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Inside Mortgage Finance

April 21, 2006

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Alternative Mortgage Products Continue Having A Major Impact on Originations in Early 2006

A flat yield curve and increased regulatory warnings appear to be having little impact on the still growing popularity of so-called alternative mortgage products in both the agency and non-agency mortgage markets. Over a third of new mortgage originations in the first quarter of 2006 came from interest-only loans, option ARMs, 40-year amortization periods and balloon loans, according to the Inside Mortgage Finance MBS Database. A substantial portion of these loans – as well as… [One data table included] Read More

Freddie Mac’s $3.8 Million Settlement With FEC Illustrates Efforts to Influence Friends on Capitol Hill

Freddie Mac this week agreed to pay a record $3.8 million to settle charges that the government-sponsored enterprise illegally used corporate resources to host campaign fundraising events and collect political contributions. The settlement with the Federal Election Commission provides extensive details about the activities of two former Freddie Mac lobbyists, Mitch Delk and Clarke Camper, as well as the involvement of former Chairman and CEO Leland Brendsel. The GSE neither admitted nor denied the allegations,… Read More

Fannie Tweaks DU to Improve Affordable Housing Underwriting Recommendations

Beginning next week, Fannie Mae is adjusting its automated underwriting system so it can more readily acquire loans that meet tougher new affordable housing goals that went into effect in 2005. The changes in Desktop Underwriter focus on how the system reports the results of its analysis for certain loans to borrowers earning up to the median income for their area under affordable housing rules prescribed by the Department of Housing and Urban Development. In… Read More

Lenders in General Support Fair Value Option For Financial Assets, But Some Split Over Details

Mortgage lenders are backing a proposed new accounting standard that would give companies the option to use fair value accounting for a wide range of their activities, including new loan commitments. The Financial Accounting Standards Board is now weighing some 70 comment letters filed in response to its proposed statement on “The Fair Value Option for Financial Assets and Financial Liabilities.” Mortgage industry sources hailed the so-called FVO as a major step in allowing companies… Read More

Countrywide Prods MBA to Assume Higher Public Profile in Opposing GSE Portfolio Caps

Countrywide Financial is putting pressure on the Mortgage Bankers Association to publicly oppose a provision in legislation to reform oversight of the government-sponsored enterprises that would impose caps on the mortgage portfolios of Fannie Mae and Freddie Mac. In late March, Countrywide Chairman and CEO Angelo Mozilo sent a letter to MBA President Jonathan Kempner, urging the trade association to publicly proclaim its strong opposition to such caps. Mozilo expressed concern that mandating a reduction… Read More

Monitoring of Servicing Shops Crucial To Reg. AB Preparedness, Experts Say

Loan originators and securitizers aren’t the only ones feeling their way through compliance with a massive new disclosure regime for non-agency mortgage securities. Loan servicers have seen the spotlight of so-called Regulation AB shine brightly on their businesses as well. “Many servicers are still struggling with their role, what they should do and how to report,” said Rita Ballesteros, an industry consultant at the Hollister Group, during a panel discussion at a recent forum on… Read More

Wells Fargo Solidifies Grip on Ginnie Mae Servicing Market as Supply of Available Business Shrinks

It’s a good thing for Wells Fargo Home Mortgage that it has hundreds of billions of conventional mortgage servicing business because the government-insured sector is a tough place to grow. The outstanding supply of Ginnie Mae servicing fell 7.5 percent from the first quarter of 2005 to the end of March 2006, and most of the top servicers in this market saw their Ginnie business drop over this period. Wells Fargo, with a huge… [One data table included] Read More

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