What We're Hearing

Ken Lewis says Bank of America's credit losses may've peaked in the third quarter but who really knows for sure? Keep in mind that when BoA bought Countrywide Financial Corp. in July 2008 it inherited roughly $80 billion in whole loans (residential mortgages) that were (to put it kindly) problematic. (CFC kept the loans on its balance sheet because it could not sell them. Not even Fannie Mae, CFC's 'BFF,' would buy them.) And let's not forget that BoA also bought Merrill Lynch and its far-flung mortgage units: First Franklin Financial, Wilshire Credit Corp., and the investment banker's jumbo lending unit in Jacksonville, Fla. We don't hear much about J-ville division anymore. For years, executives at Merrill Lynch Credit Corp. refused to answer National Mortgage News' regular quarterly lending/servicing surveys. On one occasion someone at the company filled in the survey, faxed to us, and then called to tell us that they had done so mistakenly and didn't want us to publish their numbers. (Too bad for them -- we published them anyway.) That Merrill unit originated mostly jumbo loans to its brokerage clients basing loan decisions (in part) on their stock portfolios. Meanwhile, former HUD attorney Howard Glaser -- now with Scott Stern's Lenders One group -- was on CNBC late this morning defending the Federal Housing Administration and its underwriting policies. But CNBC host Larry Kudlow wasn't buying his arguments. Also on the show was Rep. Scott Garrett (R-N.J.) who recently introduced legislation requiring FHA borrowers to make downpayments of at least 5%...