THIS JUST IN: Are mortgage insurance firms beginning to get more aggressive, taking on additional risk? The answer is yes, according to FHA chief David Stevens. Keep in mind that five short years ago FHA's market share was a blood-curdling low 2.5%. The program barely had a pulse. Most of the industry had left FHA for dead, choosing instead to promote "liar loans" from Ameriquest, Argent, First Franklin. But that was then. Today, FHA has a share of close to 30% (and the U.S. economy a big gaping hole in it, but you already know about that.) For the full analysis see Brian Collins' story in the Monday edition of National Mortgage News. Don't subscribe? Call 800-221-1809...
As for risky loan programs, I was forwarded an e-mail concerning an Irvine, Calif.-based brokerage called Intergr8ative Lending. (Can we trust a lender that can't spell correctly? It also misspelled the word license on its solicitation.) IL, it seems, is willing to extend credit to borrowers who have debt-to-income ratios of 60%. That's right, folks, 60%. Primary homes, second homes, and investment properties - IL will fund them, at least it says so. One veteran mortgage professional who saw the "ad" almost flipped, writing to me: "The ad looks like FHA to me. I have never called these people. They were marketing a 'stated income' deal last year. Gotta love that! After 20 years in mortgage, I am going to the police academy. I feel it's the only way to cleanse myself"...
THE MAIN EVENT: What a week! It's been a while since politics and finance were so intertwined in the news (OK, not really) but I'll try to make sense of it all for you. First up, Massachusetts. Senator-elect Scott Brown is apparently "one of us." At least that's what a handful of brokers told me. Mr. Brown, a moderate Republican, was a closing attorney who worked with loan brokers. "The fact that he's worked in the private sector and is someone who's had to make payroll is good," said NAMB executive Roy DeLoach. "We need more people like that in Congress." Yes, but can Mr. Brown do anything to stem the tide of tighter regulations that are hurting the small to medium sized nonbank players? And should he? Brokers, indeed, share some of the blame for the mortgage crisis but (as I've noted before) brokers don't create the menus, underwrite the loans and securitize them. The Financial Crisis Commission is now taking a keen interest in Wall Street underwriting practices. More on that at a later date. As for President Obama, he has learned his lesson a bit late. The election was all about jobs - as in creating them for the American public. Instead, he decided to push health care reform through first - and worry about jobs later. It's proved to be a big mistake and Mr. Brown is proof. But perhaps an even bigger mistake is beating the stuffing out of Wall Street and the mega banks. Obama may be playing to his base by slamming "greedy" investment bankers but if he's looking for engines of economic growth banks and Wall Street firms are potential "employers," that is - they could be used to create jobs via new hiring and loans. But instead, the president has chosen to use them as a punching bag. As for the Republicans, if they score big in November's election, they'll have to come up with some ideas. Just saying "no" on everything isn't really an idea. It speaks to the base, sure, but it doesn't cut it with moderates and independents. If the GOP rises to power again will their one good idea be cutting taxes? And wouldn't a tax cut lead to higher deficits and aren't GOPers the ones screaming the loudest about the deficit? Is there any way out of this mess? Should we go back to the gold standard?...
Did I mention that Barney Frank wants to wipe Fannie Mae and Freddie Mac off the face of the map and recreate our nation's housing finance system from scratch? The story broke late Friday and is now on the NMN website: http://www.nationalmortgagenews.com. Is anyone starting to miss George W. Bush yet? OK, it's not that bad. Like I said, what a week...
So, was the fourth quarter a good one for residential lenders? It all depends on the firm and where they are located. Cherry Creek Mortgage of Greenwood Village, Colo., had a blow-out quarter: $773 million in residential fundings compared to $431 million in the year ago period. The nation's mega banks had strong operating earnings from residential lending - but that's before deducting for huge writedowns on their legacy loans. And they also marked up - by quite a bit - the value of their servicing rights. The full story - along with a table on the MSR markups - is in Monday's NMN...
DATA POINT: BB&T Corp. ranked first among all warehouse providers in terms of commitments for the period ending Sept. 30, according to new survey results from NMN. The info also appears in our Quarterly Data Report which ranks the nation's top servicers and more. E-mail
MORTGAGE PEOPLE: Total Mortgage Services of Connecticut has hired Jim Lynch, a former Chase executive, to help run its new wholesale division. BuckleySandler LLP has hired attorney mergers and acquisitions attorney David Baris. Mr. Baris is executive director of the American Association of Bank Directors and a founding partner of Kennedy & Baris LLP.
QUOTE OF THE WEEK: "Look at the damage Fannie and Freddie caused and they were run by Congress. Should they have a special tax on congressmen because they let this thing happen to Fannie and Freddie? I don't think so." - Warren Buffet, a former investor in the GSEs.
MACROECONOMIC ISSUES: "The collapse in capital spending (capex) experienced in the recession that began in December 2007 and likely ended by July 2009 dwarfs the sharp drop experienced during the 2001 downturn. The peak to trough decline in capex totaled 21.3% compared to 9.8%, making it one of the deepest downturns on record. There are two reasons why we expect capex to recover strongly: One, capex is extremely cyclical and large declines are generally followed by sharp recoveries. Two, and more importantly, companies need to increase capex because industrial capacity is shrinking for only the second time on record. The longer companies wait to undertake capex, the more their existing capital infrastructure will deteriorate and the more these companies will ultimately have to spend to upgrade it." - Deutsche Bank
DATA NOTICE No. 1: Planning for the rest of 2010 and need soup-to-nuts statistics on the nation's top residential (and commercial) lenders and servicers? The new MortgageStats.com data product might be what you're looking for. The user-friendly M-Stats is Web-based and incorporates both the Quarterly Data Report and our annual Mortgage Industry Directory. Among other things, it has annual rankings on the top 400 lenders and servicers, including breakdowns on retail, wholesale and correspondent - and news archives. There's contact info, too, and plenty of data on servicing. And here's the best part: you get quarterly updates. To see a sample send an e-mail to
DATA NOTICE No. 2: Even though we have just launched our new MortgageStats.com product you can still subscribe to the Quarterly Data Report, a spreadsheet product that provides readers with quarterly rankings on the nation's top lenders and servicers. There's also a companion product called the Alt-QDR, which provides rankings on second liens, jumbos and much more. Again, shoot an e-mail to
SPEAKING OPPORTUNITY: SourceMedia, the folks that own NMN, American Banker, Credit Union Journal and other publications is still looking for topics and speakers for its fourth annual mortgage servicing conference in Dallas. Time is running out, though. To learn more or to register, contact
THE LAST WORD: Read Managing REO, the only publication dedicated to covering the clean up of the nation's housing and loan markets. For a free sample copy send an e-mail to
Go Jets, Go Vikings.
