RTC Mortgage Blog

"The 'Father of Subprime Crisis" ???

March 5th, 2010 7:46 AM by Richard T. Cirelli

The 'Father of Subprime Crisis" ???


New York Attorney General Andrew Cuomo is the "father of the subprime crisis" and his aggressive attacks on Wall Street could make him dangerous to the banking sector if he becomes the next governor of New York, well-known banking analyst Dick Bove told CNBC.


"One of the key reasons why Fannie Mae and Freddie Mac are bankrupt today, and why the government is spending hundreds of millions of dollars in supporting them, is because of the edicts pushed through by Mr. Cuomo," said Bove, of Rochdale Securities, in a live interview.


Cuomo, who was secretary of Housing and Urban Development from 1997 to 2001, has been blamed in some quarters for helping to trigger the financial crisis by pushing Fannie and Freddie to buy more subprime mortgages to increase home ownership among the poor. Many of those homeowners eventually defaulted, and the mortgage-backed securities market later collapsed.


I mention this because Cuomo is also the guy that forced Fannie Mae and Freddie Mac to accept his HVCC - Home Valuation Code of Conduct. This is the Regulation that we all love to hate which prohibits mortgage Lenders and Brokers form having any choice in the selection of an appraiser for a mortgage transaction that will be sold to Fannie Mae or Freddie Mac. It now applies to FHA mortgages too.


Update on the Home Affordable Refinance Program (HARP)

The Federal Housing Finance Agency (FHFA), overseer of Fannie and Freddie, announced the Home Affordable Refinance Program (HARP) will be extended a year to June 30, 2011. HARP is part of the Making Home Affordable Program, and "is designed to expand access to refinancing for otherwise qualified borrowers who cannot move into more affordable mortgages because of a lack of equity in their homes" and is for borrowers who are current on their mortgage.  The program (supposedly) allows borrowers to refinance up to 125% of the current value of their home. But, I can't find a single lender that will go above 105%. They should have made the 125% limit mandatory for lenders.

90% of agents down on HAMP

A mere 10 percent of real estate agents think the Obama administration's Home Affordable Modification Program (HAMP) is reducing foreclosures in their market, according to a recent survey.

The company's Market Pulse Survey Report asked more than 100,000 real estate agents nationwide to participate in a 10-question survey to gauge the state of housing in local markets. Nearly 5,800 agents responded; 51 percent had been a Realtor for more than 10 years. The company conducted the survey in February.

Freddie Mac Eliminates Interest-Only products


The announcement by Freddie that their IO product will be phased out in September due to higher delinquencies than their amortized loan products. No word from Fannie yet on their Interest-Only.


Look at the rates below on these ARM.s They are in the 3%'s!!!

Who' Is More Delinquent - 30-Year or 15-Year Fixed Rate Borrowers?

Borrowers in 15-year mortgages are less delinquent than 30-yr borrowers. Somewhat surprisingly, borrowers are about 30% less delinquent. Notice that 15-year rates are always lower than 30-year rates too.

Mortgage Rate Update


Mortgage rates continued to defy logic and gravity during the past week as they edged still a little lower. Probably the main catalyst is the anticipation that tomorrow's Employment Report will be a bad one. Investors in Mortgage-Backed Securities have factored in a rise in unemployment and therefore a run to the safe harbor of MBS's and Treasury's. If the report is in fact bad, I don't expect any more improvement in rates and in fact rates could pop up a little after the release of the report at 5:30am our time.


Regardless of the report, rates are still very low and nobody should be holding out for anything better.


Call me for rate information for your particular situation.
Posted in:General
Posted by Richard T. Cirelli on March 5th, 2010 7:46 AM



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