Loan Think

By now you’ve heard the stories and seen the evidence yourself: mortgage credit standards are much too tight. Over the past year a handful of jumbo lenders and brokers have told me about applicants who could not verify all their income, but had plenty of money in the bank to cover the payments. What happened to these applicants?

One major belief of ultra right (Tea Party) politicians is that the federal government is too big and that rules and regs need to be cut to spur private sector job growth. On paper that sounds nice, but mortgage servicers from coast to coast surely are nervous about layoffs in both the private and public sectors because almost every mortgagor without a job is potentially a customer who might default in the months ahead.

I recently came across a press release that said what I have been saying for years—the only way small businesses are able to compete against the big guys is by their emphasis on customer service.

For purposes of this rule, payments made by creditors to loan originators are not payments made directly by the consumer, regardless of how they might be disclosed under HUD's Regulation X, which implements the Real Estate Settlement Procedures Act.

We all knew that former FDIC chief Sheila Bair was hardly a fan of loan brokers, but did we realize her former agency is now hunting down certain third-party salesman for loans they facilitated up to four years ago that later went bad?

Fannie Mae and Freddie Mac are wards of the government and ultimately control billions of dollars of delinquent loans. The executive branch (the White House) controls the GSEs (more or less) and would like to see struggling homeowners helped by their servicers (who answer to the GSEs.)

The evidence is both anecdotal and statistical: the deconsolidation of the mortgage industry is underway. New figures compiled by the Quarterly Data Report show that certain megabanks are scaling back in correspondent lending while others (smaller players) are stepping up to the plate.

Do you blog? If you do, do you have trouble finding stuff to write about? If you don't, is the reason because you don't know what to write about?

Be thankful that you’re not a mortgage lender (or borrower) in Ireland. On Wednesday the yield on the 10-year bond of Ireland topped 14%. For a moment, let us all think about what a 14% yield on the 10-year bond in America would mean.

Oh the irony of the mortgage market! Loan rates are falling, home prices are the cheapest they’ve been (in most, but not all markets) in a decade, but the consumer is spooked by the prospect of the U.S. defaulting on its debt payments.