Loan Think

I know the holidays are a busy time for most of us but I’m proposing that with a little planning and leg work, I’m going to share with you three things that you can do for the next three months so you’ll be ready to take on the world.

Mortgage bankers have been living off of refinancings the past six months with applications for the loans running at about 70% of all new business. This, of course, is not a sustainable business strategy for the industry and every mortgage banker in the nation knows it. But with the yield on the benchmark 10-year Treasury now solidly over the 3.5% line, fear is starting to set in. One mortgage banker in Southern California had this to say late last night: "Four — count them, four rate changes to the worse today. Refinances are dead for now. We had $45 million [in loans] floating. Bye bye." He added that production in the new year will be devastated if rates stay above 5%." Then again, rates can fall as quickly as they rose, but right now it doesn't feel that way.

Don't panic. Mortgage rates are rising but maybe it won't turn out to be such a disaster after all. Mark Savitt, who runs a small brokerage in West Virginia, said the rate move is actually driving some consumers to buy a house because they fear rates have already hit bottom and could go even higher. This morning, Savitt was offering a 30-year conventional FRM at 5.25% and no points. The former president of the National Association of Mortgage Brokers also said he is seeing more buyers walk away from REO and short sales because it takes too long to get those deals done because banks are dragging their feet and being unresponsive…

The holidays are now just a short time away. Many will be traveling to be with family and friends. There are parties with your neighbors and co-workers. Then of course there are the business parties you get dragged to with your spouse and significant other.

Trying to size the nonperforming loan market is a little like trying to nail Jello to the wall. We know that of the nation's $10 trillion in outstanding home mortgages, roughly 10% are delinquent which means $1 trillion in "late" mortgages need to be resolved through sales or workouts.

There is an opportunity for mortgage originators to connect with their customers via the social media and that is because your competition is dropping the ball on this one.

The New York Post is reporting that Bank of America has a $1 billion package of nonperforming mortgages out for bid. But is the deal for real? Investors in the NPL market said some B of A traders were scratching their heads on Monday because they knew nothing about the sizeable auction.

On Dec. 3, KATHY PUCKET OF RICHMOND, IND., was sentenced to 51 months upon her guilty plea to mail fraud and obstructing justice. This followed an investigation by the Richmond Police Department, Indiana Secretary of State Todd Rokita's Prosecution Assistance Unit, and the Federal Bureau of Investigation, Muncie Office. (Notice the cooperation of multiple agencies)

THIS JUST IN: Add the name of Goldman Sachs to the list of firms eyeing the jumbo conduit space. And possibly PIMCO. We've heard the Goldman name before, but more confirmations have come in on that one. (Keep in mind that Goldman owns subservicer Litton Loan Services.)

On December 15 the board of the California Public Employees' Retirement System will hold a meeting to discuss (among other things) the future of its mortgage program. Some mortgage bankers that fund these loans told National Mortgage News that underwriting on the loans has been tightened up and a jumbo option was killed a year ago.