MORTGAGE INDUSTRY IN THE MEDIA

Washington Post, LA Times, and others. 7/13/03
White House backs credit score notices

By Kenneth R. Harney
Special to The Times

WASHINGTON - The Bush administration now favors greater disclosures whenever a loan applicant is quoted a higher rate because of credit file information.

In a policy statement, Treasury Secretary John Snow said the administration supports "granting the Federal Trade Commission specific authority to require notices to consumers when their credit scores caused them to be offered less favorable rates than for which they applied."

Though it may sound technical and bureaucratic, the policy announcement has potentially far-reaching financial impact on mortgage applicants nationwide. That's because the vast majority of applicants are now quoted interest rates that are directly tied to electronic "risk-based pricing" systems heavily dependent on credit scores.

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Wall Street Journal. 7/14/03
Snow Expected to Recommend New Oversight of Freddie Mac (excerpt).

By JOHN D. MCKINNON
Staff Reporter of THE WALL STREET JOURNAL

WASHINGTON -- Treasury Secretary John Snow agreed to testify before a House committee probing accounting problems at Freddie Mac, and is expected to recommend that the Treasury Department take over financial oversight of the huge government-sponsored mortgage company and its corporate cousin, Fannie Mae.

The secretary's willingness to weigh in before the House Financial Services Committee on July 25 underscores the concern inside the administration about potential risks posed by Freddie Mac and Fannie Mae.

The two publicly traded companies buy and sell mortgages on the secondary market. They can borrow at lower rates than other companies because investors assume the government stands behind them. Critics say the companies have used that advantage to grow too big, too fast, and that their financial regulator, an agency within the Department of Housing and Urban Development, lacks sufficient power.

Until now, Mr. Snow has stuck to broad principles in his comments on the companies, such as the need for disclosure and transparency. Mr. Snow is widely expected to recommend that if Congress shifts the companies' regulator, the Office of Federal Housing Enterprise Oversight, into the Treasury, then the Treasury should be given significant new authority, including the ability to take over one of the companies if they should become insolvent. Congress, both because of the companies' political agility and because of fears of disrupting the housing market, hasn't shown any interest in broader legislation to curb the companies' ability to grow.


Los Angeles Times. 7/14/03
Membership has its mortgage privileges

By Lew Sichelman
Special to The Times

WASHINGTON - Just about everybody is in the mortgage business these days.

Borrowers can secure financing from alumni associations, professional trade groups, unions, social organizations and, sometimes, employers. Even churches are getting into the act.

Whether borrowers can obtain a better deal elsewhere depends on how hard they shop. But all things being equal, these and other groups sometimes offer benefits not found elsewhere.

For example, the University of Maryland Alumni Assn. not only gives members a $350 discount on closing costs, they also don't levy an origination fee - a charge that can be 1% or more of the loan amount.

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San Diego Union Tribune. 7/15/03
No fallout from shake-up at Freddie Mac

WASHINGTON - Key U.S. senators said they would not rush to toughen oversight of mortgage finance firms Freddie Mac and Fannie Mae despite accounting woes that led Freddie Mac to replace its top executives in June.

Freddie Mac acknowledged last month it had manipulated its accounting to deliver steady earnings growth and could restate earnings upward by between $1.5 billion and $4.5 billion. The Justice Department and financial regulators are investigating the company's accounting problems, and House of Representatives lawmakers have proposed stronger supervision of Freddie Mac and its larger rival, Fannie Mae.

Rep. Cliff Stearns, a Florida Republican who chairs a House Energy and Commerce panel, aims to hold a hearing on Freddie Mac's accounting during the week of July 21, a source said.

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LA Daily News. 7/14/03
Fewer can afford median home cost

By Nicholas Grudin
Staff Writer

SANTA CLARITA -- Just 27 percent of California households could afford a median-priced home in May, down 1 percent from a year ago, according to a report released Thursday by the California Association of Realtors.

In Santa Clarita, the cost of a median-priced home jumped nearly 20 percent in the last year -- up to about $355,000 in May -- and is expected to continue climbing.

"We have such a shortage of homes that the median price is probably going to be $400,000 before we stabilize, because of the fact that we have such low inventory," said Tacie Jares, president of the Santa Clarita branch of the Southern California Realtors Association.

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Los Angeles Times. 7/15/03
Greenspan Says Fed Could Cut Rates Again

From Associated Press

WASHINGTON -- The Federal Reserve stands ready to reduce interest rates even further if necessary to boost the sluggish economy and guard against a destabilizing fall in prices, Federal Reserve Chairman Alan Greenspan said today.

In remarks prepared for delivery to Congress, Greenspan said that the Fed was prepared to leave interest rates at low levels "for as long as it takes" -- even though rates are at a 45-year low. The goal would be to get the economy growing at a faster pace, he said.

Greenspan's comments -- part of the central bank's twice-yearly report to lawmakers - signaled that the Fed, which has already reduced a key interest rate to the lowest level since 1958, is prepared to cut rates again. This could happen as soon as its next meeting on Aug. 12 if the economy is not showing convincing signs of a post-Iraq rebound.

The Fed "stands ready to maintain a highly accommodative stance of policy for as long as it takes to achieve a satisfactory economic performance," Greenspan said in testimony to the House Financial Services Committee.

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Reuters. 7/15/03
Mortgages to Set Record, Group Says

U.S. mortgage lenders are expected to issue a record $3.4 trillion in new loans this year, a 36.5% increase over the prior record set last year, a U.S. mortgage industry group said Monday.

Lower mortgage rates, which in June hit their cheapest levels in more than 40 years, have fueled torrid home sales and refinancing. The housing and refinancing booms have been the twin bright spots in an otherwise sluggish U.S. economic recovery.

With a gradual pickup in economic growth and mortgage rates in the second half of 2003, the record volume of mortgage demand will begin to subside after this year, the Mortgage Bankers Assn. of America said.

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