DEC 14, 2012

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Part 3: Technological Considerations for Leading in the New Mortgage Marketplace
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Part 1: Leading in a Changing Mortgage Marketplace
What We're Hearing

An Opportunity for Mortgage Bankers, Politicians to Act Responsibly

DEC 14, 2012 5:11pm ET
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Pete Correa is a New York State corrections officer, a sergeant. He and his wife own a home in Staten Island, 2,500 feet from the water on the north shore. Today, the house is a half-mile down the road, off of its foundation. This is a Hurricane Sandy story—one that mortgage bankers, secondary market agencies, regulators and politicians are going to have to deal with eventually. Pete’s situation boils down to this: Wells Fargo—the nation’s largest mortgage banking firm—services his first mortgage of $380,000. USAA Federal has the second which is for $75,000. FEMA has agreed to give him $250,000 for his troubles, and his property and casualty insurer will chip in another $60,000 for wind damage. But when you have mortgage debt of $455,000, that doesn’t cut it. “The sea wall that protected our home is gone,” Correa told me. “They have to rebuild it. It could take years.” There is some good news in this story. The lenders servicing his residential debt (Wells and USAA) have each granted him forbearance of three months. “No one’s tried to strong-arm me,” he said. “They’ve tried to work with me.” But Correa and thousands of others like him in low-lying areas in New York, New Jersey and parts of Connecticut are facing a problem: How do you rebuild after Hurricane Sandy when the assistance money is way off the mark on what it takes to rebuild? What do you do when your mortgage debt exceeds the replacement value? Spokesmen for Fannie Mae and Freddie Mac suggested that depending on a mortgagor’s circumstances, they could be granted up to 12 months of forbearance. Still, there’s the money issue—and rent to pay because a house can no longer be inhabited. At some point, something has to give. Either the feds or the states may need to step in to make home owners whole again. The argument will be this: You did it for Wall Street and General Motors. Why not me? Something to think about as the holidays approach…

Note: When a consumer enters into a short sale it goes down on their credit report as a default, unless someone pulls a string…

WASHINGTON NEWS: Mortgage and housing trade groups are urging lawmakers not to forget to pass a tax extender bill that excludes principal reductions from taxation. The Senate Finance Committee has already passed a bill that extends 27 tax provisions that are due to expire at midnight on Dec. 31. Included in the bill is a mortgage debt forgiveness provision to ensure that borrowers who receive a principal reduction via a loan modification or short sale are not penalized by the tax man. (Reporting by NMN’s Brian Collins.)

CORRECTION: This past week we reported that Quicken Loans was a top-ranked lender in the third quarter. A spokesman for the company emailed me to say the entity that originates reverses isn’t Quicken but its affiliate, which is called One Reverse Mortgage. We stand corrected.

MORTGAGE PEOPLE: Bob Ryan, a senior HUD/FHA official has accepted a position within the capital markets group at Wells Fargo Home Mortgage. He’s going to work for his old boss John Gibbons. His last day at FHA was Friday, we’re told.

TWITTER (MORTGAGE) NEWS: Watch my personal Twitter feed where I provide updates on breaking stories in the mortgage space.

FINAL WORD: Have a safe and happy holiday season. As my sister Jeanne might say, “A little less eggnog, maybe.” And yes, go Giants. People, I’m out of here.

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