Loan Think

Representatives of Freddie Mac and Fannie Mae bandied about some big numbers during a session I recently attended at the New England Mortgage Bankers Conference in Providence, RI.

Thanks to the Ally Financial foreclosure scandal there's plenty of talk in the industry that foreclosing on a delinquent borrower is going to take a whole lot longer going forward. One investor in delinquent loans told me the other day that the four worst states to deal with in terms of foreclosures (from the servicer/investor's standpoint) are: Florida, Georgia, North and South Carolina.)

The third quarter earnings season is almost upon us and there's increasing speculation that loan loss reserve set-asides in regard to delinquent residential loans may boom. The primarily culprit here will be re-defaults on modified loans.

In August I had the pleasure of attending the California Mortgage Bankers Association's sales and marketing show, which was co-presented with the California Association of Mortgage Professionals. Among the speakers were Deborah Shames and David Booth of Eloqui, who spoke of the need to create a connection with the client.

So, how's the second lien market holding up these days? Not so good, but that's not really surprising, though offers for HELOCs still occasionally show up in my mailbox at home, including mailings from SunTrust and Citibank, the latter of which has let its mortgage business whither away.

On Sept. 17, Harvard law professor Elizabeth Warren was appointed to launch the new Consumer Financial Protection Bureau. Warren also will have a broad portfolio of duties, advising President Obama on "policies and programs that are designed to protect the financial interests of middle-class families," the White House said.

THIS JUST IN: Over the past few weeks some investment bankers have been chattering about WL Ross & Co. taking a look at some of the mortgage assets of Residential Capital Corp. Wilbur Ross, of course, is a well-known bottom-fisher who (as everyone knows) pays up for nothing.

It would appear the GMAC 'Foreclosure-Gate' scandal may be the tip of the iceberg. Not only is Moody's now reviewing GMAC's foreclosure practices for a possible (servicing) rating downgrade, but I would gather that class action attorneys are probably circling the wagons, targeting the nation's mega servicers and how they've been running foreclosures factories without paying close attention to certain legal details.

As I write this article, I am sitting in the hospital waiting on my surgeon to get around to calling to the nurse’s station to allow me to have something to eat after 36 hours.

Forget the firestorm caused by the ‘GMAC Foreclosure-gate’ scandal. The industry may have a bigger problem on its hands. Banking regulators and central bank officials from across the world met earlier this month to finalize their Basel III talks on tougher capital rules for depositories and it appears one big loser could be mortgage servicing rights.