MARIO ANTOCI IS CHAIRMAN OF American Savings Bank, one of the nation's largest thrifts. Earlier this year, Fannie Mae securitized $1.4 billion of lower-income and central-city loans American Savings had made and held in its portfolio for several years. The deal was one of the largest of its kind.

Recently he spoke to American Banker about why he thinks the secondary mortgage market isn't doing more such business.

Q.: Why is the role of Fannie and Freddie so central?

ANTOCI: Because investors need the highest quality of paper, Fannie and Freddie have in effect dictated underwriting standards ofr everybody. The standards were set looking at white people. They don't take into consideration the cultural differences of minorities.

Q.: Fannie and Freddie say they're changing their guidelines. Why isn't that enough?

ANTOCI: The fact that they have to have a loss ratio that is acceptable to the outside investor market keeps them away from taking risks that maybe other lenders are taking. As others take these risks, and they find out that it's not a real risk, Fannie is waking up.

That's what's happened with us. Fannie Mae securitized our low- and moderate-income loans. They looked at a portfolio that has been performing for four years, even in this recessionary time. But will they take new production immediately?

Q.: Have you talked to Fannie about it?

ANTOCI: There's a possibility they might, but not without exacting a huge cost of insurance. They are not taking any extra risk.

Q.: You mean they've priced for the risk?

ANTOCI: Exactly. What they're suggesting by doing this is that we should charge a higher rate for those kind of loans. And we don't. We charge the same rate in the inner city that we charge in West Los Angeles.

But when they securitize an inner-city loan that has substantially more-flexible underwriting standards that what Fannie would normally tolerate, even with their relazed standards, they leave the lender with no margin of profit. So lenders can't sell those loans.

We were able to strike a deal with Fannie Mae, but it took us a year and a half to coe to this agreement. That gave the portfolio longer, in turn, to age, and it gave Fannie longer to assess the risk. Does the amount of the fee that we're paying fund that risk? If that's the fee they would charge for anybody doing inner-city loans, they would do a lot of business in inner cities.

Q.: You're saying you got a preferential deal?

ANTOCI: It feels awfully good. I don't know if it's preferential.

Q.: Why do you think you got it?

ANTOCI: Possibly the pressure that's been put on them. I think also it was because of the way they funded it.

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