My Perspective

The current financial crisis illustrates the need for the government to provide some form of support or guarantee for the mortgage market, Treasury secretary Timothy Geithner said at the start of a conference on the future of the housing finance  system.This crisis saw a "full retreat" of private market institutions from the mortgage market, he said."The challenge is to make sure that any government guarantee is priced to cover the risk of losses, and structured to minimize taxpayer exposure," the secretary said.The Treasury noted there is no consensus yet on how to design a new system.However, the Obama administration will not support returning Fannie Mae and Freddie Mac to their former hybrid status of private/public entities."This administration will side with those who want fundamental change," Geithner said.Meanwhile, Treasury wants to begin "weaning" the markets away from government mortgage programs to get the private sector back into the business of providing mortgages."As we get though this transition, it is important that consumers maintain access to credit at attractive  rates," Geithner said.The secretary stressed that government will continue to stand behind the GSEs' commitments during this transition and the "planned wind down" of the GSEs' portfolio.

Once we get past 'lil Timmy and his typical BS double-speak, I can only dream he is being honest and forthright in this quote from today's news

In a surprise move, the Federal Reserve Board has issued a final rule that imposes restrictions on loan officer and mortgage broker compensation that is very similar to compensation language in the recently passed Dodd-Frank Wall Street Reform and Consumer Protection Act. The effective date of this final Truth in Lending Act rule is April 11, 2011. The final rule is "consistent" with the Dodd-Frank bill, the Fed said because it prohibits payments to a mortgage originator that vary on the terms of the loan, other than the amount of the credit extended. This means lenders can pay a 2% commission, for example, to originators based on the amount of the loan.The TILA rule also is consistent with the reform bill because it prohibits the payment of yield spread premiums to brokers, if the broker receives "any compensation directly from the consumer." The Fed makes it clear in the rule and staff commentary that the compensation restrictions do not apply to home equity lines of credit or to loan modifications performed by servicers. The anti-steering provision in the rule includes a safe harbor. It will be presumed no violation has occurred if the consumer is presented with "at least three loan options for each type of transaction (fixed-rate or adjustable-rate loan) in which the consumer expressed an interest," the Fed said. The Fed proposed these TILA changes in August 2009 and the lawmakers essentially codified many of the provisions in the Dodd-Frank bill.

Surprise! Time to earn what you sell instead of how much you can trick the borrowers!!

Ginnie Mae is raising its net worth requirement for mortgage-backed securities issuers, requiring them to meet bank-like capital standards. Non-depositories will be required to hold equity capital of 6% of total assets, according to Ginnie president Theodore Tozer.Tozer is raising the net worth requirement to $2.5 million plus 1% for outstanding MBS between $5 million and $20 million and 0.2% above $20 million.  The current net worth requirement is $1 million."To ensure that we continue to run a conservative and sound program, Ginnie Mae will soon raise its net worth requirements, and establish a liquid asset requirement for all single-family issuers," the Ginnie president said in a prepared statement.  The agency expects issuers to maintain 20% of the net worth requirement in cash or cash equivalents "due to the capital intensive nature of servicing."The higher net worth requirement will be phased in for existing issuers starting in September. Separately, the agency reported that Ginnie Mae issuance of single-family and multifamily MBS totaled $37.8 billion in July, up 13% from the prior month.  It is the highest issuance level since January. The secondary market agency also reported that Ginnie issuers repurchased $13.3 billion in delinquent government-guaranteed mortgages out of Ginnie pools in the second quarter, down from $15.5 billion in first quarter.

Chicken shits

More long the lines of yesterday's post … think those Big-Shots will be looking out for YOUR/MY interests? Doubt it.

"This month, the Conference on the Future of Housing Finance will be held at the U.S. Department of the Treasury. Panel discussions will be moderated by the Treasury secretary and the secretary of the U.S. Department of Housing and Urban Development. Among mortgage banking executives who are scheduled as panelists are Wells Fargo Home Mortgage's co-president and Bank of America Home Loans' president."

PS: Didn't I recently read Wells Fargo Home Mortgage (Des Moines, Iowa – formerly Dial Finance) was closed down by the Wells Fargo BANK, since that specific operation in Des Moines was NEVER the actual BANK, but they pushed that illusion and have since been backing away from it for a while ….

'Approval for the Office of Complex Financial Institutions was granted by the FDIC Board of Directors. The new regulator will oversee bank-holding companies with more than $100 billion in assets. Also within the new regulator's jurisdiction will be non-bank financial companies designated as systemically important.'

Have you noticed, that so much of our industry news looks like this? Like I care about $100 Billion institutions, it's not like I will ever do biz with them (sound shallow?). Sure …. but what about all us real people down here in the real world?

A series of events is planned by the Obama administration on the future of the housing market, according to a news release. "The Obama administration announced expanded opportunities for public engagement on the future of our nation's housing finance system, including Fannie Mae and Freddie Mac," the statement said. The administration will host a conference at the Treasury in August.

Be sure YOU give them your two cents worth!  They NEED input from our industry, since they have absolutely no idea on what they're doing, I'll surely give them my opinion.

80% of agency loans these days are for refinance, and not purchase? And that 90% of their loans are at 701 FICO scores or higher? And they still can't seem to get their arms around 'Ability to Repay' Underwriting … How about the 'average' FHA loan today is 689? While FHA Fraud is twice as bad as conventional, when all the while FHA Commissioner David Stevens is on record saying that he's looking to turn down FHA volume!

As historical losses mount daily with both these groups, I foolishly ask, who hell is supposed to make loans to the 250 Million Americans that don't meet their standards? All those 'goberment' folks are clueless; sure would be nifty if there was at least ONE good loan person working @ FHA and at the agencys too (there obviously isn't now).

We're living in a  bizarro world

As a share of originations, mortgage fraud is 55 basis points on conforming loans, according to a new report from CoreLogic. But the rate is 122 BPS on loans insured by the Federal Housing Administration. The report suggested that increased FHA originations have not been accompanied by additional investments in fraud prevention.

Is even ONE of your surprised by this excessive fraud, or that the Government is so inattentive that they didn't put anything in place to fight this, when even a blind-guy could see it coming - since  there were 1,000% more loans being insured than EVER in their history?  Seriously, even ONE of you surprised by this news report? I sure as hell am not!

FHA Giving State and Locals First Crack at Foreclosure Sales

The Federal Housing Administration is giving states, cities and nonprofit housing groups participating in HUD's Neighborhood Stabilization Program first crack at bidding on its newly foreclosed properties before they are placed on the market. The new "First Look Sales Method" will give NSP grantees 14 days to purchase a FHA foreclosed house at a discount of 10% below the appraised value. "By essentially giving our NSP grantees a first bite of the apple, we hope to accelerate the sale of FHA foreclosed properties while supporting the Obama administration's neighborhood stabilization efforts," said Housing and Urban Development secretary Shaun Donovan. FHA currently has an inventory of 45,200 foreclosed properties or REO. FHA lenders have foreclosed on more than 60,000 borrowers during the first eight months of fiscal year 2010, up 44% from the same period in FY 2009. (The fiscal year starts October 1 and ends September 30.) The administration has poured $6 billion into the Neighborhood Stabilization Program to prevent deterioration and blight associated with abandoned properties. NSP grantees are expected to fix up the properties so they can be rented or sold.

… and yet  there are people that say FHA is doing a good job!

GSE Regulator Issues Subpoenas Tied to Nonprime MBS

The Federal Housing Finance Agency said it has issued 64 subpoenas to "various entities" as part of an inquiry into private-label securities purchased by Fannie Mae and Freddie Mac with an eye toward the government recouping losses on nonprime assets. Together, the two GSEs own at least $260 billion in PLS, but a spokeswoman for FHFA cautioned that the subpoenas "are not for all PLS." The regulator also declined to say which companies received the subpoenas and would not address the issue of whether any individuals were subpoenaed. In a statement, FHFA notes that "before and during" their conservatorships Fannie and Freddie "sought to assess and enforce their rights as investors" in private-label MBS. In other words, the two have lost billions of dollars because of delinquent subprime loans and want to address if they have the right to sue for damages. The subpoenas were issued as a way for Fannie and Freddie to obtain loan files and transaction documents tied to their purchase of PLS (ABS) from Wall Street firms. Critics of the GSEs have often argued that they added liquidity to the subprime ABS market during the boom years by being a major buyer of subprime bonds issued by Wall Street.

… and, yep they did it with their eyes closed too!