Uncertainty, Regulation, Continue to Worry Insiders
"The banks and everybody involved that settled is certainly saying that it’s time to move forward. I agree with Scott, the proof is in the pudding at the end of the day, and you have to see how it’s going to be implemented, how fast. I don’t know if concern is the right word or even worry. I don’t know which word I want to use there, but what they’re talking about in the settlement, having all these loans be done at FHA, I wonder how that’s going to take place and be implemented. The constraints the FHA is under today financially and their staff if they’re prepared to handle, if it gets to the volume that they think and hope that it will."
"…The compliance now goes all the way to the new regs, compliance with the origination of the loan, which ends up in the servicing pot. To Scott’s point, I’ve owned all or part of three mortgage companies in my 34-year career. I wouldn’t open another one today."
"Just from the legal perspective, I think that the servicers have been implementing and dealing with a lot of issues that are covered. The VC settlement, the DOD consent order and these issues have been out there, the affidavits, robo-signing and they’re addressed here again and until the details are released, it’s going to be difficult to tell individually anything new or anything that’s going to come of—and in a different way that they’re going to have implementing new standards, because it is out there and they have been dealing with them already."
"Compliance is the whole complexion of how these new compliances have changed. Historically it was about compliance on the origination side, if you think of this—this is like a sampling. If my 10% was good, then my entire portfolio was good. Whereas now compliance is really more of…it’s kind of an on/off switch, and it’s a go/no go as to whether or not you’re even in business. It’s not necessarily an option of certainly under which you get creative. So obviously the cost impact is tremendous. As I’ve talked to our servicing clients, the rules they have—that they’re implementing as we speak, is if they agree that they’re the right things to do. Hopefully people provide some flexibility to where we consume the business."
"Everyone that I’ve talked to, I mean these changes are very strenuous on resources. It’s very difficult to train, to hire, to find people. Staffing has increased and every time they get a process down or work properly, something else changes and they have to find another way to do that process or add to that process. And it’s very difficult. Everybody I’ve talked to said it’s very difficult right now. And they don’t expect it to get any better."
"…I happen to know a servicer that’s getting ready to take on some of those – that extra servicing that’s out there. And they’re ready or they’re getting ready. Then again it takes staffing, it takes training, it takes kind of ramping up and again, being prepared for all those compliance issues and it’s kind of a different way of servicing that they’re not necessarily doing today. And but they’re ready to try and it’s in the best interest that they do ramp up in making those changes."
"I was also hanged out with the people I know in the industry from the origination side and wanting to know subservicing loans in order to have income streams that are not always chasing the loan to originate and to be able to pay overhead with that."
"How long it’s going to take for the shadow inventory to work its way through? I think it’s going to be at least 2015, 2016. I was talking with a friend of mine yesterday who mentioned that Bank of America has 1.2 million people that are 60 days delinquent. That doesn’t get through in 2012 or 2013. And because you’re not going to see a huge rise in home prices, hopefully they’ll maintain, whereas some say they expect it to go up 4.5% by the end of the year nationally. I find that hard to believe. But we can at least get things flat, start taking—to find a good base that we can start having these short sales or REOs or whatever they are, solved. The total increase of how many people are under water is just killing us. It’s not going to be over anytime soon, but the sooner we can get to a flat market, the sooner we start clearing out that shadow inventory. And I think it’s another three or four years."
"I’ll probably say a little bit past three years. The unemployment rate—we don’t know what the real new normalized unemployment rate is going to be. Is it now going to be acceptable for us to carry 5%, 6% unemployment? Now work backwards and quantify that as to how many individuals didn’t have to give up those homes. The other factor is between this year…next year, between 2000 and 2007, how many loans did we actually do, to your point Mark, that they actually should not have done, or the borrower should not have tried to acquire? The percentile changes in employment or 8% increase in the value over the next three years are not going to change those personal financial situations to a degree where they can all of a sudden afford a home that they could not afford in the first place. So I would say 2015 or 2016—for personal reasons."