SEP 27, 2013

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Part 3: Technological Considerations for Leading in the New Mortgage Marketplace
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What We're Hearing

Government Shutdown

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WE’RE HEARING that a government shutdown is coming and this time it could hurt the housing recovery.

The House and Senate are currently fencing over a continuing resolution to fund the government for a short time—possibly two or four weeks.

The real battle will be over the debt ceiling which could really hurt the economy, consumer sentiment and undermine the housing recovery

Treasury secretary Jack Lew has warned Congress that the U.S. government would exhaust its borrowing authority by the middle of October.

By Oct. 17, Treasury estimates it will have only $30 billion in resources left, and the government normally borrows $60 billion a day.

“The House of Representatives recently passed legislation that includes an ill-advised provision to prioritize payments, which would not protect the full faith and credit of the United States. Any plan to prioritize some payments over others is simply default by another name,” Lew said in a Sept. 25 letter to the Speaker of the House John Boehner, R-Ohio.

The last time we had such a fight over the debt ceiling was in the summer of 2011, when there was no housing recovery. But the stock market cratered and the fledging economic recovery stalled.

This time the housing market could be hurt if the Democrats and Republicans get into a protracted fight.

Despite the outcome, mortgage credit will be available.

If Congress fails to pass a continuing resolution this weekend and there is a government shutdown on Oct. 1, it shouldn’t cause any problems for Fannie Mae and Freddie Mac seller/servicers. The GSEs can continue to buy loans from lenders.

The Department of Veterans Affairs will continue to provide services to veterans so lenders will be able to originate VA loans.

However, Federal Housing Administration lenders are not so lucky.

During a shutdown, “FHA will be unable to endorse any single-family loans and FHA staff will be unavailable to underwrite and approve new loans,” according to the agency.

On expert noted the lenders can continue to originate FHA loans during a government shutdown. But a protracted congressional battle could be problematic. If a shutdown goes on for more than 60 days, the lender has to show HUD that the borrower has made their payments.

But 60 days is a long time. It is hard to believe Congress could keep up a fight that long—unless they start digging trenches around Capitol Hill.

BLOG OF THE WEEK: Gotta love a blogger whose imagination turns the battle over loan officer compensation into an epic battle like the one between the Montagues and Capulets in “Romeo and Juliet”! That would be Garth Graham, whose contribution this week is titled “LOs Labour Lost; or To Pay Or Not to Pay.” Let’s hope that when all is said and done, though, there aren’t as many bodies lying around the stage as there are in Shakespeare’splay. Is the Bard really relevant to the mortgage business? Well, he did write “Neither a borrower nor a lender be!”

OH, THOSE CRAZY VINERS: Our posters at mortgagegrapevine.com have been mulling many issues over the past week but one caught our eye. It was from someone who wanted old Freddie Mac manuals from 2002-2009. Not the current ones, which are readily available. The older ones. Reason? There’s a buyback involved. If you like to crowd your workspace with ancient manuals and can help out,

here’s where to go!

MOST READ/MOST EMAILED: Here’s something unusual. The most read content on our site this week is Evan Nemeroff’s item about a software release. MortgageDashboard is up to version 5 of its loan origination software, and the world is noticing! The LOS still rocks. As for most emailed this week, don’t you hate it when billionaires make smart bets and make the cash register go ka-ching? Enough people forwarded this piece about George Soros and Goldman Sachs’ housing bets made during the nuclear winter of the mortgage crisis.

TONY SOPRANO LOAN RATES: It’s one thing to use the Bard to make a point, but Tony Soprano? His loan rates were way above subprime, and when he sent a doorknocker around there would be more knocked on than the door. A photo of the cast of everyone’s favorite mob drama graces a recent NREP post, which has the serious topic of whether home price increases mean another bubble is on the way. Perhaps we should consult the witches of “Macbeth” about this, as they famously rhymed “bubble” with “trouble” in Shakespeare’s grim tragedy.

Mark Fogarty is editorial director of the SourceMedia Mortgage Group and has been commenting on the mortgage market since 1984. Brian Collins is the group’s senior editor and D.C. bureau chief. He has worked the mortgage beat since 1988.

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