The fallout from the subprime meltdown was felt by investors as several of the players provided earning guidance. Merrill Lynch estimated their third quarter writedowns at 4.5B and Washington Mutual estimates a 1B write-down due to subprime and home-equity related issues. Deutche Bank speculated publicly that they will also take a hit. The bottom-line is that we are now seeing the bean counting after the meltdown to figure out what is left and how do we put this behind us.
Freddie Mac stepped up their campaign to encourage policymakers to loosen restrictions to lift their portfolio caps. If we are not careful, this may just become an election issue. There were some positive steps taken by Congress to help homeowners and lenders work together in modifying existing loan terms without incurring the tax penalties previously in place. The M&A front remains red hot with Allregs acquiring Lender E-Source and Litton Loan Servicing publicly exploring sale to Goldman, Sachs & Company. It was refreshing to hear that Flagstar went live with eMortgages and is preparing to sell their first loan electronically. As automated underwriting and loan pricing systems changed the industry several years ago, eMortgages will become the de facto standard—although admittedly this process may take a couple years to catch on….Next week the industry heads to Boston for the National Mortgage Bankers Association. It should be very interesting to poll the lenders and vendors as this conference typically foreshadows the prospects for the next year
MarketWise Advisors, LLC.
Investment Banking and Consulting Advisory
1-800-815-9484 (main)
www.marketwiseadvisors.com
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