Tag Archives: mortgages.

Rising Mortgage Rates Are Two-Edged Sword for Banks — Heard on the Street

Banks in the U.S. have much to be thankful for this holiday season. Higher rates on mortgages aren’t necessarily on the list.

The average rate on a 30-year fixed conforming mortgage has risen to 4.16%, according to the Mortgage Bankers Association, up from post-Brexit lows around 3.6%. Higher rates normally are good for lenders as they help them earn more on loans. Mortgages are a special case. Most are sold off to Fannie Mae or Freddie Mac and then packaged into securities. The portion held by banks stands at just a third.

Higher rates also suppress refinancing, which means fewer one-time gains for banks that make loans and sell them. For holders of mortgage-backed securities, though, this is positive. Fewer will be repaid early. As the heaviest holder of such securities among major banks, Bank of America should be the biggest beneficiary.

Ironically, though, after getting pounded by ultralow rates over the summer, BofA changed accounting policies so that quarterly earnings will be less affected. Now it will appear to benefit less from the rebound, though the impact is fundamentally unchanged.

Read on.

AIG eyes ‘direct investments’ in mortgages – FT.com

Insurer American International Group, or AIG, is looking to move into residential property loans with plans to make what company representatives called direct investments in mortgages, the Financial Times reported Sunday.

The newspaper’s website reported that AIG’s Chief Investment Officer Doug Dachille has told investors that increasing AIG’s allocation to residential mortgages was one of his “key initiatives.”

Read on.

Backed by ‘Occupy’ activists, Loretta Sanchez criticizes Kamala Harris’ signature mortgage settlement

Orange County Rep. Loretta Sanchez’s campaign for the U.S. Senate lobbed a new attack at front-runner Kamala Harris on Wednesday, this time criticizing the landmark $25-billion national settlement Harris helped wrestle from the nation’s five largest mortgage firms.

The settlement is one of the California attorney general’s biggest victories: A recent ad from Harris’ campaign featured President Obama praising the settlement. Sen. Elizabeth Warren (D-Mass.) has too.

Sanchez, as she has done before, held a news conference outside a state building in downtown Los Angeles, joined by members of an activist group called Occupy Fights Foreclosures, a spinoff of the Occupy LA protest group.

Sanchez, who has tried to appeal to conservatives and Republicans in the campaign, tried her hand at economic populism at the news conference.

“Harris has not brought one single prosecution against any major bank executive,” she said.

Read on.

“Subprime” Northern Rock can attack Societe Generale fraud in the United States

Le Monde. fr (translated in English):


An American court refused to classify without following a complaint from the British bank Northern Rock, which accused Société Générale of having cheated on the quality of subprime mortgages ( “subprime” ) that it had sold him, opening the way for a lawsuit against the French bank.

According to court documents released Tuesday, Aug. 12, Judge Melvin Schweitzer New York believes that Northern Rock debacle saved from “subprime”by the British state has evidence “sufficient” to deal in justice Société Générale fraud.


The French bank may still avoid a lawsuit by entering into a settlement agreement.And in case of trial, it would not take place before 2015, said counsel for Northern Rock, the British bank that according to Societe Generale claims $ 34 million.

In detail, accuses Northern Rock bank financing and investment Societe Generale, SG CIB, him having sold in June 2007 related to complex financial products RMBS (Residential Mortgage-Backed Securities) and CDOs toxic loans (collateralized derivatives to credit property).


Credit Suisse : Ex-Credit Suisse trader spared prison for faking mortgage prices

Credit Suisse : Ex-Credit Suisse trader spared prison for faking mortgage prices

A former London-based Credit Suisse Group AG trader was spared prison on Tuesday over his role in artificially inflating subprime mortgage bond prices, in one of the few U.S. criminal prosecutions stemming from the financial crisis.

The former trader, David Higgs, who pleaded guilty in 2012 to a conspiracy charge, was ordered to forfeit $900,000 to the government and pay a $50,000 fine by U.S. District Judge Alison Nathan in New York.

According to the office of Manhattan U.S. Attorney Preet Bharara, Higgs provided “extremely substantial assistance” after agreeing to cooperate with prosecutors.

Another Credit Suisse trader, Salmaan Siddiqui, also pleaded guilty in 2012 and is scheduled to be sentenced this month.