Bloomberg News

Mortgage Trader Brownstein Sees Few Homeowners Refinancing Loans

June 15, 2011

June 15 (Bloomberg) -- Don Brownstein, whose mortgage hedge fund was the top performer last year, said that most homeowners won’t refinance even though rates are at record lows.

“The refinancing is apt to be subdued,” Brownstein, head of Stamford, Connecticut-based Structured Portfolio Management LLC, said today in an interview with Erik Schatzker on Bloomberg Television. Mortgage rates for a 30-year loan are now at 4.5 percent compared with 6.3 percent three years ago, according to data compiled by Bloomberg.

Fewer people will refinance, he said, because homeowners’ credit ratings have declined along with housing prices. Lenders are also charging higher fees.

Brownstein’s main fund, Structured Servicing Holdings LP, returned 50 percent in the first 10 months of 2010, putting him at the top of Bloomberg Markets’ list of the 100 best-performing funds managing $1 billion or more.

Brownstein, 67, a former philosophy professor, said that to boost economic growth, the government needs to make banks lend more money.

“There was an opportunity missed back in 2008 and 2009,” he said, when the government could have insisted that the money they handed out to banks be used to make loans.

“Had the pressure been put on them, perhaps we would have gotten more bang for the buck,” he added.

--Editors: Steven Crabill, Larry Edelman

To contact the reporters on this story: Erik Schatzker in New York at eschatzker@bloomberg.net; Katherine Burton in London at kburton@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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