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In
response to Taxpayers On The
Hook For Ginnie Mae's Rampant Growth I received a
nice Email from the Center for Public Integrity inviting me to take a look at
Ginnie Mae's
Troubled Issuers. The data is interesting to say the
least.
Problem Issuers by Compare Ratio
Compare ratio is the comparison of a lender's default rates with other
lenders in a geographic region as defined by HUD. For example, if a lender
has a compare ratio of 200 percent, the Federal Housing Administration loans
made by that lender are defaulting at twice the rate of its competitors in
its geographic region. A compare ratio of 200 percent or more is grounds for
suspension and a compare ratio of 150 percent or more indicates "a
problem" lender, according to FHA Commissioner David Stevens.
Compare
Ratios Over 150%
·
Pine
State Mortgage Corporation - 314% - Default Rate 18.86%
·
Premium
Capital Funding, LLC dba Topdot Mortgage - 238% - Default Rate 14.31%
·
Ideal
Mortgage Bankers, Ltd, dba Lend America^ - 235% - Default Rate 14.14%
·
IndyMac
FSB, dba OneWest Bank - 211% - Default Rate 12.67%
·
First
Horizon Home Loans dba First Tennessee - 207% - Default Rate 12.45%
·
First
American Mortgage Trust - 205% - Default Rate 12.31%
·
First
Guaranty Mortgage Corp. - 204% - Default Rate 12.26%
·
American
Financial Resources, Inc. - 202% - Default Rate 12.16%
·
Weststar
Mortgage Corporation - 198% - Default Rate 11.88%
·
Gateway
Mortgage Group - 198% - Default Rate 11.9%
·
Colonial
Bank - 189% - Default Rate 11.38%
·
MVB
Mortgage Corporation - 183% - Default Rate 11.01%
·
GMAC
Mortgage - 171% - Default Rate 10.29%
·
Allied
Home Mortgage Corporation - 168% - Default Rate 10.09%
·
Taylor
Bean & Whitaker Mortgage^ - 163% - Default Rate 9.77%
·
Shore
Financial Services, Inc. dba Shore Mortgage - 159% - Default Rate 9.54%
Problem Issuers by Loan Volume
The charts in the article are interactive so please give it a look.
GMAC - The Gift That Keeps On Giving
None of the above banks should be doing business with Ginnie Mae. Indeed,
most of them should not be doing business at all, especially GMAC.
To help bailout GM , the Obama administration screwed the bondholders to
appease the unions, and taxpayers channeled additional money to GMAC so that
it could continue making loans. GMAC went to the well three times as the
following articles show.
Flashback October 28: GMAC May Receive
Third Government Bailout in November
GMAC
Inc., the lender that received two government bailouts totaling $13.5
billion, is negotiating with the Treasury Department for a possible third
lifeline next month, people familiar with the matter said.
The U.S. is studying a capital injection of $2.8 billion to $5.6 billion,
according to the people, who declined to be identified because the
transaction hasn’t been agreed upon.
GMAC may get more government money because the Obama administration regards
the lender as crucial to the survival of the U.S. auto industry. General
Motors Co., its former parent, and Chrysler Group LLC rely on the firm to
finance their vehicle buyers. GMAC will report third-period results on Nov.
4, after losses in seven of the past eight quarters.
“It’s outrageous that the taxpayers are being asked yet again to
support a troubled enterprise,” said Sean Egan, president of Egan-Jones
Ratings Co. in Haverford, Pennsylvania. “When will it end?”
Flashback
October 29, 2009: Geithner Says GMAC
to Need Less Government Aid Than Expected
“We’re
likely to have to put in less capital than we expected,” Geithner told
the House Financial Services Committee today. He said any additional aid to
GMAC would “follow through” on previous commitments, rather than
kicking off a new round of bank aid.
“We committed in the event that they were not able to raise capital
from the market, that the government would put that capital in,”
Geithner said. “There was no prospect, quite frankly, that they were
going to be able to raise that capital from the market.”
Flashback
November 4 2009: GMAC Reports
Third-Quarter Loss Tied to Loan Defaults
GMAC Inc., the auto and mortgage lender negotiating a third
round of government aid, reported a third-quarter loss tied to mortgage
defaults.
The net loss from continuing operations was $671 million, compared with $2.5
billion a year earlier, Detroit-based GMAC said in a statement. GMAC’s
net loss was $767 million; the auto finance unit swung to a profit, while
mortgage operations posted a smaller deficit.
Note
that GMAC was originally not even a bank, but was made into one for the
express purpose of getting $billions in taxpayer handouts.
By keeping GMAC alive, a ridiculous notion in the first place, problems
continue to mount elsewhere. GMAC has received over $13 billion in taxpayer
handouts and continues to saddle Ginnie Mae with poor quality loans. No price
is too high to win union votes.
Addendum:
Aaron Krowne pinged me with an email regarding Inside the FHA Audit: the Disaster of Seller
Financing
The
homebuyer assistance program allowed sellers to fund the downpayment and then
turn around and inflate the home price to recoup the expense. The seller also
paid a fee to the non-profit for qualifying buyers and arranging the
transactions. HUD saw it as a scam, though the downpayment assistance
providers denied it.
It was well documented that buyers generally paid too much for the properties
and ended up in high loan-to-value loans that were generally three times more
likely to default than other FHA single-family loans.
And default they did. The latest FHA actuarial report calculates the damage
SFDP inflicted on the FHA Mutual Mortgage Insurance Fund in startling detail.
If the government had never endorsed SFDP loans, the economic value of the
MMIF would be $13.2 billion as of September 30 — instead of $3.6
billion — a difference of almost $10 billion. In other words, FHA would
be in stronger financial shape today.
Aaron Krowne
Writes:
"Of course the government never really endorsed SFDP(A) loans. Rather,
it more grudgingly tolerated them. Unfortunately even post-SFDPA FHA issuance
with 3.5% down combined with the $8k tax credit likely won't leave a much
improved actuarial profile. Thus, I continue to expect taxpayers to bleed out
heavily through Ginnie Mae."
Click here for more from Aaron Krowne on the Seller-Funded Downpayment Assistance (SFDPA)
Scam.
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