[A-List] Mortgages

[Sabri Oncu <soncu@xxxxxxxxxxx>]

Anne writes:

> Before this to-do is over, the federal govt
> will probably control the entire residential
> market

I am not following the mortgage market as closely as I used to,
or had to, prior to 1998, so my knowledge is not current. I am
just curious. What happened to the private lenders such as GE,
Country Wide, Green Tree and the like? It is possible that some
old names dissapeared because of M&A activity but aren't the
private lenders the ones who lend to the non-conforming
borrowers? You probably know that it is not possible for most
home buyers to borrow from FNMA (Federal National Mortgage
Association, Fannie Mae), GNMA(Government National Mortgage
Association, Ginnie Mae) and FHLMC(Federal Home Loan Mortgage
Corporation, Freddie Mac) in cities like New York, San Francisco,
Berkeley, etc because of the loans sizes. Homes are too expensive
when compared to the maximum loan sizes available from these
government agencies. Moreover, if we ignore the middle man, I
don't think government agencies would get involved in predatory
lending that has been widespread for the past "few" years, so
there must be some private lenders in the picture. Most sub-prime
lenders (those who lend to the ones with little hope to pay their
debt) must be private lenders, unless there are significant
changes in the government agency lending criteria.

As you may recall, I once asked about the so-called Whole Loans,
mortgage loans from private lenders, that is. Institutional
investors were reducing their exposure to them as far as I know
and, as I asked then, if not institutional investors, who is
holding the Whole Loans? Did the government agencies start to buy
them?

Sabri