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Action on Cramdown Bill Is Delayed in the Senate
Wall Street Journal (03/20/09) P. A3; Williamson, Elizabeth
Legislation allowing bankruptcy judges to modify mortgages has stalled in the Senate due to banking industry opposition and lack of support among moderate senators. A spokesman for Senate Majority Leader Harry Reid, D-Nev., said the bill may not advance until lawmakers return from a two-week recess beginning April 6. The House version underwent numerous changes and, as it stands now, will allow only existing loans to be modified during bankruptcy and permit principal write-downs only when there is proof of pre-bankruptcy modification efforts. The banking industry wants cramdowns to apply only to subprime financing.
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Mortgage Rates Sink, Likely to Fall Further
Tulsa World (OK) (03/20/09)
Freddie Mac reports a drop in the 30-year fixed mortgage rate to 4.98 percent during the week ended March 19 from 5.03 percent the prior year, marking the lowest rate since 4.96 percent in mid-January. Experts say rates could fall further in response to the Federal Reserve's announcement that it will add $1.2 trillion to the economy to alleviate the credit crisis.
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Banks to Re-Enter Jumbo Arena, Which May Stabilize Prices
Chicago Daily Herald (03/20/09) Harney, Ken
Bank of America is among the major banks rolling out jumbo mortgage programs and holding the loans in their own portfolios. It will offer loans from $730,000 to $1.5 million with 30-year fixed rates under 6 percent; but borrowers must make a 20 percent down payment, have good credit, provide proof of income and hold six months' of principal, interest, property tax and insurance payments in reserve. Other banks offering jumbo loans include ING Group's ING Direct unit and Luxury Loans of San Diego.
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FTC to Draft New Curbs on Mortgage-Lending Abuse, Chairman Says
Bloomberg (03/20/09) Rowley, James
FTC Chairman Jon Leibowitz hopes to create new lending regulations for mortgage brokers by the end of the year. The rules would be crafted to limit abusive practices such as deceptive advertising and servicing procedures that have helped fuel the foreclosure crisis, and the rules would apply to finance companies that are not owned by banks. Previously, the agency brought consumer-protection cases to fight lending abuse, but a spending package passed earlier in the month by Congress now gives the agency the authority to set rules.
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Ginnie Offers Its Help to Buffer Warehouse Pain
American Banker (03/20/09) P. 12; Terris, Harry; Berry, Kate
The Mortgage Bankers Association reports a decline in the warehouse lending market to about $25 billion in 2008 from more than $200 billion the prior year, and it is calling on the U.S. government to adopt a program that would guarantee warehouse loans backed by agency mortgages for as many as two years. MBA President John Courson suggests Ginnie Mae could "early fund" FHA-insured loans and other government-backed mortgages. Warning that "any nondepository mortgage banking operation is headed for extinction if we don't figure this out," Ginnie Mae President Joseph Murin indicated the agency's willingness to administer such a program, which would allow it to assume control of loans three days after closing rather than the more common 15 to 45 days.
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FDIC Completes IndyMac Sale
Washington Post (03/20/09) P. D2
Branches of IndyMac Federal Bank will reopen March 20 as branches of OneWest Bank, which has completed its purchase of the failed California lender. The FDIC, which took over the bank that was devastated by the housing crisis, agreed to sell IndyMac to OneWest for $13.9 billion last December. OneWest is a federal savings bank that was formed by an investor group led by billionaire George Soros and Dell founder Michael Dell.
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AIG Unit Sues Countrywide Over Loan Losses
Associated Press (03/20/09)>
AIG's United Guaranty Mortgage Indemnity Co. unit has filed suit against mortgage lender Countrywide Financial Corp., charging the firm with misrepresenting the health of loans it insured that then led to huge losses. United Guaranty is suing Countrywide for breach of contract, fraud, negligence, and unfair competition and business practices It is seeking unspecified punitive damages but also wants the insurance policies on the loans and its payments on the policies to be canceled.
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U.S. Plan to Revive Lending Gets Underway
Washington Post (03/20/09) P. D2; Irwin, Neil
The Term Asset-Backed Securities Loan Facility, the U.S. government's primary program to spur consumer lending in the months to come, is now officially underway with plans to fund $4.7 billion in automobile and credit-card loans in its first month. The joint program of the Federal Reserve and the Treasury Department is intended to back $200 billion in lending through auto, credit card, student and small business loans and could eventually be expanded to include other types of lending and support up to $1 trillion in loans.
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