| By Paul Muolo pmuolo@imfpubs.com In the mortgage industry, the mud rolls downhill. That’s obvious. Fannie Mae and Freddie Mac were taken over by the government almost six years ago. Did any mortgage professional in their right mind think the Treasury Department and Federal Housing Finance Agency wouldn’t sue the pants off of any mortgage company (or executive) that could be connected to a loss at the GSEs? In the wake of the savings and loan crisis, the Federal Deposit Insurance Corp. and Resolution Trust Corp. (remember them?) sued the executives and boards of almost every failed thrift. The agencies went after the “directors and officers” insurance policies in the hopes of recouping some of their losses. In the wake of the mortgage crisis and collapse of the GSEs, FHFA sued MBS underwriters and forced billions of dollars in loan buybacks from primary market originators. This government “policy” was precedented. Anyone who had been around in the 1980s saw what happened with the thrifts. And now we have the Department of Justice suing (on a civil basis) issuers of subprime MBS. Where are we going with this? It boils down to the future: Uncle Sam has bled billions of dollars from Bank of America, JPMorgan Chase and others – but not necessarily for what they did, but for the sins of companies they bought. In other words, BofA has ponied up almost $26 billion to FHFA and DOJ over the past six months for the activities of companies that it didn’t even own at the time of their alleged crimes: Countrywide and Merrill Lynch. In the eyes of some, BofA did a huge favor for the government by taking over these too-big-to-fail institutions. And what did BofA get in return? Sued. The next time there’s a banking crisis, will any executive of a bank help out Uncle Sam?... On the topic of suing the rescuers of failing lenders, one mortgage veteran offered up this observation: “Our Attorney General is going to hunt down all the ‘banksters’ with every weapon they have and make them pay and pay. Can you imagine any bank such as JPM and Bank of America ever agreeing to help out the government over a weekend to bail another bank out, even at a huge discount?”… Lost in all the news this week about BofA paying $16.65 billion to Uncle Sam to settle allegations over faulty MBS was this little detail: $800 million is going to FHA and another $200 million to Ginnie Mae. FHA, of course, could use the cash. Ginnie Mae has been earning nice profits the past few years. A Ginnie spokeswoman promised to give IMFnews more details on its share of the settlement next week… Countrywide founder (and former chairman and CEO) Angelo Mozilo was in the news again this week. Press reports indicate that prosecutors in Los Angeles are preparing a civil case against Mozilo even though he settled with the SEC a few years ago, agreeing to pay almost $68 million to cover Countrywide-related mortgage misdeeds. We will point out that from 2004 to 2007 Countrywide Securities Corp. was the fourth largest underwriter of subprime MBS. Lehman Brothers – which went bust in 2008 – was number one with $282 billion. A close second to Lehman was Greenwich Capital, the underwriter for former subprime giant Ameriquest and its wholesale affiliate Argent. A fair question to ask is this: If DOJ goes after Mozilo, why not go after the owners of Ameriquest/Argent which created so much of the faulty subprime product that Greenwich securitized? Ameriquest was chiefly owned by businessman Roland Arnall, who died back in 2008. In theory, they could sue his estate. (In 2006 Ameriquest coughed up $325 million to settle predatory lending charges with states.) Greenwich, which is owned by the Royal Bank of Scotland, is being sued by the FHFA for all the MBS garbage it sold to Fannie and Freddie. Note: The U.K. government became the majority shareholder of RBS in November 2008 and now owns 64 percent of its shares. That settlement, when it comes, could be a doozy… Mortgage advisor Rick Roque tells us that the loan officer sector is beginning to bifurcate. Roque says high performance LOs are still in demand and are fetching nice salaries and offers to jump ship. “But lower performing LOs are leaving companies or being forced out.” The advisor said LOs who are closing $500,000 a month in loans are in a bind. “It’s getting harder and harder for them”… Roque, by the way, was one of the advisors who told IMFnews this week that mortgage companies with less than $8 million in net worth may want to consider selling. For more on the story, see the new edition of Inside Mortgage Trends… One investment manager told us this week that he owns some shares in Ocwen, but is still somewhat bullish on the company. But he noted that he has talked to other funds that early in the year had 15 percent of their money tied up in Ocwen stock. In January, Ocwen’s shares were trading for $55. Today, the price is $27. “You can hear the pain,” he said… VENDOR NEWS: Mortgage software provider DocMagic was picked by the Consumer Financial Protection Bureau for another one of the agency’s “eClosing” pilot projects. On this proposal, DocMagic is partnering with Mountain America Credit Union. The pilot is tied to compliance rules in regard to the origination function. “Lenders that take advantage of these new technologies will have a competitive advantage over their peers and will see higher borrower pull-through and customer satisfaction as well,” said the vendor’s CEO and president Dominic Iannitti. STUFF ABOUT THE MBA YOU MAY NOT KNOW: The Mortgage Bankers Association has roughly 665 “regular” residential lender/servicer members. Roughly 300 of its members service mortgages; 160 of those are depositories… LENDERS YOU MAY HAVE NEVER HEARD OF: We recently talked with Julie Messina, vice president and secondary marketing manager for CNN Mortgage of Scottsdale, AZ. CNN has 23 investors and is funding about $40 million a month in new loans. If you have any suggestions concerning smaller lenders that few know about, drop us a line at: pmuolo@imfpubs.com. We’ll publish such information from time to time. FOLLOW US ON TWITTER: Inside Mortgage Finance and some of our staffers post daily on Twitter, providing updates to readers. Our Twitter crew includes: Guy Cecala, Paul Muolo, and Thomas Ressler. And of course, Inside Mortgage Finance.
Detailed data on the first-quarter business at the top mortgage lenders
At PHH Mortgage, 61.9 percent of first-quarter originations were jumbos. US Bank, which ranked sixth for production volume, sent most of its agency loans to Freddie Mac, where it was the second biggest seller. Discover more about these two lenders – and the other 18 in the Top 20 – with IMF’s Top 20 Lender Profiles. On one data-filled page per lender, you’ll have specifics on volume and share by product, servicing performance, channel breakdown, secondary market choices and more. Other areas of interest: Originations, Servicing, Secondary/MBS, Regulatory, Data/Rankings, Mergers & Acquisitions, Nonconforming, Fannie, Freddie, Ginnie Mae/FHA, Technology | 
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