Industry NewsMortgage

FHA, GSEs seen as alternative to subprime

Wall Street investors not expected to return soon

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BOSTON -- Delinquencies and foreclosures will continue to rise in 2008, keeping Wall Street investors who bankrolled subprime mortgage loans that fueled the housing boom on the sidelines, industry executives said Monday. Until investor confidence returns, FHA guarantee programs and mortgage repurchasers Fannie Mae and Freddie Mac will have to fill the gap, was the oft-heard mantra at the Mortgage Bankers' Association annual convention in Boston. "I think over the next 12, 24 months the new subprime is FHA, because there is no subprime market today," Steve Nadon, president and chief operating officer of Option One Mortgage Co., said in a panel discussion. "There is no liquidity for that market anywhere" for originators to sell their loans in order to make more loans, Nadon said. The Federal Housing Administration's loan guarantee programs "will play a huge role in the recovery of the market," said Chase's David Lowman, chief executive officer of global mortgage. Lowman sai...