Subprime Clips, September 14, 2007

Subprime Clips, September 14, 2007
Full text of the articles follow below


1. http://www.presstelegram.com/business/ci_6888608

Alan Greenspan `missed it'
Former Fed. Reserve Chair didn't recognize subprime problem.
By Jeannine Aversa, Associated Press
Article Launched: 09/14/2007 12:00:00 AM PDT

"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he said in a CBS "60 Minutes" interview to be broadcast Sunday.

2. http://money.cnn.com/2007/09/14/real_estate/legislative_proposals/?postversion=2007091412
Legislative bull's eye: Mortgage lenders, brokers
The subprime crisis has generated heat on the Hill to prevent abusive lending in the future.
By Jeanne Sahadi, CNNMoney.com senior writer
September 14 2007: 12:41 PM EDT

Among other things, Dodd's bill would:
• Require lenders to assess borrowers' ability to pay the mortgage even after a rate reset if they're signing up for an adjustable-rate loan.
• Require lenders to verify subprime borrowers' income with documentation. Earlier this year, the Federal Reserve
• Prohibit pre-payment penalties and yield spread premiums (YSP) in subprime loans. A pre-payment penalty is the fee some lenders charge if you end up paying off your mortgage early, including if you choose to refinance. It sometimes can be as high as six months' worth of mortgage payments. A YSP is the difference between the the lowest interest rate a borrower qualifies for, and the actual rate he gets. A broker's fee may be based on it.
• Prohibit steering borrowers to more expensive loans when they qualify for lower cost ones.
• Hold lenders liable for appraisals and for brokers' actions when the broker is paid based on yield spread premiums.

3. http://money.cnn.com/2007/09/13/news/economy/fed_preview/index.htm?cnn=yes
The Fed's unkindest cut?
Wall Street is certain the Fed will cut rates to ease the pain of the credit crunch. But how will investors react if Bernanke & Co. cut by just a quarter of a point?
By Paul R. La Monica, CNNMoney.com editor at large
September 14 2007: 10:03 AM EDT

John Norris, director of wealth management at Oakworth Capital Bank, a private bank in Birmingham, Ala., … "Obviously everyone wants a 50 basis point cut. If it's only a quarter of a point the market will be upset," Norris said. "But if the Fed cuts by 25 basis points and the language in the statement is strong enough to indicate that this is the first of many cuts to come, cooler heads will prevail.

Norris added that the most recent figures from the Institute of Supply Management regarding manufacturing growth and services industry growth indicate that the economy is still expanding.
4. http://www.memphisdailynews.com/Editorial/StoryDaily.aspx?story
Wall Street, Consumer Groups
Battle Over Fraud Liability
This report compiled by Rosalind Guy with contributions from reporter Eric Smith, research analyst Kate Simone, editorial assistant Rebekah Hearn and The Associated Press.

Banks that package mortgage securities - and the institutional investors who buy them - are fearful that lawmakers could in the future make them legally responsible for fraud committed by lenders.

5. http://www.memphisdailynews.com/Editorial/StoryLead.aspx?id=98939
Fannie Mae, Freddie Mac Rise Again
By MARCY GORDON
AP Business Writer

Daniel Mudd, Fannie's president and CEO, on Wednesday said his firm can play a crucial role in steadying a home loan market while a shakeout removes what he calls the "bad actors."

6. http://www.247wallst.com/housing/index.html
Hovnanian: The Big House Giveaway
September 14, 2007

According to Bloomberg, Hovnanian will be cutting prices on some homes by "offering discounts of up to almost $150,000."
Ads for the sales have headlines like ``These three days could change your life! Don't miss this once in a lifetime opportunity!

7. http://www.nysun.com/article/62649
Greenspan Gives Bernanke An ‘Atta-Boy'
By CRAIG TORRES
Bloomberg News
September 14, 2007

The former chairman of the Federal Reserve, Alan Greenspan, said he "didn't really get" how the boom in subprime lending might hurt the economy, and endorsed his successor's handling of recent market turmoil, CBS television reported.
"I'm not certain I would have done anything different" than Mr. Bernanke, Mr. Greenspan said in the interview, according to excerpts released by CBS. "I'm not sure that's true," Mr. Greenspan said when asked if he would act "dramatically and quickly now."
After the 2001 recession, the Fed cut its benchmark rate to a four decade low of 1%. That move, along with Mr. Greenspan's hands-off approach to regulation, have brought him under fire as this year's bursting of the housing bubble and the subprime mortgage crisis again threaten to sink the broader economy.
8. http://www.nytimes.com/2007/09/14/business/14fed.html?ei=5090&en=67e57d3ac0bfa652&ex=1347422400&adxnnl=1&partner=rssuserland&emc=rss&adxnnlx=1189789564-xKfSejQxpRjIPXoNy12i+A
For Fed, a Question of Whom to Rescue, and When to Dive In
By EDMUND L. ANDREWS
Published: September 14, 2007

Mr. Bernanke wants to know if the overall economy is on the brink of a recession, and the evidence on that is far from decisive.

Mr. Bernanke and other Fed officials have said they do not want to be rescuers of investors or real estate speculators who made bad decisions.
Fed officials are also mindful of their experience in 1998, when a financial collapse in Russia led to a panic in credit markets but not a slowdown in the overall economy.

“Monetary policy’s unswerving focus should be on pursuing the Fed’s mandated goals of price stability and full employment,” Janet L. Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech Monday. “Past experience does show that financial turbulence can be resolved more quickly than seems likely when we’re in the middle of it.”

9. http://www.iht.com/articles/2007/09/14/business/mortgage.php

Britain bails out mortgage lender hit by credit crunch
By Eric Pfanner
Published: September 14, 2007

The British financial authorities said Friday that they had extended an emergency loan to rescue a big mortgage bank as the effects of a global credit crunch stemming from the crisis in the U.S. subprime home lending business spread to one of the most buoyant housing markets in the world.
Northern Rock's need for emergency funding represents a significant broadening of the effects of the crisis in global financial markets, analysts said, because until now problems at European banks have stemmed mostly from their direct exposure to U.S. subprime loans.


MORTGAGE INDUSTRY NEWS

10. http://www.nationalmortgagenews.com/washington/
Washington News Update
• The Fed also said piggybacks, in which a first mortgage and a second lien are originated simultaneously, were used in 22% of home purchase transactions, about the same as in 2005, but that more second liens were reported.

• The Senate has passed a Department of Housing and Urban Development appropriations bill that provides $100 million for counseling for homeowners facing foreclosure.
• The Senate Banking Committee is tentatively scheduled to mark up a Federal Housing Administration reform bill Sept. 19, sources say, but committee members are still trying to reach agreement on key provisions of the bill.

• The Federal Home Loan Bank of Des Moines has received regulatory approval to accept one- to four-family construction loans as collateral for advances at a time when many members have stepped up their borrowings from the bank.

• The Federal Trade Commission has stepped up its surveillance of deceptive mortgage advertising,

• But the House Financial Services Committee chairman, Rep. Barney Frank, D-Mass., and Reps. Gary Miller, R-Calif., and Dennis Cardoza, D-Calif., have filed an amendment with the House Rules Committee to raise the maximum FHA loan limit to 175% of the conforming loan limit,

• Frederic Mishkin, a Fed governor, said in a speech … . "At this point, housing demand seems likely to be crimped further by a marked reduction in the availability of mortgages, and consumer and business spending also could be damped as a consequence of the recent financial turmoil,

• Chairman Barney Frank, D-Mass., says it doesn't make sense to expect the two government-sponsored enterprises to help with the refinancing of subprime borrowers unless they have room in their portfolios to buy the loans.

• Like banks and thrifts, Fannie Mae and Freddie Mac are now bound by federal underwriting guidelines when they purchase subprime mortgages and private-label securitizations backed by subprime loans, according to the Office of Federal Housing Enterprise Oversight.
• Several Federal Reserve district banks "noted that the reduction in credit availability added to uncertainty about when the housing market might turn around," the Beige Book says.

11. http://data.nationalmortgagenews.com/columns/hearing/
What We're Hearing
Commentary
By Paul Muolo

Who is to blame for the mortgage fraud crisis in America? Answer: loan brokers. According to the FBI, most mortgage fraud occurs during the application process -- and that would mean loan brokers.

1.
http://www.presstelegram.com/business/ci_6888608

Alan Greenspan `missed it'
Former Fed. Reserve Chair didn't recognize subprime problem.
By Jeannine Aversa, Associated Press
Article Launched: 09/14/2007 12:00:00 AM PDT

WASHINGTON - Even the maestro didn't see it coming.
Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to recognize early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.
In an interview, Greenspan said he was aware of "subprime" lending practices where homebuyers got very low initial rates only to see them jacked up later, causing severe payment shock. But he said he didn't initially realize the harm they could do.
"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he said in a CBS "60 Minutes" interview to be broadcast Sunday.
"I really didn't get it until very late in 2005 and 2006," Greenspan said.
An excerpt of the interview was released Thursday.
As Fed chief, Greenspan's handling of the economy had earned him monikers, including the maestro, the greatest central banker who ever lived and the second-most important person in Washington.
Yet, some wonder whether the Greenspan Fed could have done more to prevent lax lending standards, bad loans and other problems that have since come to light in the higher-risk subprime mortgage market.
A meltdown in that market has rocked Wall Street. Foreclosures and late payments have soared and lenders have gone out of business. Nervous financial institutions tightened credit standards, making it harder for even more creditworthy borrowers to get financing. This has increased chances the economy might slide into a recession.
Sen. Charles Schumer, D-N.Y., said: "Greenspan was one of the smartest regulators this country ever had. If he missed it, then it should be a warning to the current regulators about the depth of this crisis."
Greenspan, who ran the central bank for more than 18 years - the second-longest serving chairman in history - left in 2006.
His successor, Ben Bernanke, has had to deal with a credit and financial crisis stemming from the subprime mortgage mess.
When he was at the helm, Greenspan maintained there was little the Fed - which also oversees the safety and soundness of banks - could do about the subprime situation. One of the Fed's governors, however, had raised a red flag about questionable lending practices.
"Well, it was nothing to look into particularly because we knew there was a number of such practices going on, but it's very difficult for banking regulators to deal with that," Greenspan said in the interview.
Some blamed Greenspan's interest rate policies for feeding the housing frenzy. Sales had hit record highs and house prices galloped from 2001 to 2005. Then the market fell into a slump.
The Greenspan Fed from early 2001 to the summer of 2003 had slashed interest rates to their lowest level in decades to rescue the economy from the blows of the bursting of the stock market bubble, the 2001 recession, the terror attacks and a wave of accounting scandals that shook Wall Street.
Critics say the Fed kept rates too low for too long, encouraging a Wild West mentality in housing.
Greenspan defended the institution's actions.
"They are mistaken," he said of the critics. "It was our job to unfreeze the American banking system if we wanted the economy to function. This required that we keep rates modestly low," he said.
Meanwhile, some believe Greenspan would have acted more aggressively than Bernanke in dealing with the current financial crisis.




2.
http://money.cnn.com/2007/09/14/real_estate/legislative_proposals/?postversion=2007091412
Legislative bull's eye: Mortgage lenders, brokers
The subprime crisis has generated heat on the Hill to prevent abusive lending in the future.
By Jeanne Sahadi, CNNMoney.com senior writer
September 14 2007: 12:41 PM EDT

NEW YORK (CNNMoney.com) -- The subprime crisis has put lawmakers under pressure to do something not only to help homeowners who could lose their homes but also to nail the guys who created the mess.
While there's lots of blame to go around, lawmakers are likely to focus on how to rein in lenders, brokers, appraisers and, not insignificantly, mortgage investors.
Senate Banking Committee Chairman Christopher Dodd (D-Conn.) last week proposed a predatory lending bill.

That bill is geared toward permanently expanding mortgage borrower protections and weeding out unscrupulous lenders.
Among other things, Dodd's bill would:
0. Require lenders to assess borrowers' ability to pay the mortgage even after a rate reset if they're signing up for an adjustable-rate loan.
0. Require lenders to verify subprime borrowers' income with documentation. Earlier this year, the Federal Reserve
0. Prohibit pre-payment penalties and yield spread premiums (YSP) in subprime loans. A pre-payment penalty is the fee some lenders charge if you end up paying off your mortgage early, including if you choose to refinance. It sometimes can be as high as six months' worth of mortgage payments. A YSP is the difference between the the lowest interest rate a borrower qualifies for, and the actual rate he gets. A broker's fee may be based on it.
0. Prohibit steering borrowers to more expensive loans when they qualify for lower cost ones.
0. Hold lenders liable for appraisals and for brokers' actions when the broker is paid based on yield spread premiums.
Jaret Seiberg, a financial services analyst at policy research firm Stanford Group, said Barney Frank (D-Mass.), chairman of the House Financial Services Committee, is also expected to propose a reform bill with somewhat similar provisions.
In addition, Seiberg said, Frank also may include provisions that address mortgage securitizers (those who bundle and sell loans as securities). They would be held liable if they buy loans that violate the bill's provisions unless they can show they took steps to avoid buying predatory or deceptive loans. (What readers are saying about government's responses to real estate problems)
"This [provision] is intended to force securitizers to police nonbank lenders," Seiberg wrote in research note.
Many also argue that the robust appetite on Wall Street for mortgage-backed securities encouraged subprime growth, because banks didn't have to keep such risky loans on their books and could just sell them to investors as part of bundled packages.
Seiberg noted, however, that liability provisions are what could prove to be the major sticking point in any mortgage reform legislation.
Right now, the Dodd proposals are likely to serve as a template for any Senate bill, Seiberg wrote. And, he added, "if delinquencies and foreclosures rise appreciably in the coming months, the bill could get much worse for mortgage lenders."



3.
http://money.cnn.com/2007/09/13/news/economy/fed_preview/index.htm?cnn=yes
The Fed's unkindest cut?
Wall Street is certain the Fed will cut rates to ease the pain of the credit crunch. But how will investors react if Bernanke & Co. cut by just a quarter of a point?
By Paul R. La Monica, CNNMoney.com editor at large
September 14 2007: 10:03 AM EDT

NEW YORK (CNNMoney.com) -- The Federal Reserve is going to cut the target on a key short-term interest rate on September 18. There is no mystery about that.
According to futures on the Chicago Board of Trade, the market is pricing in a 100 percent chance of a cut to the federal funds rate, an overnight bank lending rate that heavily impacts how much interest consumers pay on their credit card debt, home equity lines of credit and car loans

The fact that the Fed already cut its discount rate, which is what banks pay to borrow money from the central bank, in a surprise move on August 17, coupled with remarks from Fed members in the past few weeks about how closely they are monitoring the mortgage meltdown that is roiling the markets, makes it a virtual lock that Ben Bernanke and Co. will lower the fed funds rate on Tuesday.
Fed can't stop recession
Still, there is a fair amount of intrigue surrounding the September 18 meeting. Specifically, investors are unsure about how much the Fed will lower interest rates.
The Fed cut the discount rate by a half of a percentage point, from 6.25 percent to 5.75 percent, on August 17, leading many market observers to speculate that the Fed would also lower the fed funds rate by a half of a percentage point on September 18.
To that end, as of September 14, investors were factoring in a 58 percent chance that the Fed will cut the fed funds rate by 50 basis points, or half of a percentage point, to 4.75 percent, on Tuesday.
But hopes appear to be diminishing somewhat for a big rate cut. Investors had been pricing in a 74 percent chance of a 50 basis point rate cut on September 12.
Still, what will happen if the central bank only lowers interest rates by a quarter of a percentage point? Fed watchers said it all depends on what the Fed says in its statement.
John Norris, director of wealth management at Oakworth Capital Bank, a private bank in Birmingham, Ala., said the market would probably not be too happy with just a 25 basis point cut at first. But he thinks that in some ways, a smaller rate cut might be more reassuring.
"Obviously everyone wants a 50 basis point cut. If it's only a quarter of a point the market will be upset," Norris said. "But if the Fed cuts by 25 basis points and the language in the statement is strong enough to indicate that this is the first of many cuts to come, cooler heads will prevail. Investors would like that as much, if not more, than a half-point cut with language that indicates this is just a one-off thing to placate the markets."
Why the credit crunch may deepen
Scott Martin, managing director with Astor Asset Management, a Chicago-based investment firm with $200 million in assets under management, agreed that a half of a point cut might soothe the market at first...but not for long.
"If the Fed cuts by 50 basis points, you have to worry about the health of the economy. If the Fed can just say that they are going to keep an eye on the subprime market and signal that they may cut two more times by the end of the year, that might be the best case scenario," Martin said.
Vincent Boberski, portfolio strategist with FTN Financial in Memphis, also said that a half-point cut might get some cheers at first but it could wind up spooking the markets once investors realize the reason behind it.
"If the Fed were to cut rates by a half point, it might backfire since it could potentially give the market the impression that the economy is much weaker than investors thought," Boberski said.
Despite fears that the subprime mortgage market implosion could send the economy into a recession, fears stoked by the surprise decline in jobs during the month of August and a smaller-than-expected increase in retail sales, Norris points to other economic evidence that might prevent the Fed from cutting rates aggressively.
For one, oil prices hit $80 a barrel for the first time ever on Wednesday. That, as well as rising prices for other commodities, could keep the Fed from lowering rates by too much since it wants to keep inflation in check.
Tales of the crash of 2007
Norris added that the most recent figures from the Institute of Supply Management regarding manufacturing growth and services industry growth indicate that the economy is still expanding.
"Bernanke is in an awkward situation. Right now, the data is still mixed. And he doesn't want his reputation to be that financial markets are dictating monetary policy. He doesn't want to be known as the Fed chairman that was bullied around by Wall Street," Norris said.
David Joy, chief market strategist with RiverSource Investments, a Minneapolis-based asset management firm agreed, adding that the economy still does not appear to be in dire enough shape to justify a half-point cut.
"If the Fed cuts rates by a quarter of a point, you will hear howls from those who think the Fed is behind the curve," Joy said. "But in my mind, a quarter of a point cut is appropriate. I'm not sure the economy needs a half-point cut. Plus, the Fed could always lower rates further in the coming months."
Compounding matters though is that Bernanke's widely respected predecessor, Alan Greenspan, is currently making comments about the economy as he promotes his new memoir, which will be published on Monday.
That has led some on Wall Street to unfavorably compare how Bernanke is handling the subprime woes with how Greenspan dealt with numerous crises during his tenure, such as the 1987 Black Monday crash, the collapse of the hedge fund Long-Term Capital Management in 1998 and the September 11 terrorist attacks.
But according to excerpts released Thursday from an interview that will air on the CBS news show "60 Minutes" Sunday, Greenspan said that he felt criticism of Bernanke was unfair and added that his successor was doing "an excellent job."
Still, Greenspan's legacy has come into question lately as well. According to the excerpt from the "60 Minutes" interview, Greenspan admitted that the Fed did not fully grasp how much of a danger the explosion in demand for subprime mortgages would have on the economy.
Martin of Astor Asset Management pointed out that Bernanke might want to avoid cutting interest rates too drastically, since it can be argued that the historically low rates from earlier this decade helped bring about the subprime mess in the first place.
"The market is begging for a rate cut but we're trying to fix a liquidity problem with more liquidity. It's kind of funny," Martin said.
So while a half-point rate cut might be considered a quick cure for what's ailing Wall Street, some think it might be more pragmatic for the Fed to lower rates gradually.
"It would be a bold move to cut rates by a half of a point," Boberski said. "There is some justification for it since the labor markets are a lot weaker than people thought. But it seems like the Fed would prefer to take an incremental approach since Bernanke does not want to be seen as bailing out the financial system."
Joy added that it's amusing to see people criticize the Fed for not cutting rates since many Fed skeptics thought the central bank kept rates too low for too long.
"It's somewhat disingenuous to say the Fed needs to cut rates to bail out housing while at the same time many of these people were saying a year ago that the Fed needed to raise interest rates because the housing market was a bubble," he said.
To that end, Boberski thinks the Fed would rather cut rates two or three times by a quarter of a point before the end of the year and perhaps once or twice more in 2008.




4.
http://www.memphisdailynews.com/Editorial/StoryDaily.aspx?story
Wall Street, Consumer Groups
Battle Over Fraud Liability
Banks that package mortgage securities - and the institutional investors who buy them - are fearful that lawmakers could in the future make them legally responsible for fraud committed by lenders.
As the housing crisis worsens and foreclosures mount, federal predatory lending legislation is moving to the front burner. But industry groups are warning the Democratic-led Congress that imposing such liability would dry up funding for mortgage loans.
Consumer advocates, meanwhile, say it is the best way to rein in Wall Street's aggressive role in the increasingly complex mortgage market, which boomed in recent years amid lax standards for borrowers with weak, or subprime, credit.
Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, foresees a heated battle on the issue this fall. If companies that package mortgage securities and investors in them knew they could be liable, "they might actually look at the loans that they're buying, which they haven't been doing," Rheingold said.
However, it is unrealistic for investors to be expected to check to see whether loans were fraudulently issued, said George Miller, executive director of the American Securitization Forum, which includes buyers and sellers of securities backed by mortgages and other assets.
"The investor isn't sitting there when a lender and broker are ... at the table," he said.
At a hearing earlier this year, Republicans warned against overzealous efforts to create legal responsibilities, citing Georgia's experience as a textbook case. Georgia's 2002 predatory lending law allowed borrowers to seek punitive damages from anyone who bought a loan or a security that included the loan.
In response, major credit-rating agencies decided they would no longer rate the quality of securities containing Georgia home loans, leading to a mass withdrawal of lenders from the state. Georgia lawmakers subsequently changed their law limiting liability for loan abuses to original lenders.
House lawmakers, led by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, plan to introduce multifaceted mortgage legislation in the coming weeks. The details are still being worked out.
Rep. Brad Miller, D.-N.C., who plans to co-sponsor a bill with Frank, said the House bill probably will include protections against lawsuits for loans that don't show obvious signs of being predatory. Among those signs, he said, are requirements that borrowers pay penalties if they want to pay off their loans early.
"What we want to do is end predatory loans, but make sure that we don't regulate lending to death," Miller said.




5.
http://www.memphisdailynews.com/Editorial/StoryLead.aspx?id=98939
Fannie Mae, Freddie Mac Rise Again

By MARCY GORDON
AP Business Writer


WASHINGTON (AP) - Several years after multibillion-dollar accounting scandals tarnished reputations at Fannie Mae and Freddie Mac, the mortgage giants are regaining market dominance amid an ailing housing market.
Daniel Mudd, Fannie's president and CEO, on Wednesday said his firm can play a crucial role in steadying a home loan market while a shakeout removes what he calls the "bad actors."
Fannie, which is the largest U.S. buyer and guarantor of mortgages, has helped some 33,000 struggling homeowners refinance $6 billion in mortgages since April.
That's when Fannie and government-created sibling firm Freddie Mac committed to buy up to $20 billion in mortgages to help financially at-risk borrowers remain in their homes. Fannie has been able to refinance "about half the time" in cases it has addressed, Mudd said.
Bert Ely, a banking consultant based in Alexandria, Va., who is a critic of Fannie and Freddie, said "That's a drop in the bucket. ... All these (refinancing) programs do is help around the edges."
Amid the worst housing downturn in 16 years, political pressure is building, largely from Democratic lawmakers, for the government to expand the caps on how many mortgages the two publicly traded companies can buy and hold.
Sen. Charles E. Schumer, D-N.Y., said boosting the investment limits would ease a credit crunch that has resulted from a near-collapse in the market for subprime mortgages made to borrowers with tarnished credit histories.
As many as 2.5 million adjustable-rate mortgages, or $600 billion worth of loans, are scheduled to "reset" this year and next, jumping from low "teaser" rates for the first two or three years to much steeper rates that could cost borrowers their homes.
Some experts say many of the mortgages won't qualify for refinancing no matter how much money Fannie and Freddie have to pump into the market because many of the homeowners involved are no longer employed or the values of their houses have fallen below the total due on the mortgage.
A rising tide of soured loans already has
forced a number of lenders into bankruptcy, while hedge funds and other big investors in securities backed by subprime mortgages took deep financial hits. The turbulence spilled over into global credit markets and stock exchanges last month as investors faced the prospect of not being repaid.
"We're not the sole solution," Mudd said, in an address at a meeting of the National Association of Federal Credit Unions. "We're part of a solution that can help us move through this period in the quickest and least painful way possible."
So far, though, the federal regulator of Fannie and Freddie has declined to increase their investment caps, and the White House said it is opposed to raising them until supervision of the mortgage giants is tightened.
Yet the dominance of Fannie and Freddie in the $3.5 trillion market for securities comprised of bundled mortgages appears to be re-emerging, regardless of whether their investment caps are raised.
There were $547 billion of securities backed by mortgages issued in the second quarter, of which 53 percent came from Fannie Mae, Freddie Mac and the Government National Mortgage Association, known as Ginnie Mae. That was up from a 44 percent market share at the end of 2006, according to government figures.
Lenders that rely on selling bundles of mortgages in the secondary market to fund operations - while often competing with Fannie and Freddie - have been particularly hard hit by the market squeeze.
Given the upheaval in the mortgage market, "this is the time to chase the bad actors out of the system," Mudd said, referring to the troubled lenders who engaged in abusive lending practices that fueled an unsustainable housing boom.
Mudd said Fannie Mae welcomed President George W. Bush's recently proposed plan to allow the Federal Housing Administration to get involved in helping borrowers who are delinquent on payments because their mortgages have reset to higher rates.
The plan, though modest, is significant because the FHA, part of the Department of Housing and Urban Development, has not been permitted in its 70-year history to insure refinanced loans of delinquent borrowers.
However, changes proposed by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and other Democrats go further, and the Democratic-controlled House is expected to vote on the proposals next week.
Fannie Mae also has bought special mortgage "rescue bonds" recently issued by Ohio and Massachusetts to help curb soaring foreclosures, Mudd noted.
Shares of Fannie fell 92 cents, or 1.4 percent, to $62.81, while Freddie's shares fell 41 cents to $58.84 Wednesday.




6.
http://www.247wallst.com/housing/index.html
September 14, 2007
Hovnanian: The Big House Giveaway
Hovnanian (HOV), the home builder, is going to have a three day sale this week. It would be more accurate to say that they will be giving the houses away, at least from a profit standpoint. According to Bloomberg, Hovnanian will be cutting prices on some homes by "offering discounts of up to almost $150,000."
Ads for the sales have headlines like ``These three days could change your life! Don't miss this once in a lifetime opportunity!''
But, Hovnanian needs to get the inventory off its books, even if it loses money on some of the properties. After building the homes, it has to pay to maintain them, a mix of interest payments and upkeep. Selling the homes not only brings in some cash. It also keeps the homes from having to be written down further in future quarters if home prices continue their slide.
And, that is the toy in the Cracker Jack. Hovnanian is signaling that it believes the housing market is going to get worse. It move is more a liquidation than it is a sale. It is putting its own homes into foreclosure so that the entire company does not go there. It is saying that a recovery in real estate is far, far off.
Douglas A. McIntyre




7.
http://www.nysun.com/article/62649
Greenspan Gives Bernanke An ‘Atta-Boy'
By CRAIG TORRES
Bloomberg News
September 14, 2007
The former chairman of the Federal Reserve, Alan Greenspan, said he "didn't really get" how the boom in subprime lending might hurt the economy, and endorsed his successor's handling of recent market turmoil, CBS television reported.
The current chairman of the Fed, Ben Bernanke, "is doing an excellent job," Mr. Greenspan said in an interview on the 60 Minutes program, according to excerpts emailed by CBS yesterday. The show is scheduled to air on September 16, a day before the publication of Mr. Greenspan's book, "The Age of Turbulence."
The remarks come amid criticism among some investors that Mr. Bernanke has failed to be as forceful as his predecessor in responding to financial turmoil. Mr. Greenspan in 1998 cut interest rates three times after a Russian debt default rippled through global markets. Mr. Bernanke's Fed has refrained from lowering its benchmark so far, relying on other tools to provide liquidity.
"I'm not certain I would have done anything different" than Mr. Bernanke, Mr. Greenspan said in the interview, according to excerpts released by CBS. "I'm not sure that's true," Mr. Greenspan said when asked if he would act "dramatically and quickly now."
The former Fed chief, who led the central bank for 18 years, said inflation is a bigger concern now than when policy makers cut the target rate for overnight loans between banks in 1998, CBS said. "We were dealing in an environment back there where inflation was easing," Mr. Greenspan said, according to the excerpts. "We could have acted without the fear of stoking inflationary pressures. You can't do that anymore."
" Greenspan, given his significant legacy and stature, giving Bernanke an ‘atta-boy' in this environment is a positive boost for Bernanke," the head of U.S. rate strategy for UBS Securities LLC in Stamford, Conn., William O'Donnell, said. "It's a nice vote of confidence for Bernanke going into next week's meeting."
The Federal Open Market Committee will lower the benchmark rate by a quarter percentage point, to 5%, when it meets September 18, according to the median forecast of economists surveyed by Bloomberg News.
As chairman, Mr. Greenspan won admiration for steering the economy through a series of crises, pumping out money to help growth rebound from a stock market crash in 1987.
After the 2001 recession, the Fed cut its benchmark rate to a four decade low of 1%. That move, along with Mr. Greenspan's hands-off approach to regulation, have brought him under fire as this year's bursting of the housing bubble and the subprime mortgage crisis again threaten to sink the broader economy.
Mr. Greenspan said in the interview that he was aware of lax lending standards in the subprime market, in which borrowers have little or poor credit history.




8.
http://www.nytimes.com/2007/09/14/business/14fed.html?ei=5090&en=67e57d3ac0bfa652&ex=1347422400&adxnnl=1&partner=rssuserland&emc=rss&adxnnlx=1189789564-xKfSejQxpRjIPXoNy12i+A

For Fed, a Question of Whom to Rescue, and When to Dive In
By EDMUND L. ANDREWS
Published: September 14, 2007
WASHINGTON, Sept. 13 — When policy makers at the Federal Reserve meet to set interest rates on Tuesday, their debate is likely to be less about whether to reduce rates than about how much.
Ben S. Bernanke has not previously faced a major economic upheaval as Fed chairman.

The meeting is also likely to be a defining moment for Ben S. Bernanke, who has not had to wrestle with a major economic upheaval since he took over as Fed chairman in February 2006. Wall Street, frightened by the turmoil in credit markets and in housing, is betting on the Fed to cut rates deeply. But Mr. Bernanke wants to know if the overall economy is on the brink of a recession, and the evidence on that is far from decisive.
Investors now assume that the central bank will reduce the overnight federal funds rate by at least a quarter of a percentage point, to 5 percent. Fed officials have not tried to dissuade anyone from that assumption. But there is a possibility that the central bank will go further, reducing its benchmark rate by half a percentage point and signaling further reductions later this year.
Mr. Bernanke and other Fed officials have said they do not want to be rescuers of investors or real estate speculators who made bad decisions.
Fed officials are also mindful of their experience in 1998, when a financial collapse in Russia led to a panic in credit markets but not a slowdown in the overall economy. The central bank reduced rates twice in response to market fears, but the panic subsided almost as quickly as it began.
“Monetary policy’s unswerving focus should be on pursuing the Fed’s mandated goals of price stability and full employment,” Janet L. Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech Monday. “Past experience does show that financial turbulence can be resolved more quickly than seems likely when we’re in the middle of it.”
In practice, the line between rescuing financial markets and rescuing the overall economy is far from clear. Mr. Bernanke faces big risks, either by acting prematurely and giving investors the impression the Fed will shield them from risk or by acting too slowly and allowing a recession to set in.
Nearly a month after the Federal Reserve took its first steps to make money available for financial institutions rocked by problems with subprime mortgages, the panic in credit markets has relaxed slightly but conditions remain far from normal, according to industry executives.
New data on Thursday suggested that investors’ fears about buying commercial paper — securities backed by mortgages, credit card debt and business loans — might be easing, one of the reasons the stock market was rising Thursday.
The Fed reported that the volume of commercial paper declined by $8 billion for the week that ended Wednesday, a much smaller fall than in the four previous weeks, when investors first began to panic about subprime mortgages. Over the four weeks that ended Sept. 5, the volume of commercial paper shrank by an average of $74.6 billion each week.
But Steven Wieting, an economist at Citigroup, cautioned that recent signs of a recovery in the commercial paper market have been fleeting.
That bodes ill for the slumping housing market, which depends on the availability of capital for mortgages. Sales of new and existing homes remain weak, inventories of unsold homes are at their highest levels in years, and delinquencies are rising.
The overall economy, by contrast, has yet to show signs of serious damage.
The most disturbing sign of emerging trouble came in the Labor Department’s employment report for August, which estimated that the nation lost 4,000 jobs last month — the first monthly decline in four years. More worrisome, the Labor Department reduced its previous estimates for employment growth in June and July by a total of 81,000 jobs.
Kurt E. Karl, chief United States economist at Swiss Re Economic Research and Consulting, estimates the odds of a recession at “35 percent and rising,” but he predicted that the Fed would reduce its federal funds rate by only a quarter of a percentage point.
Yet, in a flurry of recent speeches, several Fed officials have made it clear they see a risk that the current housing problems and the credit squeeze could infect the rest of the economy.
Mr. Bernanke, who spent most of his career as a professor at Princeton and who favors a steady rules-based approach to monetary policy, has nonetheless carefully signaled that the Fed would not necessarily wait to act until it had irrefutable evidence of a looming downturn.





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http://www.iht.com/articles/2007/09/14/business/mortgage.php

Britain bails out mortgage lender hit by credit crunch

By Eric Pfanner
Published: September 14, 2007


LONDON: The British financial authorities said Friday that they had extended an emergency loan to rescue a big mortgage bank as the effects of a global credit crunch stemming from the crisis in the U.S. subprime home lending business spread to one of the most buoyant housing markets in the world.
The British government said it had authorized the Bank of England to provide a "liquidity support facility" of unspecified size to Northern Rock, a mortgage lender based in Newcastle, England, that has expanded aggressively in recent years.
The news prompted a sell-off in the shares of Northern Rock and other British bank stocks as investors worried about the possibility of similar problems at other institutions, as well as threats to the broader economy. The FTSE 100 index was down more than 2 percent in midday trading in London, and shares elsewhere in Europe fell sharply as well.
Northern Rock's need for emergency funding represents a significant broadening of the effects of the crisis in global financial markets, analysts said, because until now problems at European banks have stemmed mostly from their direct exposure to U.S. subprime loans.
Northern Rock, by contrast, said it had only a small amount of subprime loans in its portfolio, and British regulators said it "has a good quality loan book."
Instead, it ran into problems when the squeeze in capital markets undermined the bank's business model. Northern Rock has relied heavily on raising money in the capital markets, rather than consumer bank deposits, to finance its mortgage lending. With other banks increasingly reluctant to extend new credit, Northern Rock said it faced the possibility of being unable to meet existing obligations.
"The problems are potentially much wider now," said Jonathan Loynes, an economist at Capital Economics, a consultancy firm in London. "This means we have to worry about a wider range of institutions that aren't directly involved in this credit crisis but are in a way innocent bystanders."
The move came only two days after Mervyn King, the governor of the Bank of England, warned that moves by other central banks, like the Federal Reserve and the European Central Bank, which pumped extra cash into the financial system in recent weeks, could encourage "excessive risk-taking" by rewarding bad behavior.
The Bank of England emphasized Friday that its lending to Northern Rock would be conducted at a premium to market interest rates.
Because Northern Rock and other mortgage lenders will now have to pay more to raise money, they will have to pass along higher interest rates to consumers, analysts say. That will cause a slowdown in lending, they added, which could act as a drag on the British housing market and, perhaps, the economy.
"Costs for first-time borrowers, already stretched in the affordability stakes, will rise substantially," said Paul Mortimer-Lee, an economist at BNP Paribas. "First-time buyer activity seems pretty certain to show a sharp fall, which, since the whole market rests on the shoulders of the first-time buyer, is like throwing a spanner in the works of the whole market."
While the British housing market has soared over the last decade, repeatedly defying many analysts' warnings that valuations were overstretched, there have been some signs of a slowdown lately. A survey released this week by the Royal Institute of Chartered Surveyors, a real estate group, showed that prices in August fell in more areas of Britain than they rose.
But other surveys have shown continued increases, particularly in London, where an influx of buyers from Russia, the Middle East and elsewhere has fueled a surge in the cost of high-end homes.
Some analysts said the news of the bailout of Northern Rock could raise the specter of an old-fashioned "run" on the bank, as account-holders rush to reclaim their deposits. While the BBC reported on its Web site that there were long lines at some Northern Rock branches Friday morning, Adam Applegarth, chief executive of the bank, said account holders should not worry.
"I'm a depositor with Northern Rock," he said in a conference call with financial analysts. "Knowing that we have an uncapped facility with the Bank of England - you don't get better than the Bank of England."
Northern Rock approached the central bank, Applegarth said, because of the "astonishing" conditions in the markets that it had used to raise financing, and because "we could see no end to this in the short term."
He said the bank, whose level of residential lending in the first eight months of the year was 55 percent higher than a year earlier, had been more aggressive than some of its rivals in using "wholesale funding" rather than deposits to back its loans.

"With hindsight, if we had seen this coming, would we have run the same strategy? No," he said. "But hindsight is a great thing, and I don't think anybody else saw this coming either."
Now the bank will cut back on lending, as well as cut costs through a hiring freeze and other steps, he said.
"I don't expect us to move back to the volume of lending we were doing before," Applegarth said. "I think those volume days are in the past."
Some analysts said Northern Rock could become a takeover target.
Meanwhile, the Bank of England said it stood ready to make similar loans to other banks facing short-term liquidity problems, in its role as "lender of last resort."
News of the problems at Northern Rock prompted analysts to back away from predictions that the Bank of England, which has been raising interest rates, would continue to do so.




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http://www.nationalmortgagenews.com/washington/
Washington News Update

Fed: B&C, Piggyback Loans Rose in '06
Subprime and piggyback lending constituted a slightly higher percentage of mortgage originations in 2006 than in 2005, according to Home Mortgage Disclosure Act data released by the Federal Reserve Board. The HMDA data show that 28.7% of mortgages originated last year were "higher-priced," or subprime, up from 26.2% in 2005. The Fed also said piggybacks, in which a first mortgage and a second lien are originated simultaneously, were used in 22% of home purchase transactions, about the same as in 2005, but that more second liens were reported. "In 2006, lenders covered by HMDA reported about 1.43 million junior liens to purchase homes, almost all conventional loans, and a number about 4% greater than in 2005," the Fed said.
Senate HUD Bill Funds Foreclosure Counseling
The Senate has passed a Department of Housing and Urban Development appropriations bill that provides $100 million for counseling for homeowners facing foreclosure.
"Across the country too many families are facing the nightmare threat of foreclosure," said Sen. Christopher S. Bond, R-Mo. "This is a good step to help stem the tide of foreclosures without bailing out risky lenders and speculators in the market." Sen. Christopher J. Dodd, D-Conn., co-sponsored the counseling amendment with Sen. Bond. The $100 million can go to public, private, and nonprofit entities (including the Neighborhood Reinvestment Corp. and state housing finance agencies) that provide foreclosure counseling. No federal funds can go directly to lenders or homeowners, according to the Bond/Dodd amendment. The Senate has passed the Transportation/HUD appropriations bill by an 88-7 vote. The HUD bill also increases Federal Housing Administration multifamily loan limits in high-cost areas and suspends for one year a cap on the number of reverse mortgages the FHA can insure. The bill does not include any funding for President Bush's downpayment assistance program.
Senate Panel Sets Mark-Up of FHA Reform
The Senate Banking Committee is tentatively scheduled to mark up a Federal Housing Administration reform bill Sept. 19, sources say, but committee members are still trying to reach agreement on key provisions of the bill. The Senate bill is expected to raise the FHA loan limits to $417,000 in high-cost areas and limit the ability of the mortgage insurance agency to charge risk-based premiums based on credit scores. Just before the August recess, it appeared that the senators were near agreement to give the FHA the green light to set premiums based on loan-to-value ratios as well as loan or property type -- but not on credit scores. Separately, the FHA is expected to issue a proposed rule soon to establish an RBP system that the agency plans to implement if Congress does not pass an FHA bill by Jan. 1. In the other chamber of Congress, the House is expected to vote on passage of an FHA reform bill (H.R. 1852) the week of Sept. 16.
FHLBank Gets OK for ADC Collateral
The Federal Home Loan Bank of Des Moines has received regulatory approval to accept one- to four-family construction loans as collateral for advances at a time when many members have stepped up their borrowings from the bank. For many community banks, "construction loans are an important part of their lending portfolio," said Richard Swanson, president and chief executive of the Iowa-based FHLBank. Expanding the list of eligible collateral will help to "maximize their borrowing capabilities," he said. In August, members of the Des Moines bank borrowed $2 billion in advances. During the first six months of 2007, the Des Moines bank's advance business grew by only $700 million. Mr. Swanson noted that several other FHLBanks take construction loans as collateral, and his members expressed an interest. So an application was filed with the Federal Housing Finance Board six months ago. "We have determined that the proposed activity has sufficient controls that minimize the risk to the Bank," the approval letter says.
FTC Eyeing Deceptive Mortgage Ads
The Federal Trade Commission has stepped up its surveillance of deceptive mortgage advertising, and it has warned 200 mortgage brokers, lenders, and media outlets to be careful about touting low interest rates without adequate disclosures. "Many mortgage advertisers are making potentially deceptive claims about incredibly low rates and payments without telling consumers the whole story -- for example, that these low rates and payments apply for a short period only and can go up substantially after the loan's introductory period," said Lydia Parnes, the FTC's consumer protection director. In June, the FTC conducted a nationwide review of mortgage advertisements that might be deceptive or violate the Truth in Lending Act. Many advertisements touted rates as low as 1% but failed to adequately disclose the actual interest rate on the mortgage or the annual percentage rate, the FTC said.
Amendment Would Let FHA Insure $700K Loans
The Federal Housing Administration would be able to insure $700,000 single-family mortgages in high-cost areas under an amendment the chairman of the House Financial Services Committee wants to attach to an FHA reform bill the House is expected to vote on soon.
The FHA reform bill (H.R. 1852) already raises the FHA loan limit in high-cost areas from $362,790 to the $417,000 conforming loan limit, which is the upper limit on the loans Fannie Mae and Freddie Mac can purchase. But the House Financial Services Committee chairman, Rep. Barney Frank, D-Mass., and Reps. Gary Miller, R-Calif., and Dennis Cardoza, D-Calif., have filed an amendment with the House Rules Committee to raise the maximum FHA loan limit to 175% of the conforming loan limit, or $729,750, to address problems in the jumbo loan market. "The amendment modifies FHA loan limits to permit loans up to the lower of (a) 125% of the local media home price, or (b) 175% of the 2007 GSE national conforming loan limit [indexed in subsequent years] -- with additional HUD authority to raise limits by area or unit size by up to $100,000 if market conditions warrant," according to a summary of the Frank-Miller-Cardoza amendment.
Fed Officials Voicing Mortgage Worries
Federal Reserve officials are becoming more concerned that the turmoil in the credit and mortgage markets will prolong the downturn in the housing sector and lead to a pullback in consumer and business spending. Frederic Mishkin, a Fed governor, said in a speech to the Money Marketeers of New York that even creditworthy borrowers are finding it more difficult to qualify for a mortgage or are paying more for the loan. "At this point, housing demand seems likely to be crimped further by a marked reduction in the availability of mortgages, and consumer and business spending also could be damped as a consequence of the recent financial turmoil," the Fed governor said. Janet Yellen, president of the San Francisco Federal Reserve Bank, also warned in a speech that the financial market turmoil "seems likely to intensify the downturn in housing." She also opined that mortgage interest rates are likely to remain relatively high for some time and that "this could prolong the adjustment in the housing sector."
Schumer Unveils Bill to Raise Portfolio Caps
Sen. Charles E. Schumer, D-N.Y., has introduced a bill that would temporarily raise the caps on Fannie Mae's and Freddie Mac's portfolios as Democrats in Congress are becoming increasingly frustrated with federal regulators who insist on maintaining the caps at a time when the secondary market for many mortgage products has dried up.

In a letter to the Federal Reserve Board, House Financial Services Committee Chairman Barney Frank, D-Mass., says it doesn't make sense to expect the two government-sponsored enterprises to help with the refinancing of subprime borrowers unless they have room in their portfolios to buy the loans. Forcing the GSEs to sell their best mortgage-backed securities and buy riskier assets will diminish the quality of their portfolios and raise safety-and-soundness concerns, Rep. Frank says in a letter to Fed Chairman Ben Bernanke. Separately, Office of Federal Housing Enterprise Oversight Director James Lockhart says the portfolio caps are not hindering the GSEs from helping subprime borrowers. "Most new refinance loans of such borrowers can be securitized," Mr. Lockhart says in a letter to Sen. Schumer. The New York senator's bill would raise the portfolio cap by 10% so the GSEs could purchase $145 billion in new mortgages and increase the GSE conforming loan limit from $417,000 to $625,000 in high-cost areas.
OFHEO: GSEs Now Bound by B&C Guidance
Like banks and thrifts, Fannie Mae and Freddie Mac are now bound by federal underwriting guidelines when they purchase subprime mortgages and private-label securitizations backed by subprime loans, according to the Office of Federal Housing Enterprise Oversight.
OFHEO Director James Lockhart said the two government-sponsored enterprises have completed their implementation of the subprime guidance that federal banking regulators issued on June 29. The guidance requires lenders to qualify borrowers at the fully indexed rate and restricts stated-income loans and risk-layering features. Meanwhile, Treasury Under Secretary Robert Steel told a congressional panel last week that he is urging the two GSEs to develop loan products that can help refinance troubled subprime borrowers. He cited studies indicating that a large number of borrowers ended up in subprime loans when they could have qualified for a prime mortgage. "In those cases, the GSEs could help," Mr. Steel told the House Financial Services Committee. A Fannie Mae spokesman said, "Conversations are occurring. So we will see where they go."
Fed Reports Impact of Tighter Lending Standards
The tightening in lending standards on residential mortgages has had a "noticeable" impact on home sales and construction activity in August, according to the Federal Reserve Board's Beige Book. Several Federal Reserve district banks "noted that the reduction in credit availability added to uncertainty about when the housing market might turn around," the Beige Book says. The Boston Federal Reserve Bank reported increases in sales and house prices in Massachusetts. But most district banks reported declining home sales and declining or stable prices along with "high" inventories of unsold homes. Commercial real estate activity was "generally stable or expanding," the Beige Book says. However, several Federal Reserve Banks reported tighter credit conditions on CRE loans.




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http://data.nationalmortgagenews.com/columns/hearing/
What We're Hearing
By Paul Muolo

Lost in the press release about Citigroup buying Ameriquest's servicing portfolio (and wholesale division, Argent) is the even bigger news that the sale effectively ends the mortgage career of Roland Arnall. Mr. Arnall, as a technical matter, was no longer managing the day-to-day operations of Ameriquest/Argent. (He owned both lenders through a holding company.) Instead, he's been hosting state dinners, playing the role of U.S. ambassador to the Netherlands. (It pays to donate money to President Bush.) Three or so decades ago, Mr. Arnall took his S&L charter at Long Beach Savings and told the Federal Home Loan Bank Board that it could “stick it” (my words). He converted Long Beach into a nonprime lender, sold part of the business to Washington Mutual and then grew the remainder into Ameriquest and Argent. Back in 2005 the two (combined) reportedly earned $1 billion, but that was before the subprime meltdown. Arnall had hoped to take his mortgage empire public but bad publicity (and bad loan practices) hit him like a tsunami. Anyway, it's all history now. (If you have any good Arnall stories send me an e-mail at Paul.Muolo@SourceMedia.com.) As for what the sale means for Adam Bass and other executives at Ameriquest/Argent, stay tuned. For the full story on the sale see the Monday edition of National Mortgage News. Don't subscribe? Call: (800) 221-1809…
Who is to blame for the mortgage fraud crisis in America? Answer: loan brokers. According to the FBI, most mortgage fraud occurs during the application process -- and that would mean loan brokers. An FBI agent spoke this past week at the annual convention of the New York Association of Mortgage Brokers. The show was held in Melville, N.Y., headquarters of the now-defunct American Home Mortgage. Fraud was not the reason for AHM's demise -- Wall Street was but don't get me started on that topic…
This just in: According to Dow Jones, Citigroup's First Collateral unit will no longer accept any new warehouse customers…
The carnage in the subprime industry has caused financial damage worldwide -- but now the mess is spreading (that's right) to the art world. So says The New York Times, which recently quoted homebuilder and billionaire Eli Broad predicting that the subprime mess will rein in recent astounding levels of spending at art auctions. By the way, whoever bought that Rubens painting that the government inherited when it took control of CenTrust Savings two decades ago?
An estimated two million adjustable-rate mortgages could reset this year and next, jumping from low "teaser" rates (for the first two or three years) to much higher rates that could cost borrowers their homes. Then again, if the Federal Reserve cuts rates by 50 basis points (as anticipated) all bets might be off. Then again, maybe not…
National City Corp. of Cleveland revealed the other day that it had chopped 800 positions at its National City Mortgage affiliate. This follows a 500-position job cut that came in August at its home equity division. NCM is no longer funding home-equity loans through brokers. According to the Alternative Products Quarterly Data Report, NCM ranks seventh among second-lien funders. To order the AP-QDR e-mail Deartra.Todd@SourceMedia.com…
IN CASE YOU MISSED IT: Triad Guaranty, the smallest of the nation's seven MI firms, recently disclosed that it had borrowed on all of an $80 million line of credit it has with three banks, including Bank of America. After its stock was clocked, Triad issued a statement saying it is not having any liquidity issues. At the end of June it had $26.7 million in cash on hand, compared to $38.6 million a year earlier. The company recently lost its largest customer, American Home Mortgage, which closed its doors in August…
MORTGAGE PEOPLE: Countrywide Financial Corp. named Jess Lederman as its new chief risk officer. Mr. Lederman -- who joined Countrywide in 2005 and served as managing director of products and pricing -- replaces John P. McMurray. Mr. McMurray was poached by Washington Mutual as its new chief credit officer. Lederman, by the way, is a former managing director at Bear Stearns. He worked on Wall Street during the “Liar's Poker” days of Lewis Raineri. He also ran the mortgage group at Ohio Savings. Mortgage Cadence, a technology company, has named Michael Hammond chief marketing officer.
DATA NOTICE: If you're trying to figure out where the mortgage market is headed and what the business will look like for the rest of the year, you're in luck. NMN has just published the brand new Mortgage Industry Directory, which ranks the nation's top 400 lenders, 300 servicers, top 85 subprime and much, much more. The book also provides a special analysis on America's subprime crisis. To order, e-mail Rebecca.Keen@SourceMedia.com or Delores.Stokes@SourceMedia.com. Also now available: the brand-new Mortgage Broker Database which ranks the nation's top 100 brokers and provides contact info for 2,000 active brokerage firms. For more info, e-mail Deartra.Todd@SourceMedia.com. According to the first-quarter edition of the Quarterly Data Report, 18.76% of all subprime mortgages are delinquent, based on unpaid principal balances. Ask Deartra about the QDR as well.