Fed Cuts Discount Rate to Save Countrywide?

National Mortgage News writer, Paul Muolo, says in an article that there was a run on a Countrywide branch in Pasadena, CA the other day. He goes on further stating that Bernanke & Co. cut the discount rate to give a hand to Countrywide with its 16% market share through its $1.4 trillion mortgage servicing portfolio (8.9 million homeowners). Countrywide also owns a thrift with $60 billion in liabilities.

I guess the thinking is that Countrywide needs the rate slash to borrow money to continue it's operations as it's downfall would be a psychological blow that Americans won't be able to handle.

Mortgage Market Craziness

The feds are trying to provide some liquidity to the mortgage market (maybe even accepting those pesky mortgage backed securities as collateral) while the market has priced a 55% change of a rate cut into it. Meanwhile, Homebanc files for bankruptcy, Washington Mutual and Countrywide are on the ropes, and all bank stocks are dropping on fears of everything from mortgage market illiquidity to dwindling investment banking fees.

It's an interesting time to be a loan officer out there looking to build his book of business. I think this is an excellent time to establish myself and someone who is still in the game, who works for a lender who can close and fund (very important) the loan. It's a time to gear up and make those calls to possible referral sources that I've been putting off. To work with developers whose preferred mortgage broker may not be able to close the jumbo loan.

I think I'll be able to increase my book of business during this shake out.

No Longer a Mortgage Broker

Now that I work for JPMorgan Chase Bank, N.A. I'm no longer a mortgage broker.

I just made the move a week ago, so I've been watching the news with interest as American Home Mortgage locks out it's employees (heard they did that, don't know for sure) and then shuts down completely laying off 7000 people.

Also Greenpoint Mortgage has stopped originating Jumbo (loans over the conforming limit of $417K) ARMS. That is a major part of my book of business here in Manhattan. Wells Fargo slashes it's Alt A programs, as does Wachovia. Wells Fargo's Alt A cutback only affects Mortgage Brokers, while Wachovia ditches Alt A lending altogether. Alt A mortgages are those in which the borrower falls between prime and subprime, but the borrower are closer to Prime borrowers, so this really hurts the homebuyer, who might be a small businessman, shop owners and the like.

Accredited's clean bill of health is pending.

Top brass at Bear Stearns says the secondary debt market is the most volatile it has been in 22 years. While Indymac's Chief Executive emailed people saying the mortgage-backed bond market is "very panicked and illiquid", driving Indymac's stock price down.

This next few months are going to be a roller coaster ride for us in the mortgage business, especially those of us on the front lines as we find out hour by hour what types of loans we can originate and what types are no longer available.