Paul Muolo

As Deep Throat once quipped: "Follow the money." That suggestion not only applies to politics, but to financial service and mortgage firms. And whose job is it to keep track of the money and all them fancy regulations at a mortgage company?

By now you’ve heard the news and read the stories (some of which we published) about the coming Basel III rules and how they could force a wholesale restructuring of the residential servicing business. At issue is the cash or “real value” of mortgage servicing rights and how much they can count toward Tier I capital at a depository institution.

Mortgage and political analysts are trying to figure out the White House's GSE strategy. Supposedly, in less than 24 hours. the Treasury Department 'white paper' on revamping the two will go viral. Everything we're hearing suggests the Obama White House wants to cut almost all federal ties to housing, with the exception of FHA.

Many members of Congress—especially the hardcore conservative wing of the GOP—would love to see Fannie Mae and Freddie Mac disappear from the face of the earth. After seeing the GSEs tap Uncle Sam for $150 billion in cash (and counting) to keep their net worth position in the black, elected officials have said enough's enough.

On Friday morning when the world sees the Treasury Department's 'white paper' on restructuring Fannie Mae and Freddie Mac, citizens may ponder whether President Obama has switched political stripes. As one mortgage analyst told us: "The government is basically walking away from housing — except for FHA."

Yesterday, Rep. Scott Garrett, R-N.J. stunned the mortgage industry when he made a speech in Florida calling on the Obama administration to speed up the sale of Fannie Mae and Freddie Mac's mortgage portfolios to capture "unrealized gains" on these assets. Okay, maybe it wasn't such a stunner.

CMG Mortgage Services is becoming something that is increasingly rare: a nonbank lender with strong growth and a franchise model that relies on both retail lending and loan brokers.

We're about to test the two theorems of rising mortgage rates. One concept says that when rates rise (as rapidly as they have since early December) that new applications dry up — and fast. The other theory (the one promoted by optimists) is that rising rates spur home buyers sitting on the fence to apply because they fear that rates will rise even more and want to lock in now.

THIS JUST IN No. 1: Here's an addendum to our “Obama GSE Plan” story below: The White House will unveil three options for government involvement in the secondary mortgage market. One could mandate that no low-income aide will be provided to homeowners unless it comes through the Federal Housing Administration…

Loan officers working for nonbank lenders and brokerage firms are an unhappy lot these days. Not only do LOs face depleted earnings prospects thanks to a pending Federal Reserve rule on compensation, but they're looking at higher licensing costs, and fewer choices in the secondary market as wholesalers ponder their future in the sector.

I would hope that Dave Stevens has the ability to hire a lot more workers at Federal Housing Administration because if certain regulators get their way, his government insurer may soon be swamped with a flood of new business.

Mortgage rates fell like a rock in Q4, that is, until early December. Now lenders (and consumers) are facing a benchmark 10-year Treasury that on Thursday morning was yielding north of 3.5%. Still, it should be pointed out that servicing balances at yearend were strong (according to preliminary 4Q figures compiled by National Mortgage News' Quarterly Data Report) with many firms reporting gains in their receivables.

It appears that certain regulatory agencies want the 'qualified residential mortgage' test to be written in such a way that a QRM loan will be one with a downpayment of at least 10%. (If that happens you can bet that Wells Fargo will place a huge order for champagne.)

If you were listening to Ally Financial's fourth quarter earnings conference call this morning (as I was) you would've been struck by two things: (1)Boy, this company loves all facets of the auto finance business (2)it doesn't seem to fear, in the least, residential buyback claims from investors who bought GMAC's nonprime MBS during the go-go years.

There's talk that an Irvine-based company called Roosevelt Management has received significant backing from Texas Pacific Group to buy distressed residential mortgage loans and has been quite active lately. A few of Roosevelt's top executives used to work at C-BASS.

THIS JUST IN: A West Coast-based nonbank plans to make a big splash in the wholesale market and is busy hiring account executives. At last check the firm had almost 15 AEs signed on with half of them coming from (you guessed it) Bank of America. For the full story, see the Monday paper edition of National Mortgage News. Don't subscribe? Call: 800-221-1809…

MetLife Bank last week hired industry veteran Jess Lederman to head its fledgling correspondent lending division, the last piece in the company's plan to become a top five player in mortgage banking."We plan on building a major corresponding lending business," said Lederman in a brief interview with National Mortgage News.

Okay, so Sen. Rand Paul, the Tea Party darling from Kentucky, wants to kill the Department of Housing and Urban Development, which contains the very popular FHA program. (See the National Mortgage News website for details.) And yes, he's dreaming., but as the late great Stan Strachan once said: "Never let the facts get in the way of a good story."

Early next week Ally Financial will release its fourth quarter results and chances are the government owned mega bank will post some decent results in its mortgage division. What are we basing this prediction on? Well, first off, Residential Capital Corp. (the mortgage unit) is a top ranked correspondent buyer of home mortgages, a sector in which profit margins have been particularly strong.

Now that residential application volumes are on the wane—thanks to rising mortgage rates—the obvious question becomes the most gut wrenching: When will mortgage bankers begin cutting heads and which firms will bite the dust?