One of the recurring themes I have written about is the elimination of loans for the group of folks who are struggling to get down payment or have credit issues. I think the article below is just more of the same. Fannie Mae and Freddie Mac have been criticized for eliminating affordable housing mortgages. I am not entirely sure of which programs were considered affordable housing mortgages. Each agency had a $0 down loan that did not have as many restrictions as their normal loan programs so I guess that is what the complaint is about. Those were eliminated in the recent flurry of changes that have taken place. I am not sure you would have called them affordable housing mortgages however.
No matter what the argument both Fannie Mae and Freddie Mac have eliminated programs that helped many buyers and are currently price fixing (my opinion of course) their rates on buyers with lower credit scores. Note the fact I said lower credit scores, not bad credit. I think the price gouge starts on anyone who has a credit score below 700. Maybe Fannie and Freddie should buy some oil company stock; I am sure the oil companies could give them a few more tips on how to take advantage of the consumer.
I don’t know if the criticism below is entirely warranted but believe me Fannie and Freddie should take a good look at their policies, I know the consumer is paying dearly to do business with them.
This article was taken from the Mortgage Banker News;
Fannie Reconsidering AH Changes April 24, 2008
In response to strong criticism from fair-lending groups, Fannie Mae has indicated that it is reconsidering recent moves to tighten underwriting standards on affordable housing mortgages and impose new fees. "We have met extensively with advocates, listened to their concerns, and are considering making some changes to our methodologies," Fannie spokesman Brian Faith said. Freddie Mac has also met with the fair-housing and civil rights organizations that have accused the two government-sponsored enterprises of abandoning their affordable housing mission. "While we disagree with their conclusions, we have had helpful discussions with the housing groups and take their concerns very seriously," a Freddie spokesman said. The GSEs can be found online at http://www.fanniemae.com/ and http://www.freddiemac.com./
Monday, April 28, 2008
Friday, April 25, 2008
MORE OF THE SAME STUFF
Well anyone who is checking into the Blog of late has not found a lot of activity. I have been looking for something different, perhaps a bit more interesting news, or perhaps some light at the end of the tunnel that might not be a continuation of the same train wreck. To tell you the truth the events and news of the day is just more of the same ole stuff.
Loan programs age going away, lenders are tightening up more and more. The average borrowers who don't have spotless credit are being charged more and more or have no loan funds available at all. Fannie Mae and Freddie Mac are profiteering any way they can, investors who buy FHA loans are charging more and more and not buying into the Government programs like the FHA Secure loan.
Politicians are still spouting and fantasizing about thinking some investors and lenders who own mortgage paper are going to reduce the amount owed on the mortgage so someone will refinance the loan that no investor will buy.
In the mean time someone from Countrywide called me yesterday, lied about wanting to refinance his loan and then tried to recruit me to go to work for them. I simply laughed out loud and told him he had to be crazy.
More non specifically the beat goes on, the tail continues to wag the dog and this thing is far from over. I wish I knew which round of the battle the industry was now in. We will see.
I am getting requests to do more blogging and I will be back at it hopefully.
More to come
Lonny
Loan programs age going away, lenders are tightening up more and more. The average borrowers who don't have spotless credit are being charged more and more or have no loan funds available at all. Fannie Mae and Freddie Mac are profiteering any way they can, investors who buy FHA loans are charging more and more and not buying into the Government programs like the FHA Secure loan.
Politicians are still spouting and fantasizing about thinking some investors and lenders who own mortgage paper are going to reduce the amount owed on the mortgage so someone will refinance the loan that no investor will buy.
In the mean time someone from Countrywide called me yesterday, lied about wanting to refinance his loan and then tried to recruit me to go to work for them. I simply laughed out loud and told him he had to be crazy.
More non specifically the beat goes on, the tail continues to wag the dog and this thing is far from over. I wish I knew which round of the battle the industry was now in. We will see.
I am getting requests to do more blogging and I will be back at it hopefully.
More to come
Lonny
Wednesday, April 2, 2008
CHEATS & TRICKS PART 2
Enjoy part 2 Cheats and Tricks
Exactly how deeply this attitude was in the business of making loans was revealed by this memo. It involves Zippy, Chase's in-house automated loan underwriting system.
The memo's title: "Zippy Cheats & Tricks."
It provides a rare glimpse into the corporate mentality that has been a key factor in the current mortgage crisis (a Chase spokesperson denied that Zippy Cheats & Tricks was official policy; thus we are reassured that this was only "unofficial policy").
Here's an excerpt from the Oregonian:
"During the boom, it was common for lenders and brokers to get paid more for risky subprime loans than for 30-year fixed-rate loans because the higher-interest loans fetched a higher price on Wall Street.
Chase, the nation's second-largest bank, originates mortgage loans itself but also operates a wholesale arm that underwrites and funds loans brought to them by a network of mortgage brokers. The "Cheats & Tricks" memo was instructing those brokers how to get difficult loans approved by Zippy.
"Never fear," the memo states. "Zippy can be adjusted (just ever so slightly)."
The Chase memo deals specifically with so-called stated-income asset loans, one of the most dangerous of the mortgage industry's innovations of recent years. Known as "liar loans" in some circles because lenders made little effort to verify information in the borrowers' loan application, they have defaulted in large number since the housing bust began in 2007...
The Chase memo is "a perfect example of one of the big five banks out and out telling mortgage brokers to commit fraud," said Todd Williams, a broker with Evergreen Ohana Group in Portland. "And this has been going on for years." Williams and other mortgage brokers gave a copy of the memo to Oregon financial regulators.
Three other facts make this story incredibly intriguing:
1. State regulators recognized signs of fraud early on, but attempts to curtail it were prevented. The White House asserted that it was the Feds -- and not states -- that have jurisdiction over federally chartered banks.
And the Feds? They did nothing until 2008.
2. Tammy Lish, a Portland, Oregon account representative for Chase, accidentally forwarded the memo by email. Chase fired her days after discovering this.
3. Chase no longer makes any stated-income loans; the bank wrote down $1.3 billion in nonperforming mortgages in 2007.
The entire episode is amazing. I expect that more and more of these smoking guns will be finding their way into public view. Perhaps we can ask the Oregonian to make the actual email available online.
Now of course Chase denies this, you decide, good grief.
More to come
Lonny
Exactly how deeply this attitude was in the business of making loans was revealed by this memo. It involves Zippy, Chase's in-house automated loan underwriting system.
The memo's title: "Zippy Cheats & Tricks."
It provides a rare glimpse into the corporate mentality that has been a key factor in the current mortgage crisis (a Chase spokesperson denied that Zippy Cheats & Tricks was official policy; thus we are reassured that this was only "unofficial policy").
Here's an excerpt from the Oregonian:
"During the boom, it was common for lenders and brokers to get paid more for risky subprime loans than for 30-year fixed-rate loans because the higher-interest loans fetched a higher price on Wall Street.
Chase, the nation's second-largest bank, originates mortgage loans itself but also operates a wholesale arm that underwrites and funds loans brought to them by a network of mortgage brokers. The "Cheats & Tricks" memo was instructing those brokers how to get difficult loans approved by Zippy.
"Never fear," the memo states. "Zippy can be adjusted (just ever so slightly)."
The Chase memo deals specifically with so-called stated-income asset loans, one of the most dangerous of the mortgage industry's innovations of recent years. Known as "liar loans" in some circles because lenders made little effort to verify information in the borrowers' loan application, they have defaulted in large number since the housing bust began in 2007...
The Chase memo is "a perfect example of one of the big five banks out and out telling mortgage brokers to commit fraud," said Todd Williams, a broker with Evergreen Ohana Group in Portland. "And this has been going on for years." Williams and other mortgage brokers gave a copy of the memo to Oregon financial regulators.
Three other facts make this story incredibly intriguing:
1. State regulators recognized signs of fraud early on, but attempts to curtail it were prevented. The White House asserted that it was the Feds -- and not states -- that have jurisdiction over federally chartered banks.
And the Feds? They did nothing until 2008.
2. Tammy Lish, a Portland, Oregon account representative for Chase, accidentally forwarded the memo by email. Chase fired her days after discovering this.
3. Chase no longer makes any stated-income loans; the bank wrote down $1.3 billion in nonperforming mortgages in 2007.
The entire episode is amazing. I expect that more and more of these smoking guns will be finding their way into public view. Perhaps we can ask the Oregonian to make the actual email available online.
Now of course Chase denies this, you decide, good grief.
More to come
Lonny
Tuesday, April 1, 2008
CHEATS & TRICKS PART 1
One of the things I have been sure was going to happen was how the big banks are going to be exposed during this time of upheaval in the business. The big boys will try to come off as innocent and not part of the problem but the reality will be once all the dust settles that they (in my opinion) were as much to blame if not more so than anyone else. Sure the originators are just as guilty but the greed motive by the big banks fueled the wreck in my opinion.
I ran across an article written by Barry Ritholtz who is Chief Market Strategist for Ritholtz Research, an independent institutional research firm. He “claims” that JP Morgan/Chase sent out a memo instructing their mortgage brokers on how to get questionable loans approved by their system.
Now if that is a fact it is pretty revealing about the tactics of at least this bank in contributing to the problem we have today. Think about it, a Federally Chartered Bank instructing originators on how to produce fraud in their system. I don’t acknowledge that this is factual but sure looks like it, you decide.
Enjoy part one of two:
3 "handy steps" for getting a questionable loan approved by JPM Chase's (JPM) automatic system:
1. Lump all of an applicant's compensation as the applicant's base income, rather than breaking out commissions, bonuses and tips.
2. Do not disclose use of gifts for down payments.
3. If all else fails, simply inflate the applicant's income. "Inch it up $500 to see if you can get the findings you want. Do the same for assets.
Thus reads an internal memo from Chase that accidentally found its way into the hands of journalist Jeff Manning of The Oregonian. It was the basis for an article titled; Chase mortgage memo pushes 'Cheats & Tricks'.
Fraud has been a frequent theme of ours regarding Housing during the Boom, circa 2001-06. From appraisal fraud to the payola of the Ratings agencies, the entire system has been corrupted. Some will act as apologists for the worst tendencies of the banking industry, and others may debate who is to blame. We long ago reached a verdict as to where the culpability lay.
Anyone with even a modicum of experience in the mortgage industry will confirm the rampant disregard for lending standards and the corner cutting and shortcuts that were all but official corporate policy during the boom years. There was headlong rush to originate, process and securitize mortgages -- and the ability to repay the loans be damned. (Predatory Borrowing my ass!)
Part 2 tomorrow,
More to come
Lonny
I ran across an article written by Barry Ritholtz who is Chief Market Strategist for Ritholtz Research, an independent institutional research firm. He “claims” that JP Morgan/Chase sent out a memo instructing their mortgage brokers on how to get questionable loans approved by their system.
Now if that is a fact it is pretty revealing about the tactics of at least this bank in contributing to the problem we have today. Think about it, a Federally Chartered Bank instructing originators on how to produce fraud in their system. I don’t acknowledge that this is factual but sure looks like it, you decide.
Enjoy part one of two:
3 "handy steps" for getting a questionable loan approved by JPM Chase's (JPM) automatic system:
1. Lump all of an applicant's compensation as the applicant's base income, rather than breaking out commissions, bonuses and tips.
2. Do not disclose use of gifts for down payments.
3. If all else fails, simply inflate the applicant's income. "Inch it up $500 to see if you can get the findings you want. Do the same for assets.
Thus reads an internal memo from Chase that accidentally found its way into the hands of journalist Jeff Manning of The Oregonian. It was the basis for an article titled; Chase mortgage memo pushes 'Cheats & Tricks'.
Fraud has been a frequent theme of ours regarding Housing during the Boom, circa 2001-06. From appraisal fraud to the payola of the Ratings agencies, the entire system has been corrupted. Some will act as apologists for the worst tendencies of the banking industry, and others may debate who is to blame. We long ago reached a verdict as to where the culpability lay.
Anyone with even a modicum of experience in the mortgage industry will confirm the rampant disregard for lending standards and the corner cutting and shortcuts that were all but official corporate policy during the boom years. There was headlong rush to originate, process and securitize mortgages -- and the ability to repay the loans be damned. (Predatory Borrowing my ass!)
Part 2 tomorrow,
More to come
Lonny
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