home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Mortgage Rate News | Mortgage Market Index | ARM indices | ARM Statistics
Average fixed and ARM rates. Rate forecasts. Quotes on ARM indexes including COFI, MTA, LIBOR & Treasuries. Rate reset studies and reports. Mortgage rate litigation.


Scandal's Effect on Mortgage Rates

Fannie Mae reduced purchases could spell higher rates

September 30, 2004

By PATRICK CROWLEY


Fannie Mae's accounting problems have touched off concerns about a spike in mortgage rates.

The situation is being closely watched by financial analysts, mortgage bankers and industry watchers. Many assume that if Fannie slows its purchases of home mortgages interest rates will rise.

But few, at least for now, see rates rising so much as to slow home sales or add major costs to the purchase of a home.

"The cost of mortgages down at the retail level where human beings get financing is a long way and disconnected from the accounting issues that Fannie Mae is being required to address," Keith Gumbinger, vice president of HSH Associates, a publisher of mortgage information based in New Jersey, said in an interview.

If rates do rise a couple of basis points those costs will be passed on to consumers, and the impact will not be that great, he said.

"It's nothing to get too worried about," Gumbinger said. "The effect on the consumers will be pretty limited, if there is any at all."

In a research report to investors, equity analyst Jonathan Gray of Sanford C. Bernstein & Co. in New York said that if Fannie starts to sell of portions of its large mortgage portfolio "we would expect mortgage rates to rise by perhaps 25 (to) 40 basis points," according to a written copy of the report the firm provided to MortgageDaily.com.

That could actually be good news for Fannie's stockholders, Gray said.

"While (Fannie) would have a smaller volume of loans on its balance sheet, it would have a much wider profit margin on those assets and...higher capital level," he said.

In a blistering report, the Office of Federal Housing Enterprise Oversight, (OFHEO) the regulator that oversees Fannie, detailed accounting and management problems at the nation's largest owner of home mortgages. Fannie has agreed to keep 30 percent more capital on its balance sheets, a number that will equate to billions of dollars.

The Securities and Exchange Commission has also launched an informal probe.

Bert Ely, who operates a Washington D.C.-area bank consulting firm, said he believes that even with Fannie's problems talk of a big jump in interest rates has been "overstated."

"I'm skeptical" of any major rate increase, Ely said in an interview. "Rates...might go up 5 to 15 (basis) points, maybe a 10th of a percent. There's a lot of noise out there but I question whether homeowners will really see any effect."

But the scandals could lead to talk of privatizing Fannie and the smaller Freddie Mac, which are both known as Government Sponsored Enterprises, or GSEs. They are privately owned now, but operate under federal government charters and oversight.

In a newspaper opinion piece Jonathan L. Kempner, president and CEO of the Mortgage Bankers Association, said explicitly that "privatization is not the answer" for the GSEs.

"Congress should pass legislation that provides the proper oversight of the GSEs," Kempner said. "While recent events prove that stronger regulation of the GSEs is necessary, privatizing them could lead to disruptions in the market and higher costs for consumers."

A stronger regulator "should ensure that the GSEs maintain their original mission of providing liquidity so mortgage bankers can continue offering products that meet consumer needs at the lowest possible interest rates," he said.

Meanwhile, Moody's Investors Service is reviewing and may downgrade Fannie's 'A-' Bank Financial Strength Rating.

The rating "reflects the uncertainty surrounding the ongoing OFHEO investigation and informal SEC inquiry regarding accounting and internal control matters at the GSE."

"The uncertainty arising from these events could result in greater political and financial challenges for Fannie Mae, particularly if the GSE is required to restate its financial results," Moody's said in a statement.


Patrick Crowley is a political reporter and columnist and former business writer for The Cincinnati Enquirer. Email Patrick at: [email protected]
GSE News | Fannie/Freddie Share Statistics
Fannie, Freddie and FHLB news. Coverage of government sponsored enterprise regulation, operations and litigation.




SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders