Federal Home Loan President Slams Mortgage Brokers

September 5, 2007 No Comments »

In a CNBC interview aired just minutes ago, Federal Home Loan Bank of New York President Alfred Dellibovi spoke about the current lending environment, speaking of previous housing crises, while praising community banks and bashing mortgage brokers.

Asked how bad things were in the current market, Dellibovi centered in on subprime lending, blaming unregulated mortgage brokers who don’t know how to make mortgages, and who don’t really don’t care because they don’t hold them at the end of the day.

Asked if it would harder or more expensive to get a loan without a mortgage broker, or by means other than the Federal banks, Dellibovi simply recommended homeowners go to an FDIC-insured institution.

He added that credit union and savings and loans have access to the home loan bank system because they’re supposedly credit-worthy.

When asked if his organization could refinance subprime loans originated by mortgage brokers, Dellibovi said members could look at them, but expressed that most were not made by member banks.

He added that so-called toxic things like ninja loans and 2/28s (adjustable-rate mortgages) brought on the mortgage crisis, and simply noted that those without the ability to document income (stated income loans) probably can’t and won’t repay their loan.

The interview closed with a question of whether Countrywide’s days were over.

Dellibovi simply called Countrywide a “very professional, very well run organization,” and said they would always have a hand in the mortgage market.

Rather strange that he nailed mortgage brokers who sold Countrywide products, yet failed to place any blame on the mortgage lender itself for coming up with the underwriting guidelines and incentivizing riskier loan programs.

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