industry has hit the skids (an understatement) but one boutique investment banker I know told me this morning that he's the busiest he's been in five years. "I'm working on M&A deals," he said. "There is such a need for capital"...
Remember FM Watch, the lobbying group whose mission in life was to check the expansionist tendencies of Fannie Mae and Freddie Mac? In retrospect the FM Watch gang might look like geniuses. But hold on there. Four of the biggest movers and shakers in FMW were American International Group, Household Finance, General Electric and the National Home Equity Mortgage Association. AIG's failure (let's call a spade a spade) has cost taxpayers $150 billion, Household's subprime assets blew up HSBC (Sir John Bond, where art thou now?) and GE's stock is down $6 a share. Oh, and NHEMA? Don't make me laugh. The full story is also in Monday's NMN along with Bonnie Sinnock's "Street Smarts" column...
Is Bank of America's Ken Lewis toast? The man responsible for BoA buying both Countrywide and Merrill isn't loved by Change to Win Investment Group. This past week CtW asked the bank's board to fire Mr. Lewis. (CtW works with union-affiliated pension funds, and says it has about 33 million shares in Bank of America.) As I recall CtW also asked (numerous times) for Countrywide to fire its founder and CEO Angelo Mozilo. Countrywide, of course, did not listen. Will BoA? Don't bet on it. Then again, its stock price is still $3.50 a share...
The Mortgage Bankers Association is continuing its struggle finding tenants for its new office building. But at least the National Association of Realtors has money to burn. A few days ago NAR took out a full-page ad in Politico, imploring Congress not to put a "tax" on homeowners. That tax, of course, would be a cap on the mortgage interest deduction for high-income earners. The strange thing about the ad is that it portrays the U.S. housing market as a house of cards. Really. To see the ad turn to page 11 of the newspaper. In the same issue homebuilder Toll Brothers - whose stock (to the surprise of few) is near its 52-week low - is advertising brand-new Maryland homes for up to $1 million. Hopefully, if members of Congress and their staffers apply for a mortgage they won't get socked with any GSE "adder" fees. Politico publishes every day that Congress is in session...
One reader wrote in defending former Sen. Phil Gramm, accusing me (I think) of having a liberal bias, and blaming repeal of the Glass-Steagall Act for the credit crisis. This reader wrote: "You have a spin, naivety or ignorance as your guide to writing." Me, naive? What does that word mean? I'm not sure what ignorant means either. But anyone who blames Fannie and Freddie (and CRA laws) for this crisis needs his head examined plain and simple. Yes the GSEs played a role but they were not the cause. As for Glass-Steagall, as I've noted before in other columns, its repeal, indeed, played a role in the subprime and credit crisis because it allowed commercial banks to underwrite ABS. I'm all for bringing back Glass-Steagall. And once we clean up the financial mess let's look at banning interstate banking to some degree but don't get me started. As for those of you who hold CNBC and Rick Santelli in high regard please visit
My apologies to reader James Curti of Plaza Home Mortgage. In a recent column I painted all wholesalers with a broad brush saying they "did not have skin in the game." Many wholesalers did, in fact, have skin in the game because the loans they sold to Wall Street (usually) were sold with recourse. James wrote: "Our contractual obligations with our investors and warehouse lines is what I define as 'skin in the game.'" Keep in mind that many non-bank wholesalers were thinly capitalized or were REITs and their ability to buy back loans can be viewed (in retrospect) as negligible...
Two years ago this month, Merrill Lynch began conducting margin calls on certain B&C originators that receive financing through the firm's warehouse group. As we reported back then: One secondary market official, requesting anonymity, said Merrill is the "main culprit" in the current buyback plague sweeping the subprime industry. He added, "Merrill is making originators pay dearly"...
So, how's the residential servicing sector holding up? In normal times - and we are living in anything but normal times - servicing would be a countercyclical play to originations. But the ugly delinquency numbers are making servicing rights less valuable. Don't get me wrong, some companies are living off their servicing revenue provided their portfolios include GSE, FHA and VA product. But one investment banker pointed out to me that escrow earnings are way down, collection costs are eating into profits, and prepayment speeds could rise. He added, "No one wants to sell servicing right now because the bid price is so bad. It's better to just hold it"...
WASHINGTON NEWS: The House of Representatives has approved legislation 234 to 191 that would let bankruptcy judges modify or "cram down" mortgages, but the bill's fate in the Senate remains unclear. Though the House leadership had enough of a majority to pass the bill over opposition from Republicans and several conservative Democrats, Senate leaders do not have as much leeway. Some Senate Democrats, including Sen. Evan Bayh of Indiana, continue to push for ways to narrow the bill, encouraged by the banking industry, which believes the legislation will drive up the cost of credit. Stay tuned.
MORTGAGE PEOPLE: Wolters Kluwer Financial Services named Fran Sullivan to the newly created position of chief information officer. WKFS provides regulatory intelligence, policy and process management services to mortgage firms and financial service companies. Trust Title Co. named Tim Landwehr senior vice president in charge of national sales. Trust Title is a national provider of title and settlement services.
MUST ATTEND CONFERENCE: National Mortgage News/SourceMedia's third annual servicing conference is gaining a lot of sign-ups. 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
