Compass Point on Mortgage Finance: BofA's Origination Business Already in Freefall - Fannie Mae Decision Simply an Added Negative
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Price: $61.86 -2.07%
Rating Summary:
26 Buy, 18 Hold, 2 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
26 Buy, 18 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Compass Point on Mortgage Finance: BofA's Origination Business Already in Freefall - Fannie Mae Decision Simply an Added Negative
Analyst, Chris Gamaitoni, said, "Bank of America (NYSE: BAC)(NotCovered) announced in their 2011 10-K that the company would no longer sell conforming mortgages, excluding HARP refis and HAMP mods, to Fannie Mae (Nasdaq: FNMA)(NC) after a dispute over mortgage repurchase issues. We believe BAC’s decisions will have a very limited impact on the mortgage market or availability of credit to consumers. We view this decision as an attempt to limit losses in anyway possible, as the issue represents a small and declining percentage of total repurchase claims. We foresee three potential mid-to-long-term negative impacts from BAC’s decisions: (1) BAC loan pricing being less competitive than Wells Fargo (NYSE: WFC)(Buy, $37 PT, Gamaitoni), JP Morgan (NYSE: JPM)(NC), Citigroup (NYSE: C)(NC), US Bancorp (NYSE: USB)(Neutral, $30 PT), etc—High Likelihood; (2) BAC being shut off from sales to the GSEs entirely—Moderate Likelihood; and (3) BAC being unable to meaningfully enter the private securitization market when the market reopens—High Likelihood."
Analyst, Chris Gamaitoni, said, "Bank of America (NYSE: BAC)(NotCovered) announced in their 2011 10-K that the company would no longer sell conforming mortgages, excluding HARP refis and HAMP mods, to Fannie Mae (Nasdaq: FNMA)(NC) after a dispute over mortgage repurchase issues. We believe BAC’s decisions will have a very limited impact on the mortgage market or availability of credit to consumers. We view this decision as an attempt to limit losses in anyway possible, as the issue represents a small and declining percentage of total repurchase claims. We foresee three potential mid-to-long-term negative impacts from BAC’s decisions: (1) BAC loan pricing being less competitive than Wells Fargo (NYSE: WFC)(Buy, $37 PT, Gamaitoni), JP Morgan (NYSE: JPM)(NC), Citigroup (NYSE: C)(NC), US Bancorp (NYSE: USB)(Neutral, $30 PT), etc—High Likelihood; (2) BAC being shut off from sales to the GSEs entirely—Moderate Likelihood; and (3) BAC being unable to meaningfully enter the private securitization market when the market reopens—High Likelihood."
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