Archive for April, 2009
Wells Fargo & Co. (WFC: 29.60 +1.89%) posted a consolidated net income of $3.05bn, or 56 cents per share, for Q109 after losing $2.55bn, or 79 share, in Q408. Wells included acquired Wachovia's business for the first time in the quarter's earnings statement. Wells posted $2.5bn in consolidated revenue for mortgage banking, with $2.44bn from Wells Fargo's legacy business and $62m contributed by Wachovia's operations.
Wells said it saw the best mortgage origination quarter since 2003, with $175bn in loan commitments, mortgage originations and mortgage securities purchases; $101bn of which were purchase or refinance mortgage loans for more than 450,000 homeowners. Wells also reported $190bn in mortgage applications lining the pipeline, including a record $83bn in applications in March alone. Wells hired 5,000 operations team members to process the influx in mortgage demand, chief financial officer Howard Atkins said in an investor conference call.
The bank reported tangible common equity (TCE) of $41.1bn at quarter-end, an increase of $4.5bn during the quarter, allowing for a TCE ratio of 3.28% up from 2.86% at year-end. Wells said its credit-loss allowance totaled $22.8bn, or 2.7% of total loans, covering the bank's expected consumer losses for at least the next 12 months.
“Results also reflected lower net charge-offs partly because Wachovia’s higher-risk loan portfolios already were written down at December 31, 2008, leaving the remainder of Wachovia’s loan portfolios with naturally lower loss content,” says Atkins.
Wells' chief credit officer Mike Loughlin said the bank made $40bn in credit write-downs through purchase accounting adjustments at the time Wachovia was purchased. "As a result of having already written down Wachovia’s higher-risk portfolios for their expected losses, the remaining portfolio will have lower loss rates because of its reduced loss content," Loughlin said in the earnings statement. "As a result, Wachovia’s total net charge-offs in first quarter were only $371 million."
Wells' net loan charge-offs for its legacy business totaled $2.89bn, slightly more than the $2.80bn in charge-offs recorded for Q408. Wells' legacy business consolidated with Wachovia's operations made for $3.258bn in total charge-offs. In the residential mortgage business specifically, Wells reported net loan charge-offs of $310m for residential first mortgages — or 1.56% of average loans — and $81m for Wachovia's residential first mortgages — or 0.2% of average loans.
Loughlin said Wells' higher-quality residential first mortgage portfolio continued to reflect relatively low loss rates, although he warned credit results will deteriorate until home prices fully stabilize. Wells' overall portfolio also shows some areas of concern as far as future credit costs are concerned. The lender posted $12.6bn in total nonperforming loans, or 1.5% of all loans in its portfolio, and said it expected this volume to grow.
“As long as the U.S. economy remains weak, losses on the combined portfolio will increase,” Loughlin said. "In addition to the significant write-downs taken to reduce risk in the Wachovia portfolio at close, we ceased originations in and are liquidating certain higher-risk, lower-return portfolios, such as Pick-a-Pay."
Wells released a pre-earnings expectation in early April, which generated a fair amount of cynicism. Critics said the jump in earnings pertain to FAS 160, an accounting rule first announced in 2007 that became effective on Jan. 1, 2009. The rule addresses accounting for minority interests, and mandates the ownership interests in subsidiaries held by parties other than the parent corporation be clearly identified and presented as equity for the purpose of consolidated reports. Until now, minority interests in the U.S. have been reported either as a liability or as a mezzanine line item between liability and equity. The effect of the new accounting rule allows certain liabilities to "jump over" to the asset book as non-cash transactions via paid-in capital, thereby rolling directly into earnings and boosting reported equity.
But statements from Wells' CEO and president John Stumpf seem to argue against the criticism. “The best way to generate capital is to earn it,” Stumpf said. “This has long been the hallmark of our company and we’re now seeing the initial signs of the earnings and capital-generating power of the combined Wells Fargo-Wachovia in our first quarter together."
Another school of criticism scrutinized Wells' reports they would absorb just $3.3bn in charge-offs on bad loans for the quarter and just $4.6 billion in loss provision expense; both numbers are well below most analyst estimates. Historically, Wells has justified its lower reserves by maintaining a comparatively higher-quality loan book, but critics say the argument may lose some of its strength in light of the option ARMs still lingering in Wachovia's books, regardless of the hefty write-downs taken at the time of purchase.
Write to Diana Golobay at diana.golobay@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
A hotly-contested legislative proposal that would allow bankruptcy judges to modify mortgage debt in certain bankruptcy cases appears to be losing momentum in the U.S. Senate, various sources said this week. So-called 'cramdown' legislation, which passed a key vote in the House of Representatives in early March, has been facing much stiffer opposition in the Senate and has forced the Senate bill 61's primary sponsor, Richard Durbin (D-IL), to back away from a harsher stance he had taken with respect to the cramdown proposal.
"Durbin has remained wedded to the cramdown bill," said Dr. Joseph Mason, professor of banking at Louisiana State University and a senior fellow at the Wharton School. "The industry is done with it, as is the rest of Congress. He might get it tacked on to something else, though."
Both the American Bankers Association and the Mortgage Bankers Association have come out strongly against proposed cramdown legislation, with the MBA arguing that such legislation would increase primary mortgage rates, as investors adjust their risk tolerances. The MBA's assertion has been met with criticism from some researchers, including Adam Levitin, a Georgetown law professor. "There is no empirical evidence that supports a conclusion that permitting either strip-down or other forms of modification of principal home mortgage loans in bankruptcy would have more than a minor impact on mortgage interest rates," he said in Congressional testimony early last year.
Nonetheless, bankers say that the current Obama administration's Homeowners Affordability and Stability Plan, which includes provisions to modify loan payments down to 31 percent of a borrower's income, effectively makes further modifications via bankruptcy somewhat repetitive.
In February, Durbin had suggested to American Banker that Democrats might be willing to limit cramdown authority to just subprime mortgages, in an effort to quell industry unrest and long-standing opposition to the proposal.
“We’ve talked about that as a possibility,” he told the news service. “I am willing to negotiate. I want this to be a reasonable approach, but we have to include [bankruptcy]. If we don’t include it, we’ll be stuck in the same mess we’re in today.”
Durbin apparently wasn't as willing to negotiate on the Senate bill as he had originally claimed in February. The ABA says they walked away from Senate negotiations earlier this month, because Durbin would not concede to allowing cramdowns to apply only to subprime loans. Durbin spokesman Max Gleischman denied the suggestion that the Senate version of the cramdown bill was DOA, however, telling HousingWire that "all terms are being negotiated right now, there is not one main sticking point."
Over the congressional recess, Durbin’s team had worked furiously with the nation's bulge banks, including JP Morgan Chase & Co. (JPM: 37.21 -0.75%), Wells Fargo & Co. (WFC: 29.60 +1.89%), and Bank of America Corp. (BAC: 7.29 -0.14%), as well as key credit unions, in hopes of swaying more Democrats in the Senate to support the proposal, according to sources involved in the negotiations. Press reports earlier this week from Durbin’s camp said progress had been made, but sources inside the negotiations now admit that the deal on the table currently would likely still not encourage enough votes to pass a vote in the Senate.
Much of the behind-the-scenes opposition has come from Arizona Senator Jon Kyl, a Republican, who sources say has been strongly in the corner of bankers over the proposed bankrupty reform; Democrats, including Durbin, had originally attempted to push cramdown legislation through the Senate by tying the legislation to a proposal that would see the Federal Deposit Insurance Corp.'s borrowing authority from the Treasury increased from $50bn to $100bn. Sources say Senate Republicans are now confident they will get the FDIC expansion measure through the Senate, irrespective of the fate of the controversial bankruptcy proposal.
"Democrats have tried to strike a compromise with some in the banking community by holding FDIC borrowing authority hostage to passing cramdown," Kyl told an industry conference on April 1.
"Fortunately, the industry has politely declined. There is no reason to concede on cram down when you have the votes to stop it. As Senator Phil Gramm once said, ‘Never take hostages you’re not willing to shoot.’ On [March 27], the Majority Leader signaled that he wouldn’t shoot the hostage, FDIC relief. He said, 'If we can't get the votes for [cramdown], and I am hopeful we can — I am semi-confident we can — then what I'll do is take that off [the bill] and do the other banking provisions.'"
"Durbin had a hell of a time coming up with a bill that’d pass the Senate," said Burt Ely, a banking expert and principal of Ely & Co. "He’s watered it down so much that his proposal now limits the accessibility or intention of the bill. Even if he got it passed, the gulf is so big it wouldn’t even get out of [the House] conference committee to be enacted into law."
Not surprisingly, consumer advocates are seeing red.
"With Durbin, Dodd and Reid doing the bidding for the banks, this current state of the cramdown bill will have virtually no impact for at-risk borrowers," says Bruce Marks, CEO of Neighborhood Assistance Corp. of America, a mortgage broker and consumer activist. "The Senate Democrats have made no measurable actions this year to help the housing crisis."
Late Tuesday, in an apparent effort to save a measure he feels is important to help distressed homeowners facing foreclosure, Senator Charles Schumer (D-NY) said he would instead try to tack the cramdown measure to other pending banking/housing legislation being considered in the Senate, rather than including it directly in proposed legislation, bringing it up for a quick vote as the Senate considers its options.
Editor’s note: Teri Buhl is an investigative journalist covering Wall Street who has written for the New York Post Sunday Business and Trader Monthly. Contact her at teribuhl@yahoo.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
An interesting Bloomberg feature Wednesday looks at Ben Bernanke's penchant for studying up on the Great Depression, and details the Fed chairman's faith in low mortgage rates leading the way out of the nation's housing mess:
Conventional mortgages averaged 4.61 percent in 1951, 4 percent when backed by the Veterans Administration, and 4.25 percent by the Federal Housing Administration, according to “The Postwar Residential Mortgage Market,” a 1961 book written by Saul Klaman and published by Princeton University Press. Rates during the 1930s were as high as 7 percent.
Bernanke, a Harvard-educated student of the Great Depression who spent his 20-year academic career writing and teaching about the 1930s, is using his knowledge of that era to avoid the missteps policy makers made then. He’s bringing down mortgage rates, supporting the banking system, and buying back government debt and mortgage-backed securities to relieve the scarcity of credit.
As the Bloomberg story points out, he may not get a four percent mortgage, but it appears that Ben is going to get sub-5 percent mortgages for at least something resembling the foreseeable future. (Give or take a few points paid up front, of course.)
But I'm not sure that low rates are the answer here, given that the nation's jobless rate is soaring — nearing 10 percent, officially, and well over 15 percent if you add in underemployed. And underwriting criteria are tougher to navigate than ever. (Need a second mortgage, or PMI? Good luck.) In other words, low rates benefit the best borrowers but do little to help those on the margin — which, ostensibly, is the group that needs to have the confidence and the ability to begin buying (we'll leave the debate about whether this group should be buying for a different post).
After all, money was pretty cheap on the way up, too. Which, on some level, makes you question the wisdom of pushing out cheap money now, as the market is attempting to correct.
Raw mortgage application activity ticked up 5.3% in the week ending April 17, according to a weekly survey released Wednesday by the Mortgage Bankers Association. The four-week moving average remained virtually unchanged, up 0.3% for the week, indicating overall seasonal application activity remains somewhat static.
The volume of applications for refinance rose 7.7% while the four-week moving average of refi activity inched up 0.7%. The refi share of total mortgage applications rose to 79.7% in the week from 77.8% the previous week. The rate of decline in the index measuring purchase application slowed to 4.2% in the week, from 11.3% a week earlier. Conventional purchase application volume down 4.6% and government purchase application volume — think FHA-insured loan applications, here — down 3.6% for the week, according to the MBA.
A separate survey, conducted by Mortgage Maxx LLC found that application activity adjusted for multiple applications from a single household rose 3% for the same week ending April 17, after falling 7.5% in the previous week. Household activity in California alone rose 6.4% after slipping 14.7% the week before, the study found. The Mortgage Application Index — or MAX — publisher Paul Descloux, in his weekly commentary on the index, said the weekly applications remain strong as mortgage rates hover near "what may be their interim" lows. The demand on the Federal Reserve's resources to influence lower mortgage rates may, however, prove more costly than widely believed, Descloux wrote.
The most recent mortgage rate survey by Freddie Mac (FRE: 0.00 N/A) showed 30-year fixed-rate mortgages averaged 4.82% with an average 0.6 point last week, down from the previous week’s 4.87% average, and far below the average last year at the same time — 5.88%. Last week’s 15-year fixed-rate mortgage hit an all-time low, averaging 4.48%, compared to 4.54% the week before and 5.4% a year ago at the same time, Freddie said. With lower rates come higher interest in purchase and refi mortgage loans, but Mortgage Maxx's Descloux warned against undue optimism on refinance effectiveness.
"Even though rates are attractive, and the six-week exhalation of the stock market is lifting spirits, the same impediments to purchase and refi applications remain in the trenches," he wrote in his weekly commentary. "For both creditor and mortgagor asset valuation, credit qualifying, and the home sale multiplier remain tanked. And something else not mentioned nearly enough is the cost of refinancing. For many who are able the origination expense associated with monthly mortgage savings may not make overwhelming home economic sense."
Visit www.mbaa.org and www.mortgagemaxx.us for further details.
Write to Diana Golobay at diana.golobay@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
(Update 1: adds in FHFA statement)
David Kellermann, acting chief financial officer of mortgage giant Freddie Mac (FRE: 0.00 N/A), was found dead at his home in Reston, Va. Wednesday morning in what police said was an apparent suicide. The 41-year old Kellermann has been Freddie Mac's CFO since Sept. 2008.
Police were called to Kellermann's home at 4:48 a.m. EDT and found his body inside, according to a report in the Wall Street Journal. "It was an unattended death and there are no signs of foul play," a spokeswoman for the Fairfax County police told the news service, although police are still continuing their investigation, she said.
Freddie Mac owns or guarantees roughly 13 million home mortgages. Kellermann was named acting chief financial officer last year, after the resignation of Anthony "Buddy" Piszel, who stepped down after the Sept. 2008 government takeover of both Freddie and sister GSE Fannie Mae (FNM: 0.00 N/A). A lifer at Freddie Mac, Kellerman was with the GSE for 16+ years, and was previously senior vice president, corporate controller and principal accounting officer.
"For many years, we have known David as a person of the utmost ethical standards who was hardworking and knowledgeable in his field," a statement released by the Federal Housing Finance Agency on Wednesday morning read. "As the Acting Chief Financial Officer of Freddie Mac during particularly challenging times, David was an inspiration to his staff and many others who were privileged to work with him. We extend our condolences to his family, friends and colleagues."
Write to Paul Jackson at paul.jackson@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
Online real estate broker Redfin said Wednesday it has expanded its service to Long Island and Westchester County in New York, and to California's Central Valley, including Sacramento. The new markets extend Redfin's listings reach by nearly 20%, according to a statement released by the firm.
The opening of two new markets, the first since June 2008 for Redfin, is part of an effort by the online real estate brokerage to reach listings in every major U.S. market. The company plans three additional markets to be added for 2009, bringing Redfin's total to 13. To serve such large new areas, Redfin will offer service from its own agents and from partner agents, the company said. In both cases, clients search for homes using Redfin's site, then choose an agent based on the agent's online deal history and customer reviews.
Redfin's own agents work on a team to offer property tours and handle escrow, using online tools to schedule the tours and prepare offers; clients of these agents get a refund of as much as 50% of the commission. Partner agents work one-on-one with the client; these clients get a refund of 15% of the commission. In either case, Redfin surveys the client and publishes his review, with the agent receiving a bonus that varies with customer satisfaction.
The new version of Redfin's Web site is also one of the first to take advantage of data released by Multiple Listing Services as a result of last year's settlement between the Department of Justice and the National Association of Realtors, which required listing services to allow brokers to publish any data that brokers can disclose in-person. The deadline for compliance was February 15, 2009.
As a result, in the markets the firm operates, Redfin says it now publishes data about the seller's mortgage, the cumulative days on market that a property has been for sale, even if it has been re-listed to appear new; and the price history.
"More liberal data-sharing policies among listing services and a new partner-assisted strategy have opened a new phase of growth for Redfin," said Redfin CEO Glenn Kelman. "We used to evaluate new markets in terms of what the local listing service would let us publish, and the ground our own agents had to cover. Now that the settlement is in effect and our partners can help us in outlying areas — and now that we've got new markets like Chicago contributing profits very quickly — we expect to expand quickly. Since Redfin has reached only about 1/7th of the U.S. market, there's lots of room to grow."
Write to Paul Jackson at paul.jackson@housingwire.com.
U.S. Bancorp's first-quarter earnings dived 51% from last quarter, due largely to affirmed losses tied to loans and securities, the bank said Tuesday. However, activity in the mortgage sector is helping the medicine go down.
In its fourth consecutive profit decline, the Minneapolis-based bank earned $529m, or 42 cents per share, down from a $1.1bn, or 62 cents per share, profit in the last quarter.
The company increased its allowance for credit losses by recording $530m of provision for credit losses in excess of net charge-offs. Additional items included $198m of net securities losses, believed to be tied to the Bancorp's deteriorating investment of preferred stock in a large domestic bank, though the bank is vague on this point, as it was with a $92m posted gain coming from a corporate real estate transaction.
In total, these items reduced first quarter of 2009 earnings per diluted common share by about 28 cents. But CEO Richard Davis told investors on a conference call this morning that he didn’t see credit problems tempering yet. “We’re probably in the middle of this whole cycle,” Davis said.
The CEO said he was "very proud" of U.S. Bancorp's first quarter results. "The results clearly demonstrated our company's ability to produce strong core operating earnings despite a very challenging economic environment."
Davis said the bank's earnings are aided by record-setting activity in its mortgage banking division, including both loan production and fee revenue. The presence of lower interest rates spurred a refinancing boom in the sector. And when combined with sharply lower home values, the bank says more new buyers entered the market. The bank posted record loan application volume of $25bn, from which it produced $13.4bn in mortgage loans.
Offsetting these positive results were, as expected, higher credit costs and additional market-related write-downs, as well as lower fee revenue in certain line items that are closely linked to the slower economy and current equity market conditions.
Bancorp's Davis said Tuesday he expects the bank to pass the government's stress test, and added he is ready to quickly repay the $6.6bn of bailout funds the bank received last fall.
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.
The set of risk management regulations that are currently gaining steam globally, the Basel II standards, are increasingly falling under critical eyes as the system gains worldwide support.
The bureaucracy that drives the development and implementation of Basel II is headquartered at the Bank for International Settlements in Basel, Switzerland. Representative from member nations regularly met to discuss practical solutions to the management of bank activities in an attempt to promote stability. Standards are set on the amount of regulatory capital a bank should maintain, and a framework managing risks associated with liquidity are among the ‘pillars’ of Basel II. A third pillar deals with disclosure and transparency practices.
The system has its share of critics. Most recently Fitch Ratings, which recently tightened criteria for collateralized debt obligation risks, argues that as part of the proposed Basel II enhancements under Pillar 1 the risk weights for 're-securitizations' will be increased relative to the risk-weights on other forms of securitization exposure.
Basically, when re-organizing risky or unpopular structured finance platforms (or both, in the case of CDOs), Basel II does not regulate concentration risk, those associated with pooling according to vintage or geographic area, effectively. This may negatively impact ratings.
"In concept, similar risk exposures should face similar capital charges, irrespective of the form that the exposure takes. When layering the higher proposed Basel II re-securitization charges onto the additional conservatism of Fitch's SF CDO criteria, our analysis indicates that the Basel II capital charges on the full SF CDO capital structure could be several multiples higher than the Basel II charges on the entire underlying pool of structured finance collateral, even though the risk exposure is essentially the same," says Ian Linnell, a director in the Fitch Structured Finance group.
Despite Linnell’s criticism, Fitch remains an ardent supporter of Basel II, which recently invited Brazil, Russia, India and China (BRIC nations) as well as Australia, Korea and Mexico to adopt the standards.
The present crisis demonstrates the disruptive effects of procyclicality on banks — where the interconnection between the financial and real estate sectors boosts macroeconomic contraction that extends to retail, industry, commodity etc. – and critics say Basel II must quickly evolve to address and, going forward, prevent this phenomena. Their fear is that Basel II will be moot by the time it is formally adopted.
A prime example of this in action is that in its current, revised form Basel II does not adequately address counterparty risks. Such a tool would be necessary to avert the widespread damage caused by the collapse of Lehman Brothers, which happened more than six months ago.
Write to Jacob Gaffney at jacob.gaffney@housingwire.com.
Neil Barofsky, special inspector general for TARP, is sounding a warning about the potential for fraud within the Treasury's mortgage modification program. Meanwhile, United States Senator Charles E. Schumer, joined by all five NYC district attorneys, introduced legislation Monday calling on the federal government to infuse $100 million into fighting the recent wave of housing scams.
“The recent foreclosure and refinancing crisis, following a sharp increase in home values created a perfect storm for these housing scammers to swoop in and fleece homeowners," Schumer (D-NY) said. "With this bill, these criminals will be stopped.”
Schumer's Fighting Real Estate Fraud Act of 2009 establishes a grant program in the Department of Justice for local District Attorney’s offices around the nation, which authorizes $100 million in grants for hiring specialized staff for offices that need additional resources to combat mortgage fraud. Across the country, federal and local prosecutors are simply on overload, he said. The creation of Real Estate Fraud Units is meant to resolve these issues by employing staffers who will be able to focus exclusively on real estate crimes and prosecute scammers.
Just last month, Schumer secured $875,000 toward the creation of such a Real Estate Fraud Unit at the Brooklyn DA’s office.
"Our mortgage fraud hotline in Brooklyn rings off the hook with cries from homeowners who have been scammed out of their most precious possession," said Brooklyn DA Charles Hynes. "This legislation and the grant funding will go a long way towards protecting those victims and prosecuting those who prey on them."
Over the past several years, the NYC Kings County District Attorney’s Office has been flooded with referrals of mortgage and deed fraud cases from local politicians, homeowner advocacy groups, attorneys, state agencies and individual homeowners. While several investigations and prosecutions were undertaken, much of the increasing work load was referred elsewhere, Schumer said in a press release. Often times, victims of mortgage fraud were referred to civil court to battle the scams.
"Civil court is the wrong place for this," Schumer told the New York Times in an interview. "It takes too long and it's expensive."
The majority of housing fraud cases involve some degree of criminal conduct, whether it be theft of a home by way of a forged deed or falsification of borrower assets by a mortgage broker. But uncovering the evidence of criminality requires investigative resources that are currently not readily available to victims around the nation, according to the NYC district attorneys.
"Increased prosecution of housing frauds is a necessary weapon in the arsenal of government programs to end the crisis currently manifesting itself in the foreclosure wave," reads a report from Schumer's office. "Prosecutions can result in jail sentences for the offenders and restitution for the victims, which currently is very rare."
Barofsky's focus, on the other hand, is on fraud prevention according to his quarterly report to Congress today. In it, he makes several recommendations to combat the potential for fraud within the Treasury's mortgage modification program. Barofsky urges the Treasury to "build certain fraud protections into the mechanics of the program," suggesting there are very little, if any, currently in place.
Further, the report recommends third-party verifications of residence and income, conducting a closing-like procedure in which the identities of participants are confirmed, and delaying modification incentive payments to servicers. In addition, the oversight agency said the Treasury should proactively educate homeowners about the nature of the program, publicize that no fee is necessary to participate in the program, and collect and maintain a database of the names and identifying information for each participant in each mortgage modification transaction.
SIGTARP reported seeing potential for corporate and securities fraud instances, insider trading, public corruption and other fraudulent schemes in a number of TARP programs. SIGTARP's hot line, established to record instances of suspected violations, has so far received 200 tips, including "serious allegations of fraud," the report said. To keep ahead of alleged fraud and to prevent future cases, SIGTARP made a number of recommendations to the Treasury.
"Simply put, the American people have a right to know how their tax dollars are being used," the report says.
SIGTARP recommended requiring TARP recipients — through the Capital Purchase Program (CPP), Public-Private Investment Program (PPIP), Term Asset-Backed Securitis Loan Facility (TALF) or any other program — to report exactly how they use the funds. The PPIP, in particular, is "inherently vulnerable" to fraud, waste and abuse in fund managers' conflicts of interest, collusion between participants and money laundering, the report said. Greater oversight, transparency and due diligence would serve to ensure such conflicts of interest don't exist among fund managers.
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.
Diana Golobay contributed to this article.
Bank of America Corp. (BAC: 7.29 -0.14%) and Wells Fargo (WFC: 29.60 +1.89%) took the top originating positions in the commercial and multifamily market in 2008, according to a report released Tuesday by the Mortgage Bankers Association.
The MBA's top 10 list also includes PNC Real Estate, Holliday Fenoglio Fowler LP, Wachovia, GE Real Estate, Capmark Financial Group Inc., CBRE | Melody, Deutsche Bank Commercial Real Estate and KeyBank Real Estate Capital, according to the MBA.
In terms of originations by investor group, Capmark filled the top originator position for Freddie Mac (FRE: 0.00 N/A), Federal Housing Administration/Ginnie Mae and specialty finance. BofA took the lead for commercial banks and savings institutions and conduits. MetLife Inc. Real Estate Investments posted the top originator position for life insurance companies. PNC nabbed the top originator position for Fannie Mae (FNM: 0.00 N/A). KeyBank was top originator for real estate investment trusts (REITS), mortgage REITS and investment funds. MBA also named TIAA-CREF top originator for pension funds, GE Real Estate for credit companies, and Wells for other investors.
Holliday Fenoglio Fowler, CBRE | Melody, Wells, NorthMarq Capital, and PNC took the top-five intermediary positions by dollar volume in 08 after the top lenders, the MBA said. Wachovia, PNC, and GE filled the top three lender positions by dollar amount after BofA and Wells, whose strong quarterly earnings — and projected earnings — may indicate some of the lending force behind their top positions in the MBA's report.
BofA earned $4.2bn net income in Q109, compared with the fourth-quarter $1.79bn net loss reported in mid-January. Wells in early April said it expects to post a record net income of $3bn — or 55 cents per share — in its first-quarter earnings statement, slated for release Wednesday. It appears, however, an accounting treatment makes up as much as nearly one-third of the bank’s Q109 earnings.
Write to Diana Golobay at diana.golobay@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
