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What We're Hearing
October 30, 2009
By Paul Muolo
THIS JUST IN: On Monday morning the Mortgage Bankers Association will release its new study on second-quarter profitability. As you might recall, 1Q profit margins were quite strong and sources tell us that 2Q was even better. As for 3Q, it's safe to assume that not a whole lot changed in terms of business conditions...
In other MBA news, if you have $80 million to spend on a nice new "green" office building in Washington, trade group president John Courson would like to talk to you. Two decades back MBA chief Warren Lasko (now deceased) wanted the organization to buy a building but the board shot down the idea...
Bank of America (we're told) has quietly begun auctioning off some of its huge holdings of payment-option ARMs. BoA inherited billions worth of POAs when it bought Countrywide in the summer of 2008. For the full details see the Monday morning print edition of National Mortgage News. Don't subscribe? Call 800-221-1809...
We're also hearing rumors that a New York hedge fund is pulling out of the NPL (nonperforming loan) market. Any info? Drop me a line at Paul.Muolo@SourceMedia.com...
Who says there's no future for nondepository residential lenders? CMG Mortgage of San Ramon, Calif., has agreed to buy Northwest Financial Advisors, a top-ranked lender in the Seattle market. For years CMG has been managed by industry veteran Chris George. Details to follow...
On Friday, a day after the nation's economy posted a better-than-expected GDP number of 3.5% the stock market sold off. For a few minutes there it felt like March again. On Fox News the night before, pundits were questioning both the recovery and new job numbers released by the White House. To Fox it looks like we're headed for a double-dip recession and that the Obama administration's economic policies are a complete failure. Then again, it's Fox. Let's hope the right-leaning network is wrong. But if it's not, the nation might be looking back on 2009 fondly. Meanwhile, for residential lenders it looks as though the two biggest items on their wish list will come true: the $8,000 first-time homebuyer tax credit looks like it will be extended, and the Senate and House have green-lighted language to renew the GSE loan limit at $729,750. (Can you imagine what would happen to home sales in high-cost areas if that language was not renewed?) Even though the Federal Reserve said it will stop supporting the mortgage market in March by halting its MBS binge you can probably bet the house that the central bank will continue gobbling up product. If the nation's economy does weaken, private market investors will avoid buying MBS - unless Congress puts the full faith and credit of Uncle Sam behind all Fannie/Freddie securities. If you have any thoughts on this drop me an e-mail at Paul.Muolo@SourceMedia.com or comment at the end of this column...
AN EXAMPLE OF PRUDENCE IN MORTGAGES: In October 2008, Congress passed a VA bill (S. 3023) that removes a 10% equity restriction on refinancing veterans with subprime or other conventional loans. The bill opened the door for lenders to refinance veterans with maximum loan limit of $729,750 with no money down. Mark Bologna, the director of the VA home loan guarantee program, told NMN's Brian Collins that the change from 90% loan-to-value ratio to a 100% LTV has not generated much business. "Even though it was authorized, most lenders were not enthused about doing it. They were leery about the 100%," Mr. Bologna said. The VA loan guarantee covers only 25% of the loan balance...
According to FHA critic Ed Pinto the Obama administration has opened the door for struggling borrowers to include unemployment insurance benefits in their gross income to qualify for a HAMP modification. Ed used to work for Fannie Mae two decades ago...
The criminal trial of former Bear Stearns subprime hedge fund manager Ralph Cioffi has started. Ralph appears as a character in the book "Chain of Blame, How Wall Street Caused the Mortgage Credit Crisis"...
Monday's bankruptcy filing by commercial mortgage banking giant Capmark Financial lists dozens of individual shareholders who hold common equity in the company. Those shares, arguably, are now worthless. The largest individual shareholder appears to be Dennis Dammerman, chairman, of the Municipal and Infrastructure Assurance Corp., a financial guaranty insurance company that was formed earlier this year. Mr. Dammerman is best known for his management career at General Electric where he served as chairman and CEO of GE Capital Services. Another common shareholder is Scott Shay (92,764 units) who has been associated with Signature Bank of New York...
UPCOMING IMPORTANT INDUSTRY MEETINGS: NMN and SourceMedia will be holding a loan modification show in Dallas in November. There's still time to register but not much. For more details e-mail Julie.Dienes@SourceMedia.com or visit http://www.sourcemediaconferences.com/TMS09/index.html.
DATA NOTICE No. 1: Need soup-to-nuts statistics on the nation's top residential (and commercial) lenders and servicers? The new MortgageStats.com data product is ready. The user-friendly M-Stats is Web-based and incorporates both the Quarterly Data Report and our annual Mortgage Industry Directory. Among other things, it has annual rankings on the top 400 lenders and servicers, including breakdowns on retail, wholesale and correspondent - and news archives. There's contact info too, and plenty of data on servicing. And here's the best part: you get quarterly updates. To see a sample send an e-mail to Delores.Stokes@SourceMedia.com or Dearta.Todd@SourceMedia.com. Site licenses are available.
DATA NOTICE No. 2: Even though we offer MortgageStats.com you can still subscribe to the Quarterly Data Report and Alternative Products QDR, spreadsheet products that provide readers with quarterly rankings on the nation's top lenders and servicers. There's also a companion product called the Midyear Data Report, which offers half-year rankings on lenders, servicers and more. There is an Alt-QDR version of this as well. Again, shoot an e-mail to Dearta.Todd@SourceMedia.com.
EDITORIAL NOTE: The Washington bureau of NMN has moved to Northern Virginia, which means there are new telephone numbers for our staff. Executive editor Paul Muolo can be reached at 571-403-3851, bureau chief Brian Collins at 571-403-3837, Andras Malatinszky, director of online products at 571-403-3862, and Deartra Todd, data collection and sales at 571-403-3859. The mailing address is 4401 Wilson Blvd./Suite 910, Arlington, VA 22203.
THE LAST WORD: The phones are still ringing at Lend America in Long Island. That's good news for its 700 employees.
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Comments
Posted: 2009-10-30 20:28:18
by Chris Sorensen
Ashely clearly jumped back into the business before he was supposed to after his frist guilty plea. The 700 if good at what they do will find jobs if Lend America is found to have not followed the rules and shut down. If they are "order takers" then good ridens. The rules must be enforced. The small guy would have been done already. He couldn't afford the Attorney's to fight. The honest and ethical professional,who places fiduciary responsibility at the forefront of their career, has been at a competitive disadvantage for far too long.
Posted: 2009-10-31 17:13:27
by Larry Rubinoff, TheMortgageCornerFORUM
Fox News: I am not a fan of FOX News but I believe they are right about the double dip. There is too much smoke and mirrors being put out to make people believe things that just are not true. Housing prices fell substantially last month. Sales of homes are reported as increassed by the NAR - National Association of Realtors - but those figures are misleading. They are based on "contracts" not on closed sales. Many contracts do not close as many people simply cannot qualify for a mortgage. Unemployment AND Underemployment is over 20% and not gettng any better. "Feel Good" reporting saying that 650 new jobs have been created is a "meaningless" figure when yu take into consideration the newly unemployed, continued unemployed no longer collecting benefits therefore not included in the unemployment figures, Credit card defaults that have not truly been reported nor the negaitive impact it will have on the economy soon. Commercial real estate defaults have also not "hit the fan" yet and will cause a mess in many regional banks further affecting the economy. There is much more to indicate a "double dip". TAX CREDIT: Great benefit if you can QUALIFY for a mortgage. Millions of un and under emplyed CANNOT. A very select benefit. HIGH LOAN LIMIT: This one bothered me from the very first time it was announced. The determination of "high cost" areas is not accurate. This limit should be across the board not selective. Examples: Broward County, FL - Greater Ft. Lauderdale does not get the higher limit. Yet, it is none of the wealthiest areas in the country and has very high priced real estate even in these depressed times. Tampa Bay, FL - Greater Tampa - Not as affluent as Broward yet still has high cost homes. Why, if you can afford a $729,750 mortgage in Greater New York City or in the Metro D.C. area and choose to buy a home in Tampa should you not be able to get a Fannie loan? There are homes and people all over the country who can but are prevented from getting a loan or a loan at a market rate just because "some" statistics say you can't. The limits are based on FHA census data which may have worked for FHA but does not work for Fannie/Freddie. Want to make it a positive benefit - make it for EVERYONE if you QUALIFY based on your income, credit rating and assets - not on WHERE YOU LIVE! FULL FAITH AND CREDIT BEHIND GSE'S: Basically the full faith and credit of Fannie/Freddie is already in place. What once was a perception is now a reality. Both are directly controlled - you can say owned by - the government. So who cares if the Fed continues to buy MBS or not. Private investors will because they know the Government will back them because again, Fannie/Freddie are "TOO BIG TO FAIL". I say the worst is yet to come. Fasten your seatbelts.
Posted: 2009-11-01 19:40:31
by Janet Barney
Paul... FYI...current HAMP guidelines allow unemployment benefits to be used in the gross income calculation provided there is at least 9 months of benefits remaining.
Posted: 2009-11-02 21:38:15
by Larry Rubinoff, TheMortgageCornerFORUM
Correction to my comment above: "Feel Good" reporting saying that 650 new jobs have been created is a "meaningless" figure when yu take into consideration the newly unemployed, continued unemployed no longer collecting benefits therefore not included in the unemployment figures, The number of new jobs reported should be 650,000 NOT 650 as the typo above.
