Archive for February, 2009
The American Securitization Forum kicked off Monday at the Venetian Resort in Las Vegas, Nevada to a much more somber note than previous years. The conference, traditionally held at the casino and gambling capital of the nation (a bit of self-jest, although the failed gamble on the subprime mortgage market may have cast a note of irony on the joke), started off with preliminary discussions Sunday and will continue through mid-week.
Sandra Thompson, director of the division of supervision and consumer protection within the Federal Deposit Insurance Corp., was one of the first to speak at this year's conference, replacing Sheila Bair, whose understandably busy schedule prevented her from attending. Thompson added to an overall tone of reform when she urged the industry to return "back to the basics" of sound lending practices and credible securitization structures. "We must reform our credit markets to make them more sustainable," she said.
From "complex and very murky" ratings practices to lenders and originators with only a short-term view of profit all went together to cause the credit crisis now seen, she said. "Originators didn't think they had any risk" when they first made bad loans and built securitizations from them, Thompson said. "Such an incentive system that rewards deal making…is and was a recipe for disaster. Rewards must be restructured to promote longterm results. Everyone needs some skin in the game."
Key industry players echoed her caution going forward as well as lessons that can be learned from looking back. Tom Marano, president and CEO of Residential Capital LLC, said the securitization industry was made to be too complex and the securities themselves became too complex to manage. He suggested a movement of reform to the industry as well as a list of rules of engagement that may help people within and without the industry understand the system and what can and cannot be done with securities.
"You can treat a psychiatric patient with medication and skip the talk therapy. Well, we need both," Marano said.
Tricia Hazelwood, managing director of Credit Suisse, added that treating the psych patient with every bit of medicine available is likely to kill him. "The problem is a lot bigger than just an aggregate bank can handle," she said, citing the "bad bank" that may be in the works and announced as early as Tuesday by Treasury Department secretary Tim Geithner.
"We have to make the goals work," Hazelwood said. "We have a multi-trillion dollar problem, so an $800 billion solution will not work."
HousingWire is reporting on-site from the ASF all week, and will continue to publish industry updates as they occur.
Write to Diana Golobay at diana.golobay@housingwire.com.
Officials said 20-year-old Mississippi-based Realty Mortgage Corp., one of the largest privately owned mortgage companies in Mississippi, laid off about 300 employees in several states last week after Countrywide Financial Corp. froze its line of credit, according to Yahoo Finance.
Representatives at Countrywide, which was acquired by Bank of America Corp. (BAC: 7.29 -0.14%) in July of 2007, notified Realty Mortgage on Tuesday its line of credit used for payroll and day-to-day operations — amounting to over $200 million — would be frozen.
Sally Wood, operations manager for Realty Mortgage, told Yahoo Finance Friday the company was still in business and officials were searching for another lender. In the meantime, however, most mortgages have been resold to other lenders with only a small fraction remaining with Realty Mortgage.
But in a report Monday, Mortgage Daily.com said it learned Realty Mortgage had suspended operations and plans to file for bankruptcy this Friday. Housing Wire was not able to reach a spokesperson at Realty Mortgage before press time.
Realty Mortgage Corp. is headquartered in Flowood, Miss., — where according to Yahoo Finance, 65 workers were laid off — and operates out of offices in Florida, Tennessee, Texas and Georgia.
Lines of credit are becoming increasingly troublesome to access, as warehouse lenders are going out of business, terminating, or adding restrictions to their lines of credit. In a letter to Treasury Secretary Timothy Geithner Thursday, the Mortgage Bankers Association urged government actions to restore liquidity to the warehouse lending sector.
"This assistance by the federal government is urgently needed to maintain the mortgage funding structure borrowers depend upon, especially borrowers who rely on independent, non-depository lenders," read the letter.
The MBA recommended the government offer a short-term federal guarantee of warehouse lines that are collateralized by Fannie Mae (FNM: 0.00 N/A), Freddie Mac (FRE: 0.00 N/A), FHA, VA, and RHS-eligible mortgages, and modify the present risk-based capital treatment of warehouse loans to facilitate the expansion of warehouse lending.
Write to Kelly Curran at kelly.curran@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.
Mortgage fraud reached a new high in 2008, according to the FraudBlogger index published by MortgageDaily.com, during which time more than $5 billion in mortgage fraud cases were tracked.
"Mortgage fraud activity that might have otherwise gone undetected was uncovered as falling home prices and rising defaults pushed these crimes to the surface," said MortgageDaily.com publisher Sam Garcia. The FraudBlogger index, which reflects a combination of the number of cases and the dollar volume was 1488 last year, up from just 607 in 2007. In terms of dollar amount, Fraud cases in 2007 amounted to about 4 billion, about 25 percent less than in 2008.
Fourth-quarter 2008 activity nearly doubled from the prior quarter and was nearly 300 percent higher than a year earlier, the report said.
More than $1 billion in fraud was tracked in California alone, during the fourth quarter, pushing it to the top of the fourth-quarter state rankings. Much of that increase, according to MortgageDaily.com's report, was tied to around 11,000 mortgage fraud investigations reported by the U.S. Attorney in San Francisco. New York ranked number two in the top ten worst states, with a much less, although still significant, $374 million in fraud cases. Florida, Minnesota, Nevada, Virginia and Texas followed.
"Although fraud is being uncovered at an increasing pace, the actual level of fraud on more recent originations has likely tumbled as production has dwindled and lenders have tightened guidelines," suggested Garcia.
Nonetheless, many industry insiders fear that mortgage fraud will continue to increase. Representative of the fear are the solutions technology companies are rolling out in order to mitigate fraud. David Vida, president of Acqura Loan Services, said the concern is that modification fraud and even short sale manipulations will worsen, especially as press continues to grow around what the government will do with principal forgiveness. "The concern is that people will manipulate the sitation and take advantage of free-bees, if you will," Vida said.
Write to Kelly Curran at kelly.curran@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.
ComplianceEase, a provider of risk management solutions, announced Monday at the American Securitization Forum's ASF 2009 Conference a new regulatory compliance risk mitigation solution called ComplianceAnalyzer LIFT (Legal Integrity for Financial Transactions), which according to the company, meets the new compliance due diligence criteria announced by the various credit rating agencies in late 2008.
The new due diligence requirements for rated RMBS transactions detail the need for loan-level regulatory compliance audits that cover all applicable Federal, state and municipal mortgage lending laws and regulations. They also set forth minimum standards for maintenance of compliance technology that is employed as part of implementing that loan-level due diligence review, said ComplianceEase.
"There are literally hundreds of lending laws in effect across the nation today. The associated penalties and costs to cure for non-compliance are very costly, especially when the loans are part of structured finance transactions," said Mark Hughes, vice president of due diligence solutions at First American CoreLogic. "ComplianceAnalyzer provides us with real-time access to loan-level compliance auditing and risk analysis across all Federal, state, and municipal consumer credit and high-cost laws and lending regulations."
The solution is now available through all major firms that conduct independent third-party due diligence on residential mortgage-backed securities transactions. www.complianceease.com.
Forecast Data Boosts Structured Finance Workstation
Moody's Analytics announced Monday it has enhanced its Structured Finance Workstation platform by integrating macroeconomic forecast data from Moody's Economy.com and credit risk modeling from Moody's Mortgage Metrics with the platform's existing cash flow analytics tools. The enhanced platform is available to investors starting Monday.
"Investors can now access integrated economic forecasts, credit risk modeling and securities valuation through a single platform," said Jacob Grotta, managing director of Moody's Analytics. "The combination of these services gives investors a powerful and flexible tool with industry-leading analytical capabilities."
"These enhancements are a direct response to our clients' desire to include macroeconomic forecasts when analyzing structured finance transactions," commented Mark McKenna, Director of Moody's Analytics. "The addition of economic and credit forecasts will allow for a more rigorous analysis of asset-backed securities." www.moodys.com
OnMark Enhanced
ICP Capital revealed Monday the latest enhancements to its OnMark system, ICP’s proprietary risk and valuation analysis model for whole loan and structured credit instruments.
The latest enhancements help ICP clients create detailed reports projecting future cash flows and potential losses on these securities and underlying collateral, as well as perform ongoing surveillance to determine fair market valuations.
“This is the next generation of valuation analysis and risk management analysis for our marketplace,” said Chris Howley, managing director of ICP Advisory and Solutions Group. “OnMark provides a new level of transparency into intrinsic values for our clients as they upgrade their risk management procedures and investment strategies.”
OnMark also focuses on risks associated with residential mortgage modifications and potential court-ordered changes to mortgage terms, or cram downs. “Loan modifications will have a measurable impact on mortgage-backed security values in the medium term,” said Dr. Wenbo Zhu, managing Director and head of Risk Analytics at ICP Capital. “OnMark enables a granular review of loan level detail to predict how borrowers will respond to these programs.” www.iccapital.com
Partnership Provides 24/7 Loan Underwriting Support
Teres Solutions, Inc., a provider of direct, indirect and merchant lending software to credit unions and financial institutions, announced Monday that it has partnered with Lending Solutions, Inc. As part of the agreement, LSI will integrate with the Teres Solutions SAIL lending platform to allow loan officers at LSI to provide 24/7 outsourced underwriting support to SAIL customers.
The move will ensure that loan applications are reviewed and underwritten in a timely manner for credit union and banking customers. According to a statement from Teres, a specialist at LSI can now be notified of a pending application in the system and provide a decision on the application within minutes.
"At LSI our goal is to help credit unions grow their loan volume while providing world-class service to their members," states Jeff Frantz, senior vice president of corporate development at Lending Solutions, Inc. "By responding to these indirect applications immediately, the member is taken 'off the market' and the credit union secures more loan business from the dealer." www.teressolutions.com www.lendingsolutions.com
Ellie Mae & Loan-Score Integrate Platforms
Ellie Mae and Irvine-Calif.-based Loan-Score, will be integrating Loan-Score’s product and pricing solution, Power Pricer, with Ellie Mae’s Encompass Mortgage Management Solution, Banker Edition. This embedded integration will provide Ellie Mae’s customers with the ability to quickly price and select loans through Loan-Score either at the point of sale or in back office functions—all directly from within Encompass Banker Edition.
“In this market, efficiency is a key aspect to profitability,” said Jonathan Corr, Ellie Mae’s chief strategy officer. “With this integration, we’ll be providing our clients with access to Loan-Score’s rules engine, so they can price and decision loans in a seamless, transparent fashion, right from Encompass Banker Edition. Those seamless integrations are a key aspect of the kind of efficiency that drives profits.”
Loan-Score’s Power Pricer is the product and pricing component of its comprehensive decisioning suite, which can be used for all lending channels and products. In addition to centralizing pricing for all lending channels, according to Ellie Mae's Statemenet, Power Pricer also returns instant product eligibility and best-fit pricing, provides loan-level drill downs while in the pipeline, and ensures that eligibility and pricing adhere to ever-changing investor guidelines.
www.elliemae.com www.loanscore.com
RCH Capital Selects FICS' Commercial Servicer
Financial Industry Computer Systems, Inc., a mortgage technology specialist that provides in-house commercial servicing technology to the mortgage industry, announced at MBA's CREF/Multifamily Housing Convention & Expo 2009 the successful implementation of Commercial Servicerâ at Saint Petersburg, Fla.-based RCH Capital.
RCH Capital, who through its affiliated investment entities, acts as a principal in acquiring commercial mortgage loans, purchased FICS’ commercial real estate loan servicing system, Commercial Servicer, in August 2008 to replace a proprietary loan servicing system. The existing system did not have the functionality RCH Capital required; Therefore, RCH Capital selected FICS’ Commercial Servicer — and according to a press statement, RCH chose FICS based on its reliable reputation, as well as for the systems’ flexibility and ability to generate interest accrual and custom reports.
“I, along with many of our servicers, have had previous experience working with FICS,” said Joe Amoriello, CPA and controller at RCH Capital. “I knew the system would meet our requirements and serve as a reliable system that would enable our organization to work more efficiently.”
www.rchcapital.com www.ficsloanware.com
Write to Kelly Curran at kelly.curran@housingwire.com.
Editor’s note: Tech Roundup runs every Monday, and offers a look into the various technology that makes the entire mortgage market work — whether origination or default, through to secondary market operations. If you’ve got a tech bit that we should know about, email the reporter above.
U.S. house prices overall will hit bottom by year's end, after suffering a 36 percent drop from their 2006 peak values, a study co-authored by Moody's Economy.com chief economist Mark Zandi said Monday morning.
"Notwithstanding the intensifying economic gloom, the bottom of the housing downturn is within sight for the nation," said Mark Zandi, chief economist at the economic research hub. "Presuming we see strong action by policymakers to help support the economy and the housing market, prices will begin to recover by the end of this year."
The forecast marks the first somewhat positive outlook for the U.S. housing market by a major independent economic team this year — somewhat, because home prices still have further to fall. A recent HousingWire Magazine cover story took a look at what major economists predict for U.S. housing in 2009, and the outlook was pretty grim across most we spoke with (Zandi declined to be interviewed, as his study was not released). Subscribe here.
Nonetheless, Zandi and co-authors Celia Chen, Cristian deRitis and Andres Carbacho-Burgos said that they see flattening inventories, prices coming back down to earth, and sales that are approaching stability in many markets. House prices nationwide have already fallen by about 25 percent since their 2006 peak, using the Fiserv Case-Shiller home price indices as a benchmark.
But despite some early signs of improving sales and optimism that new policy measures will help to put a floor under the housing market, the study does predict that 2009 will be a year to forget, with home prices falling another 11 percent on average before stabilizing.
"Policymakers have not yet been able to break the downward spiral that has developed among the sinking housing market, job losses, frozen credit markets, and rising foreclosures," Zandi said.
The study predicts that by the time the market correction is complete, it will have been widespread and severe, with 62 percent of the nation's 381 metro areas seeing double-digit, peak-to-trough declines in house prices.
Declines will exceed 20 percent in about 100 metro areas, as measured by the Case-Shiller, the study estimates. The hardest-hit regions, such as Southeast Florida, California's Central Valley, and the Riverside, CA metro area, are expected to decline by upward of 50 percent, according to the study. In only about 42 markets, mostly smaller cities in the South, house prices will fall by less than 1 percent.
Even if the recession ends late this year, as expected, the subsequent recovery looks to be lackluster. Real GDP is not expected to return to its pre-recession peak until late 2010, and the nation will not approach a full-employment jobless rate of 5 percent before President Obama's term nears its conclusion in 2012, according to the study's authors.
Write to Paul Jackson at paul.jackson@housingwire.com.
The asking prices of homes listed for sale continued to fall in January across most U.S. markets, while listed inventory continued to fall as well, according to a study released Monday morning by Altos Research and market analysis firm Real IQ.
The Altoa 10-City Composite Price Index, which tracks single family homes in Boston, Chicago, New York, Los Angeles, San Diego, San Francisco, Miami, Las Vegas, Washington D.C, Denver, found that asking prices fell 2.1 percent in January versus December 2008. Home prices are down 2.4 percent during the most recent three-month period.
Asking prices fell at the fastest rate in Las Vegas — down 5.4 percent during January — and 8.8 percent during the past three months. Sin City has posted the fastest rate of decline in asking prices in the nation for ten straight months, the firms said. And while listing prices rose at the fastest rate in Miami — up 1.5 pecent in January — the Altos/Real IQ report makes it clear that aggregate price increases in these markets are a function of a shift in the class of properties listed for sale moreso than an actual increase in the prices of individual properties.
“Despite continuing decreases in inventory levels, asking prices remained on a steep downward path in January,” said Michael Simonsen, CEO and co-founder of Altos Research. “The trends appear to be continuing. We can find no signs of a turn-around in the data as of the first week of February.”
Inventory levels declined in most major markets, with the exception of Portland, Seattle, Charlotte and Salt Lake City. Across the 10-City Composite Index markets, inventory declined by 3.3 percent in January, and 9.7 percent during the most recent three-month period. Inventory fell by more than 5 percent in Detroit, Boston, Atlanta and Cleveland during January.
“Inventory levels generally increase in January as sellers anticipate the seasonally strong spring selling season,” said Stephen Bedikian, partner and research director for Real IQ. “So far we are seeing the opposite as inventory levels are continuing the decline they began in the summer of last year. The big test will come over the next few months as any increase in inventory will exacerbate the already large imbalance of housing supply and demand by adding to the existing overhang of available homes.”
Suggesting that markets could ill afford an influx of new housing inventory, the median days-on-market rose in all markets during January, staying above 100 or more days-on-market in every major market, according to Altos and Real IQ. By far, the market with the slowest rate of inventory turnover was Miami, at a median of 189 days-on-market — or more than six months. Miami has experienced the slowest market turnover in every month since September 2007, while Salt Lake City enjoyed the fastest rate of turnover with a median days-on-market of 101.
For more information, visit http://www.altosresearch.com and http://www.realiq.com.
Write to Paul Jackson at paul.jackson@housingwire.com.
Regulators shut down two banks in California and one in Atlanta on Friday, marking the seventh, eighth and ninth bank failures of the new year, according to the Federal Deposit Insurance Corp. The total number of banks that have collapsed during the recession which started in December of 2007, now rings in at 34.
McDonough, Georgia-based FirstBank Financial Services was shut down by the Georgia Department of Banking and Finance, which appointed the FDIC as its receiver. To protect the depositors, the FDIC said, it entered into a purchase and assumption agreement with Regions Bank, out of Birmingham, Alabama, to assume all of the deposits of FirstBank Financial Services.
FirstBank's offices will reopen on Monday, according to the FDIC's statement, as branches of Regions Bank. Depositors of FirstBank will automatically become depositors of Regions. And deposits will continue to be insured by the FDIC.
As of December 31, 2008, FirstBank had total assets of approximately $337 million and total deposits of $279 million. In addition to assuming all of the failed bank's deposits, including those from brokers, Regions agreed to purchase approximately $17 million in assets. The FDIC will retain the remaining assets for later disposition.
Number Eight
Alliance Bank, based in Culver City, California, was also shut down Friday. Its regulator, the California Department of Financial Institutions, named the FDIC the receiver. The FDIC then entered into a purchase and assumption agreement with San Diego-based California Bank & Trust to assume all of the deposits of Alliance Bank.
As of year-end 2008 Alliance Bank had total assets of approximately $1.14 billion and total deposits of $951 million. In addition to assuming all of the deposits of the failed bank, California Bank & Trust agreed to purchase approximately $1.12 billion in assets at a discount of $9.9 million. The FDIC will retain the remaining assets from Alliance for later disposition as well.
California Bank & Trust will share with the FDIC in the losses on the asset pools covered under a loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector, the FDIC said. The agreement also is expected to minimize disruptions for loan customers as they will maintain a banking relationship.
Number Nine
Lastly, Merced, Calif.-based County Bank, was closed Friday by the California Department of Financial Institutions, which appointed the FDIC as receiver. Under a purchase and assumption agreement, Westamerica Bank, out of San Rafael, California, will assume all of the deposits of County Bank.
As of February 2, 2009, County Bank had total assets of approximately $1.7 billion and total deposits of $1.3 billion, according to the FDIC's statement. Westamerica Bank agreed to purchase all of County Bank's assets and assume all of its failed bank deposits. The FDIC and Westamerica Bank also entered into a loss-share transaction.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $135 million. Westamerica Bank's acquisition of all deposits was the "least costly" resolution for the FDIC's Deposit Insurance Fund compared to alternatives. County Bank is the ninth bank to fail in the nation this year, and the third in California.
Unfortunately, we've seen a steady flow of bank closings since the start of the year. On the last Friday in January, three banks closed in quick succession. The Office of Thrift Supervision closed Crofton, Md.-based Suburban Federal Savings Bank. The Office of the Comptroller of the Currency closed Florida-based Ocala National Bank, the non-brokered deposit accounts of which transferred to Winter Haven, Fla.-based CenterState Bank of Florida. And the Utah Department of Financial Institutions closed Salt Lake City-based MagnetBank.
Write to Kelly Curran at kelly.curran@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.
President Barack Obama on Friday announced the formation of the Economic Recovery Advisory Board to assist in the "months and years" to come of economic recovery. The announcement came in the midst of Congressional bickering over the financial stimulus package, the passage of which is being held up by criticism that too much government spending and not enough tax cuts will have no significant effect reducing the national deficit and encouraging consumer spending in the short term.
"[I]f we drag our feet and fail to act, this crisis will turn into a catastrophe," Obama said. "We’ll continue to get devastating job reports like today’s – month after month, year after year…. If we don't do anything, millions more jobs will be lost. More families will lose their homes."
The President's remarks came hours after the U.S. Labor Department reported the unemployment rate had reached 7.6 percent in January, up from the 7.2 percent reported for December. Non-farm payrolls plunged 598,000, after dropping 577,000 in December. Payroll employment has now declined a total of 3.6 million, representing about 2.6 percent of employment, since the start of the recession in December 2007, according to the report. If that’s not astonishing enough, about one-half of that 3.6 million decline occurred in the past three months.
Obama has consistently called for the Senate to resolve quickly on the financial stimulus bill that he claims will save and create some 3 million jobs and encourage consumer spending. The bill has been held up in recent days by a reluctant GOP and an effort from both sides of the aisle to trim the Senate's version of the bill some $100 billion (it stands at more than $900 billion as of the passage of the home buyer tax credit earlier this week).
"It is inexcusable and irresponsible for any of us to get bogged down in distraction and delay or politics as usual while millions of Americans are being put out of work," he said. "Now is the time for Congress to act." In an effort to coordinate the recovery efforts like the stimulus bill being discussed and dissected in Congress — and which might hit the President's desk mid-February — Obama announced the creation of the Economic Recovery Advisory Board.
"I created this board to enlist voices to come from beyond the Washington echo chamber, to ensure that no stone is unturned as we work to put people back to work and to get our economy moving," Obama said. "We will meet regularly so that I can hear different ideas and sharpen my own, and seek counsel that is candid and informed by the wider world."
The board will be headed by former Federal Reserve chairman Paul Volcker, whom Obama called "one of the world’s most experienced and insightful economic minds," with the assistance of presidential economic advisor Austan Goolsbee and former Securities and Exchange Commission chairman William Donaldson, among other economists, professors and leading financial executives.
CBS News obtained a copy of the President's remarks, which can be read here.
Write to Diana Golobay at diana.golobay@housingwire.com.
The Federal Housing Finance Agency released its November Foreclosure Prevention Report Friday which found the number of modifications completed by Fannie Mae (FNM: 0.00 N/A) and Freddie Mac (FRE: 0.00 N/A) increased 67.6 percent in November compared to the monthly average of the first nine months of 2008.
“Loan modifications for October and November, which were the first two full months of the
converservatorship, increased by 50 percent from the previous two months,” said James Lockhart, director of the FHFA, suggesting the data reflected an increased commitment of the servicers and GSEs to help borrowers keep their homes.
For November, the report showed foreclosures were started on 5.25 percent of the 30.6 million residential mortgages the GSE's jointly serve, which is down from the 6.44 percent of foreclosures started in October. Foreclosure completions also dropped, from 2.33 percent in October to 1.73 percent in November.
November marked a big change in the handeling of defaults for Fannie and Freddie. Both GSEs announced a suspension of foreclosure sales and evictions on all single-family properties scheduled to occur from Nov. 26 through January — a suspension that was later extended through the end of February. The report said since only two business days of foreclosure activities in November were impacted by the suspension, it had little effect on the month's performance. However, the FHFA said it expects the suspension to have a greater impact in December and January.
November showed early signs of loss mitigation efforts by Fannie and Freddie, as they posted a 61.7 percent loss mitigation ratio, according to the report, a ratio which allows for comparison of loss mitigation performance over time — irrespective of delinquency rates. But as we sit well into the first quarter of the new year, job loss continues to surge and overall economic conditions continue to deteriorate — requiring yet a further boost in modification efforts, as more Americans turn delinquent on their homes.
As of November, loans 60+ and 90+ days delinquent were on the rise, reaching 2.73 percent and and 1.8 percent of all loans, respectively.
Write to Kelly Curran at kelly.curran@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.
Strong and resilient was the message CEO Ken Lewis gave of Bank of America Corp. (BAC: 7.29 -0.14%) in a televised interview with CNBC's Maria Bartiromo Friday.
"This company's going to be a thing of beauty as we get to the other side of this [economic downturn] and it will be the envy of the financial services industry in terms of market shares," Lewis said.
In a bold and likely surprising statement, Lewis said Bank of America expects to pay back U.S. Treasury relief funds within the next three years, and "categorically" does not need additional government funding. The bank has thus far received up to $45 billion in TARP funds. He told CNBC the bank will not change its operations based upon the relief funds based upon the relief funds.
"[W]e'll have the largest market shares and the best seller products in the best regions in the best country in the world. And then we'll be complemented obviously with the international capabilities of Merrill Lynch," Lewis proceeded.
The purchase of Merrill Lynch by Bank of America has been questioned by many industry insiders, particularly on the heels of a "larger than expected" fourth-quarter loss by Merrill Lynch. But Lewis said he has no long-term regrets about buying Merrill Lynch. He proceeded to express satisfaction with another recently acquired mortgage vendor, Countrywide, saying its refinancing sector has been "on fire" in January.
See the full transcript of the interview.
Write to Kelly Curran at kelly.curran@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.
