Magazine article Mortgage Banking

New Year, Old Stories. (on the Road)

Magazine article Mortgage Banking

New Year, Old Stories. (on the Road)

Article excerpt

FANNIE MAE AND FREDDIE MAC TURNED in outstanding profit performances in 2001, and the good times keep rolling, according to jonathan E. Gray, vice president and senior research analyst with Sanford C. Bernstein & Co. LLC, New York. "The spread they're getting when they buy mortgages for their portfolios is higher than it's been in 15 years," Gray told an audience at the National Winter Management Conference in New York City, co-sponsored by America's Community Bankers and Community Bankers Association of New York State in early December 2001.

The government-sponsored enterprises (GSEs), Gray said, "haven't seen profit margins like this since 1986. So if you happen to be talking with someone from Fannie and Freddie and they bemoan some aspect of their business, you can save your sympathy for another phase of their monetary cycle."

Also at the Winter Management Conference, Kerry Killinger, chairman, president and chief executive officer of Washington Mutual Inc. (WaMu), Seattle, discussed his bank's expansion in multifamily lending. "It's one of our newer focuses," said Killinger, explaining that WaMu sees the current multifamily sector as "very large, deep and fragmented," presenting the company with an "opportunity to become a dominant player."

WaMu plans to originate and then securitize "a certain amount" of multifamily loans for sale to insurance companies, said Killinger, who added that the bank would "retain for portfolio [the] adjustable-rate loans" it originates. It will be an approach similar to what WaMu uses on the single-family side. Subsequent to that stage, Killinger said the bank would build "strong expertise in the [multifamily] servicing business." The model has worked "awfully well for us" in residential lending and servicing, Killinger noted, adding that WaMu expects similar results in the multifamily area.

Fannie Mae's president of e-commerce, Mike Williams, told the audience at the third annual Mortgage EC Conference in Las Vegas last December that the company will continue to look for loans it can buy from borrowers with "minor credit problems." Williams, who said "everybody has a different version of what 'subprime' is," explained that Fannie Mae "wants to pull some borrowers who are on the edge with blemished credit into the primary market and give them a better mortgage option. It's extraordinarily good for the lenders and it's good for the consumer, he said.

At the EC Conference, there was discussion about the role of the private sector in the development of automated underwriting (AU) technology. …

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