GSEs
testing program to aid independent Mortgage BankersBy
Jann Swanson Mortgage News Daily 10.07.09
According
to information published in The Wall Street Journal,
Freddie Mac and Fannie Mae are preparing to step up and help
some of their affiliates in the current credit crunch.
The
two government sponsored enterprises (GSEs) are rumoured to be
test-driving a program to make it easier for independent
mortgage banks to acquire the short-term funding needed to
make home loans.
The
pilot program which has not been formally announced by Fannie
and Freddie, is being conducted in conjunction with Provident
Funding Associates, a mortgage bank based in
Burlingame
,
California
, and NattyMac, a warehouse lender in
St. Petersburg
,
Florida
that provides short-term funding to mortgage companies.
The
Journal quotes unidentified sources as saying that
under the pilot program Freddie Mac and Fannie Mae are making
commitments to purchase loans from Provident Funding that are
financed by Natty Mac. In return the latter is changed
with ensuring that Provident's loans meet certain quality
standards set by the GSE's These advance commitments
reduce the risk that either NattyMac or Provident will be
stuck with loans that they write and/or fund after they are
rejected by Fannie and Freddie. After such a rejection a
loan can be marketed to other investors only at a very large
discount. If a mortgage bank is virtually guaranteed that its
loans can be passed through to Freddie and Fannie it is hoped
that other lenders will be more willing to provide short term
credit.
Traditional
warehouse lines, which allowed lenders to fund and hold new
loans until a sale to the GSEs or investors could be arranged,
have been a victim of the tightening of credit markets.
Many mortgage banks have gone out of business when their lines
were shortened or withdrawn while others continue to lose
business to larger and better financed banks. According
to the Journal, three of these big banks, Wells Fargo,
Bank of America, and J.P. Morgan Chase accounted for more than
half of new home mortgages during the first two quarter of
2009 compared to a 37 percent market share two years earlier.
All
four principals involved in the pilot program and the FHFA,
the regulator of Fannie and Freddie, have refused to comment
on the reported program.
Provident
Funding, L.P. is the largest privately held non-bank owned
mortgage company in the
United States
and the 10th largest wholesale lender. It has 48
branches located throughout the country. NattyMac is owned by
Guggenheim Partners, LLC a diversified financial services firm
with more than $100 billion in assets under supervision.
Its focus is on agency-eligible and government insured loans.
For more
information about Lillian Wong & Associates and our services, please visit
my website at LillianWong.net or email me at
Lillian@LillianWong.com.
If
you would like to unsubscribe to this mailing list, please
click on this 'REMOVE'
link and follow the instructions shown on the automated
'Opt-Out Service'.
