More Fed Speak on Mortgage Markets
Testimony of Roger T. Cole, Director, Division of Banking Supervision and Regulation re: Mortgage markets.
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate March 22, 2007: Naybob commentary in parentheses.
Subprime lending has grown rapidly in recent years and has expanded homeownership opportunities for many individuals. It is important to ensure that these gains are not eroded by the recent increase in delinquencies and foreclosures in the subprime market.
(Subprime is officially dead, all three top lenders have ceased and desisted either by order or voluntarily in making loans.)
less than half of subprime loans have been originated by federally regulated banking institutions.
(This is "reassuring" in that one can conclude from the statement: at least 49% have been)..
To date, the deterioration in housing credit has been focused on the relatively narrow market for subprime, adjustable-rate mortgages, which represent fewer than one out of ten outstanding mortgages.
(omission of the no down, interest only and no doc loans made by all Alt A and Prime lenders certainly does narrow the focus.)
market investors and lenders have begun to implement more appropriate underwriting standards and to change their risk profiles.
(Too little, too late, the ship has sailed, 5 years of poorly underwritted loans, outright appraisal fraud to puff up values, fees collected, loans booked, very few held, most portfolioed and sold to FNMA or as MBS to investors.)
at this time, we are not observing spillover effects from the problems in the subprime market to traditional mortgage portfolios or, more generally, to the safety and soundness of the banking system. (At this time, is the operative phrase)
the consolidation in the subprime sector of the mortgage finance industry began several months ago and has likely not yet run its course.
(This is just the tip of the iceberg, wait till the spillover into Alt-A and prime hits. Conservative estimates call for 1 - 2 Million foreclosures...
...more intrepid observers are calling for 3 - 4 Million. The Nattering One has been ragging on this all along, how will this shake out in the leveraged CDO derivatives market?)
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate March 22, 2007: Naybob commentary in parentheses.
Subprime lending has grown rapidly in recent years and has expanded homeownership opportunities for many individuals. It is important to ensure that these gains are not eroded by the recent increase in delinquencies and foreclosures in the subprime market.
(Subprime is officially dead, all three top lenders have ceased and desisted either by order or voluntarily in making loans.)
less than half of subprime loans have been originated by federally regulated banking institutions.
(This is "reassuring" in that one can conclude from the statement: at least 49% have been)..
To date, the deterioration in housing credit has been focused on the relatively narrow market for subprime, adjustable-rate mortgages, which represent fewer than one out of ten outstanding mortgages.
(omission of the no down, interest only and no doc loans made by all Alt A and Prime lenders certainly does narrow the focus.)
market investors and lenders have begun to implement more appropriate underwriting standards and to change their risk profiles.
(Too little, too late, the ship has sailed, 5 years of poorly underwritted loans, outright appraisal fraud to puff up values, fees collected, loans booked, very few held, most portfolioed and sold to FNMA or as MBS to investors.)
at this time, we are not observing spillover effects from the problems in the subprime market to traditional mortgage portfolios or, more generally, to the safety and soundness of the banking system. (At this time, is the operative phrase)
the consolidation in the subprime sector of the mortgage finance industry began several months ago and has likely not yet run its course.
(This is just the tip of the iceberg, wait till the spillover into Alt-A and prime hits. Conservative estimates call for 1 - 2 Million foreclosures...
...more intrepid observers are calling for 3 - 4 Million. The Nattering One has been ragging on this all along, how will this shake out in the leveraged CDO derivatives market?)
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