Caroline Baum over at Bloomberg must be pandering for media visibility. There's simply no other way to describe the disjointed and rambling piece published over at Bloomberg today -- but, hey, it's getting us to link into it, isn't it? In the wreckage, we see a headline about Mary Had a Little Lamb and Jumbo Mortgages, and a story that manages to mention neither. Tanta's stream-of-consciousness-style description actually makes more sense than the story itself:
But the rest of us did not write a column that is titled "Mary Had a Little Lamb and a Jumbo Mortgage" and then have this thing about kings and taxes and then Fannie turns out to be the fairy godmother, which is Cinderella, not Mary and the lambs, and then admits to perfect ignorance of what "DU" is and then makes claims about what DU is and then ends up predicting that Fannie will self-insure mortgages which would be like totally surprising since it would require the king to change Fannie Mae's charter which forbids such things, and dammit if you don't get all the way to the end and there aren't any jumbos in it. Boy howdy.
Thing is -- and we've checked -- it's not surprising at all that DU couldn't handle loan level pricing adjustments, not at least to those we've spoken to that have actually used the thing. (Our sources actually called the platform by another term even we won't use here -- because we still hold out hope that Fannie will want to plant some ad dollars on this site, being the capitalists that we are). Most of those in the know think Fannie ran and hid on this after being pressured by community groups; what's more amazing to us is that this sort of thing doesn't really end up in Fannie or Freddie's lap at all, despite the incoherent fairy tales that try to suggest otherwise. Where do you think the decision to take on the risk of a 97 percent loan really sits? Wait for it ... wait for it ... becoming clearer now, isn't it? (That would be the mortgage insurers, for those of you having troubled playing along at home.) We'll have some commentary up this week outlining what Fannie and Freddie's cut-and-run really means, and for whom.