THIS JUST IN: The Government National Mortgage Association is apparently on board with a warehouse lending solution for funders of FHA and VA loans. Now it must approach the Treasury Department. See Brian Collins' story on the National Mortgage News website at
To say that loan brokers have an image problem is an understatement. But here's the stark reality right now: brokers have little "juice" in Washington and they've lost the public relations battle over who caused the mortgage and credit crisis which is a shame because I firmly believe that a majority of the blame rests with Wall Street because firms like Merrill Lynch, Bear Stearns and Lehman Brothers, two of which are now six-feet under. The reason for my belief is obvious: the Street financed the non-bank subprime lenders via warehouse lines, bought their loans so they could securitize them, and didn't care one bit about credit quality. The idea was to create mortgage-backed bonds as quickly as possible. "Underwriting - who needs it," was the attitude. But I've been down this road before, most notably in the book "Chain of Blame" which is now going into paperback (early next year). If you have any stories that you think might fit into the new version drop me an e-mail at
OK, back to brokers. Yes, brokers were no angels either. They were part of the problem, for sure, but there were many good brokers who did their jobs honestly and are now suffering because the surviving mortgage players with deep pockets (the mega-banks, Wall Street) have outmaneuvered them in both lobbying and PR. Have brokers even been at the table when discussing the mortgage mess with Treasury? With the Fed? One fact seems certain: remember all those large abusive lending settlements that Ameriquest, Associates and Household struck with the Feds and the states? Almost all of those allegations centered around those firms' retail lending divisions - not their wholesale/broker units. Again, not to dismiss the notion that sleazy brokers took advantage of consumers - they did, but bad loans wouldn't happen if someone in wholesale underwriting (and on Wall Street) did their job properly - checking VOEs, VODs and calling employers. Oh, and looking at real appraisals - ones done at arm's length. Will brokers survive? We shall see. Late last week it appeared that all yield-spread premium payments had been banned under the just-passed Mortgage Reform and Anti-Predatory Lending Bill of 2009 (H.R. 1728). Brokers aren't happy with the language because it means that going forward they could have a tough time getting paid - unless they can work out some other type of arrangement with their wholesalers that doesn't violate RESPA. Then again, brokers probably don't have much to worry about. The Senate is notorious for tying up bills forever and never passing them - unless (of course) there's an impending "must act" crisis like the meltdown of our nation's entire financial system or a war...
It's been a week since the Home Valuation Code of Conduct became the law of the land. For full analysis see the "Inside Take" column only in the print edition of Monday's National Mortgage News. Don't subscribe? Call (800)221-1809. Brokers are hopping mad over HVCC, too. Some have even started a petition. One LO told me: "As everyone on the mortgage side knows HVCC is nothing short of a detriment to the borrower, both in the initial cost and the long term costs." To view the petition visit
Fannie Mae on Friday reported a loss of $23 billion, no surprise there really. In its financial statements it notes that its "book of business" has guarantees on $283 billion in alt-A loans. If you're looking for a smoking gun, follow those loans...
If Fannie reported 1Q results that means Freddie Mac is soon to follow. As my colleague Ed Roberts of The Credit Union Journal pointed out the other day: "None of the FHLBs have reported their first-quarter financials yet either"...
So, what's going on with the mortgage insurance industry? Their stocks rallied a bit this past week. Perhaps, someone at the Treasury Department and/or Federal Reserve woke up and realized that the nation's seven mortgage insurance firms cover the first 20% of losses on conventional loans held by Fannie Mae and Freddie Mac, which means that if the MI industry goes south Uncle Sam has a 20% "loss coverage" problem on (potentially) $5 trillion of mortgages...
Who says the home-equity loan market is dead? In the Washington metropolitan area, PNC Bank is advertising HELOC rates as low 3.99%. However, in its marketing materials the bank is telling potential customers that the 3.99% rate is only for "strong financial households" that want a line of $75,000 or more. Keep in mind that compared to the rest of the nation, D.C. area values have sagged - but nowhere as badly as such devastated markets as Arizona, California, Florida, Nevada and Michigan. PNC of Pittsburgh is the 7th largest servicer of residential second liens, according to figures compiled by National Mortgage News and the Alternative Products Quarterly Data Report. Need a complete list of the nation's top second-lien lenders and servicers? Drop an e-mail to
WASHINGTON NEWS: Declining home values are undermining the performance of the Federal Housing Administration's reverse mortgage program, the Obama administration warned this past week. The Home Equity Conversion Mortgage program is expected to face a $798 million budget shortfall in fiscal year 2010. Its budget proposal blames the decline in house prices. The same states with large concentrations of seniors that use the FHA HECM program - Florida, Arizona, California and Nevada - are the same ones that have seen the biggest house prices declines over the past two years. However, the FHA single-family program is projected to generate a $1.7 billion budget surplus that can cover the HECM shortfall. The president's budget estimates that FHA lenders will originate $300 billion in single-family loans in FY 2010, up from $285 billion in FY 2009, which ends Sept. 30. 2009. But HECM originations are projected to be $30 billion in FY 2010, unchanged from this fiscal year.
MORTGAGE PEOPLE: This past week Helen Kanovsky, Peter Kovar and John Trasvina were sworn in Monday as general counsel, assistant secretary for congressional and intergovernmental affairs, and assistant secretary for fair housing and equal opportunity, respectively, at the Department of Housing and Urban Development. All three were unanimously confirmed by the Senate on May 1.
SURVEY NOTICE No. 1: Loan officers for retail shops and brokerages, we want to know all about your business last year and what you expect for this year. To fill out our annual LO survey, please visit
SURVEY NOTICE No. 2: Responses are pouring in for the annual National Mortgage News/American Banker residential lending and servicing survey ritual. Results will wind up in the eMortgage Industry Directory as well as the two newspapers. There is still time to give us your numbers. If you're a mortgage lender/servicer send an e-mail to
DATA NOTICE: You can now pre-order the upcoming eMortgage Industry Directory which includes a subscription to MortgageStats.com. With this product we are significantly expanding our offerings in the data/information services space. One option subscribers will have is to get quarterly updates. We'll also offer a special white paper on "Ten Mega Lenders to Keep an Eye on in 2009/2010." To advance order the eMID/Mortgagestats.com e-mail
