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A Perfect Storm Ahead for Lenders? Probably Not, but...

DEC 7, 2012 5:29pm ET
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A RUDE AWAKENING MAYBE: The job of this column is to provide you with information—both facts and yes, that ugly thing called gossip—that helps you manage your business and career. But there’s a scenario that’s been kicking around in the back of my mind and it goes like this: home prices keep firming up in many markets, employment continues to improve, but housing inventory shrinks and loan underwriting standards stay tighter than a snare drum. (You don’t get those kind of similes at our competitors.) What would happen then? Maybe not a lot, but what if interest rates tick up? We would be faced with a situation where home buyers continue to look, but can’t get a loan as prices and their (potential) monthly costs increase. Would the purchase market totally evaporate or would alt-A or "almost GSE" lending emerge with private sector firms filling that void? We hear all sorts of predictions about the return of private label lending—and I’m not talking about jumbos here—but the industry might be in difficult straights…

Then again, accurately predicting this business is impossible, as I often said before. Just when you think you have it all figured out, something comes out of left field to change those assumptions…

I know of three mortgage executives trying to raise money for PLS ventures. We shall see…

The best way to play the MSR market may be to buy the stocks of public firms that play in that space, or so it’s been suggested to this columnist. But is the strongest growth behind firms like Ocwen and Nationstar? Any thoughts? Drop me a line at Paul.Muolo@SourceMedia.com... 

Congratulations to NMN’s Brian Collins, whose story on raising FICO scores at FHA topped our viewership rankings this week. Our story on the coming loan officer compensation rule garnered much attention as well. To view both, visit the NMN website at www.nationalmortgagenews.com.

A NOTE ABOUT THIS WEB COLUMN: I’ve been writing it for seven years now or something like that, but it wasn’t my idea. Our behind-the-scenes web master Andras Malatinszky pushed me into it (over a few drinks as I recall). And I’m glad I did, so, time to tip my hat to him. And thanks for reading…

So, what’s the back story on the big layoff at Allonhill in Denver? Company owner Sue Allonhill said the shakeup is part of a “restructuring.” One source close to the company noted that it gets into trouble on staffing issues because it W-2s employees instead of 1099’ing them. Maybe so. (Due diligence contracts can ebb and flow.) But letting that many workers go right before the holiday season is, to be kind to the company, not good PR. I would hope the severance packages were decent. And if Ms. Allonhill has aspirations to run for public office some day—as rumored—good press is something she will need…

For anyone looking for work check out National Mortgage NewsGrapevine web page. You can register and post but please keep it professional…

DATA POINT: Wells Fargo exited the wholesale channel this past summer (or so it announced) but according to the survey it filed with our data guru Deartra Todd, the bank said it table funded $8 billion in home mortgages. Dee can be contacted at Deartra.Todd@SourceMedia.com...

MORTGAGE PEOPLE: GHM Mortgage of Newton Square, Pa., recently hired Bill Bogle as its new senior vice president of capital markets. The nonbank also recently hired Joel Rose as vice president of retail sales, Eastern division. Global DMS named Patricia Rauch chief operating officer, a newly created position. DMS is an appraisal technology vendor.  

WASHINGTON NEWS: Gradual guarantee-fee increases are going to continue, Federal Housing Finance Agency acting director Edward DeMarco promised late this week during a speech in New York. “We haven’t announced any particular timeline…but I’ve given indications in the past that we intend to stay on [a path of] continued, gradual increases,” he said, in answer to a question. (Reporting by NMN’s Bonnie Sinnock.)    

TWITTER (MORTGAGE) NEWS: Watch my personal Twitter feed where I provide updates on breaking stories that appear on the NMN site. Just visit Twitter and plug in my name. Also, check out NMN’s Twitter feed.

FINAL WORD: In this holiday season if charitable donations are on your mind consider the following: Save the Children, the Cystic Fibrosis Foundation and the Red Cross…and to all a good night.

Comments (4)
Chairman of Allonhill is Sue Allon.
Posted by | Friday, December 07 2012 at 5:58PM ET
Regarding the Allonhill layoff story, before I moved into lending in 1975, I was a toy buyer for a Virginia wholesaler, and was laid off on Christmas Eve, which no severance package. :(
Posted by JIM P | Friday, December 07 2012 at 7:26PM ET
Allon provided no severance to staff and contractors that were laid off last week, despite having a documented policy details eligibility. Roughly 40% of those laid off were eligible for severance, though Sue Allon and her mouthpiece, David Kaplan, would have you believe differently. The company rationale was that their business was in such a tailspin that their bank wouldn't cut them a check.

It's also noteworthy that Allonhill is exiting the jumbo conduit space as well. The spin machine for Allon is trying to make it sound like this isn't a significant move. In reality, Allon is severing ties with some of the most important conduits in the market.
Posted by | Monday, December 10 2012 at 4:48PM ET
It's 4true about conduit shutting down for Allonhill. My last task before being laid off was to call clients and tell the we couldn't take their loans. Allon cut BAML, Redwood Trust, JP Morgan, Credit Suisse, Scotttrade, among others.

That also impacts conduit sellers: everyone from GRate to RPM. I hoe other diligence firms are reading this--lots of business to pick up!!
Posted by | Tuesday, December 11 2012 at 10:27AM ET
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