Mortgage Risk More Costly

Perhaps you have heard the rumors this week of big losses in the hedge funds. The entire global credit structure is repricing risk and the consequences for the mortgage business are huge. "The annual cost to insure $10 million of the debt for five years of the finance unit of GM, General Motors Acceptance Corp., most actively traded swap, is $717,000, up from $229,000 in February, according to broker GFI Group Inc. in New York."

That's an increase of over 200%. And check out this table to see just how important GMAC is to the industry.

The reinsurance business, which is seeing a lot of scrutiny these days, is headed by AIG. Origination News tells us they just bought a promising firm. "A member company of AIG, has acquired an equity position with Investors Mortgage Asset Recovery Co. LLC, a provider of mortgage fraud recovery services. The company provides assignment services, under which it consults with mortgage lenders on the problems created by flipping schemes.

"Every participant in the mortgage process stands to benefit from recovered losses, but many cases are either too difficult or too small to handle through typical recovery methods," said Cindy Kirkley."