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What We're Hearing
November 6, 2009
By Paul Muolo
Irony: Stan Kurland's vulture fund Penny Mac is trying to make a tidy little profit by purchasing all those toxic mortgages that are dragging down our nation's financial institutions. Of course, $100 billion of those crummy loans were created by Mr. Kurland's old employer Countrywide Financial. Penny Mac, which went public this summer, just posted its first earnings report - a loss of less than $1 million. Its biggest problem? Answer: It appears that all those damn banks, Wall Street firms and thrifts aren't willing to sell their toxic subprime, alt-A loans, ABS and so on at a price where Mr. Kurland's firm can make a killing. Instead of buying assets at what Penny Mac believes are inflated prices, the firm is just saying no. But he isn't the only one who is displeased by the "bid/ask" out there. There are plenty of others. For the full story on why toxic loans sales haven't taken off - and likely won't - see the Monday paper edition of National Mortgage News. We're also publishing a selected list of lenders and their nonperforming assets most of which includes residential and commercial mortgages. Don't subscribe? Call 800-221-1809. If you have any thoughts about the state of the toxic asset market drop me an e-mail at Paul.Muolo@SourceMedia.com or post a comment at the end of this column...
Meanwhile, Mr. Kurland, it appears, wants to get back into the lending business. You read that correctly. Penny Mac wants to start a conduit. Here's a piece of advice for the company: don't put a "Mac" or "Mae" in the firm's name. The full story is the on the NMN website: http://www.nationalmortgagenews.com...
Former Beneficial Finance manager Peter Cugno is still searching for startup capital to start a nonprime wholesale lender. It's tough going, he says...
The next paragraph is for HUD secretary Shaun Donovan and FHA commissioner David Stevens and concerns this past week's cancelled press conference. The rest of you can scroll down to the next item. Shaun, Dave: What the heck happened? Who's advising you these days on media relations? (If you need any help give me a call. Let's do lunch. And, by the way, where's my FOIA on Lend America?) But seriously, gents: You don't call a press conference at the National Press Club in Washington and then cancel it the night before WITHOUT giving a real explanation. Shaun, you're in the president's cabinet! OK, so the audit looks a little dodgy and you're trying to get the numbers right. I get it - but don't put out a press release/e-mail without some explanation. Better yet, don't say you're even going to have a press conference and release the audit when it's not a sure thing. You wouldn't believe what the rumor mill was saying about FHA. (Remember: FHA has almost 30% of the market these days. Without it ... you can fill in the blank.) It sounds like the fund is broke but sources tell me it's not. Let me correct that, sources say there's still some money left in it. That's the good news. The bad news is that the fund covers $700 billion in mortgages. Meanwhile, the rumor mill says FHA premiums could rise. For the full story see Monday's NMN...
For the rest of you: the FHA audit should be out within 10 days or so. Rumors are circulating that the Senate Banking Committee has hired its own auditor to look over FHA's book. It's strictly a rumor though...
Fannie Mae is talking to Wilshire Credit about that company - now owned by IBM - being a force-placed servicer for it...
According to the Quarterly Data Report, mortgage bankers are on track to fund $2.1 trillion this year. To order the QDR drop an e-mail to Dearta.Todd@SourceMedia.com...
MORTGAGE PEOPLE: Former Bear Stearns executive Steven Begleiter is set to compete in the final table at the Main Event at the World Series of Poker starting on Saturday in Las Vegas. Until 2008, Begleiter was head of corporate strategy at Bear where executives - Jimmy Cayne and some of the mortgage traders - were known more for their bridge playing acumen. Bear, of course, no longer exists. Former Treasury secretary Henry Paulson has a new book coming out in January. It's about how he saved our financial markets. You can find it in the nonfiction section. (I think.) Lender's One chief Scott Stern recently competed in the Iron Man competition in Hawaii.
DATA NOTICE No. 1: Need soup-to-nuts statistics on the nation's top residential (and commercial) lenders and servicers? The new MortgageStats.com data product is ready. 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 Delores.Stokes@SourceMedia.com or Dearta.Todd@SourceMedia.com. Site licenses are available.
DATA NOTICE No. 2: Even though we offer MortgageStats.com you can still subscribe to the Quarterly Data Report and Alternative Products QDR, spreadsheet products that provide readers with quarterly rankings on the nation's top lenders and servicers. There's also a companion product called the Midyear Data Report, which offers half-year rankings on lenders, servicers and more. There is an Alt-QDR version of this as well. Again, shoot an e-mail to Dearta.Todd@SourceMedia.com.
EDITORIAL NOTE: The Washington bureau of NMN has moved to Northern Virginia, which means there are new telephone numbers for our staff. Executive editor Paul Muolo can be reached at 571-403-3851, bureau chief Brian Collins at 571-403-3837, Andras Malatinszky, director of online products at 571-403-3862, and Deartra Todd, data collection and sales at 571-403-3859. The mailing address is 4401 Wilson Blvd./Suite 910, Arlington, VA 22203.
THE LAST WORD: Irony: Fannie Mae holds or guarantees almost $200 billion in nonperforming assets but it doesn't appear that it will unload any of it any time soon.
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Comments
Posted: 2009-11-10 12:39:46
by brian
Funny how the Feds are taking the money back from everyone that profited under Madoff, (yes he was a scum bag)but that the Goverments plan. Now we move to the Fannie Mae offer to keep the loans it fraudulently bought from US Mortgage. Why does Fannie profit when unknowing citizens now have to refund monies. Both were fraudulent actions. Not trying to justify Madoff, but Fannie needs to take a look at its actions and return the loans.
Posted: 2009-11-06 18:06:05
by Larry Rubinoff, TheMortgageCornerFORUM
FHA: It is curious that FHA = the FHA Commissioner and HUD Secretary - canceled the press conference that would have announced their audit. However, it is not surprising. Optimistically they both probably thought the audit would be fine then found out it wasn't (just my opinion). Addressing it logically, why would it be OK? FHA was the government's creation of sub prime after which all other sub prime was fashioned. Even that so called very toxic Option Arm Loan was a creation of FHA back in the 80's. FHA required NO credit scores and allowed credit to be established by use of utility bills, phone bills and financed auto insurance. If you had a 12 month good pay history on those - you HAD credit. Then FHA only required 3% of borrowers cash in the deal. It was not necessarily a down payment requirement, it could have been in the form of closing costs. So basically, FHA did 100% financing. To enhance credit, you could use a non occupant relative's credit as well. And to make it even easier to buy and qualify, the seller could pay up to 6% of the buyers closing costs, prepaids and escrows. The market for FHA loans was primarily low income borrowers (you could have a much higher debt to income ratio with FHA) with little or no credit. SO YOU THOUGHT SUB PRIME WAS BAD, huh?. These low income borrowers with little or no credit are the main victims of our failed economy and would, I believe, be a large segment of our unemployed. FHA INSURES these loans to the lenders that actually make and fund them. THEY DO NOT MAKE LOANS as many are led to believe. So basically they are an insurance company probably facing a larger number of claims then they have cash to pay them. Not unlike what happened with Credit Default Swaps that brought AIG down. There has been little or no investigation, conversation or reporting on FHA other then, as you say it accounts for almost 30% of the market now. But if sub prime failed so miserablly - and those loans were all securitized and sold as are FHA loans - the banks/lenders had and have no risk as the risk fell onto the insurance (FHA) fund. If AIG failed because of Credit Default Swaps why does anyone think FHA could have survived with an inadequate insurance fund> Kind of the same. Fannie and Freddie cooked their books and the delay in the press conference is probalby a way to figure out HOW to HIDE the real numbers from the public. I, for one, say the fund is broke.
Posted: 2009-11-09 16:34:03
by Robert Sandoval
Larry taking it further the old FTHB and now extended HB tax credit is in actuality 100+% financing! Talk to the buyers. They will tell you that w/o it they would not be buying because they have no down payment! In other words, there really is no difference than the sub prime era except for A paper interest rates and longer terms all because of USG guarantees.
Posted: 2009-11-09 17:48:56
by Richimac
To "Larry" above I would like to comment - you're 99% correct/accurate but be careful. When you say "low income" (I believe everyone knows FHA loans have always been "A Paper" to "B" borrowers), it also means VERIFIED income. Don't let that be confused with the "liar loans" AIG covered with CDS. FHA has come a long way since offering home improvement loans to our returning veterans (Title I's), it will be sad day if they go away.
Posted: 2009-11-10 15:11:43
by Mathew Kukielka
I received a request to use IMRBanc.com Has anyone any feed back from a experience either way?
