Loan Think

The debate over overhauling servicing compensation continues. Should the GSEs trim the 25 basis point minimum or not? One industry veteran wrote to us recently, noting this: “In regard to reduced fees, the servicing industry has recently proven that they cannot manage mortgage portfolios and staff appropriately and make a profit given the current fee levels.

The U.S. District Court for the Eastern District of Virginia held that the Home Owner's Loan Act preempts state tort law claims alleging that Flagstar Bank FSB improperly represented itself as as a lender to collect brokerage fees on a home mortgage (Down v. Flagstar Bank F.S.B., E.D. Va., No. 3:10-cv-847, 4/4/11).

“I fear that with Fannie and Freddie reporting earnings again the whole debate on reforming them will fall apart,” one senior mortgage insurance official told me this past week. That was on Thursday, the day after Freddie Mac reported its first true net profit in almost two years, earning $676 million in the first quarter.

The debate over how (and if) servicing compensation should be changed continues to rage on – quietly, that is. Our sources tell us that Fannie Mae appears to be the one driving this truck with Freddie Mac and Ginnie Mae sitting in the back seat, shouting, “Slow down.”

At the Mortgage Bankers Association’s annual technology conference in Fort Lauderdale, Fla., we gathered a panel of industry participants to discuss the latest trends and issues facing the sector and the role of technology in the business.

Early this morning the yield on the benchmark 10-year Treasury fell to 3.17% and oil tumbled $4 a barrel. If these two economic ‘events’ don’t spur home buying (and maybe more refinancings) then nothing will. Of course, many consumers still think that values haven’t bottomed and there’s more room to fall.

When it comes to mortgage lending, the nation’s megabanks are in an interesting position. When applications boom they (in theory) have more financial wherewithal than the little guy to capture market share. And of course, because they have so much market share, they are also in a position to suffer the most.

One of the biggest questions Sue and I get from our subscribers at www.reversemortgagesuccess.com is “Please tell us what your 'best' reverse mortgage marketing strategy is?” or “If you could only do one thing to get new business what would it be?”

As any mortgage banking veteran can tell you, the two key drivers of home loan demand are interest rates and jobs. Rates continue to look enticing (though not as enticing as early December) and the job market seems to be improving. (We’ll know for sure when the new employment numbers are released this Friday.)

Typically businesses and individuals set their goals at New Years, for any number of reasons. First, it is traditional (the New Year's resolution). But also for most companies and sales people, their fiscal year is the same as the calendar year and so they create their business plan to fit that time frame.