Loan Think

Who says the commercial real estate market is in the tank? All the doomsayers were saying CRE would be the next shoe to drop in the economy.

Wells Fargo & Co. officially pulled the plug on its consumer finance unit yesterday, saying it would no longer originate "nonprime" residential loans through its Wells Fargo Financial unit. Truth be told, WFF wasn't exactly doing much true real estate-related subprime lending anyway, which makes the story a bust of sorts in mortgageland. The unit's core residential product was the FHA loan. Meanwhile, in other matters, we understand the 'Octomom' may be needing a loan workout. The woman who gave birth to octuplets in January 2009 is about to go into foreclosure on her house, a source close to the situation told us. "The holder of the mortgage is a private lender," said the source. He noted that the Octomom bought a (roughly) $600,000 home in California with the proceeds of her reality TV show…

A few months back CitiMortgage stopped funding jumbo mortgages through loan brokers, a story broken by National Mortgage News on its website. It now appears that Citi is beginning to get a bit more aggressive on jumbo lending through its retail branches. But one former Citi jumbo broker told us that the bank's jumbo prices "are not competitive," adding that "they can keep the broker out and charge what they want." Meanwhile, we continue to hear reports from factions of the mortgage industry that certain servicers are refusing to modify loans unless a borrower is already delinquent. Perhaps, that's not big news, but we can only wonder that if a "current" loan is not modified whether it might eventually lead to a strategic default…

So far we have covered having people discover their sales strengths, assisting real estate agents with tax planning and teaching people self defense. This idea takes a little more time-but it's worth the effort.

Now more than ever, with the limited amount of product selection available, mortgage origination is a commodity business. Therefore, one must compete on service more so than price.

Thanks to all who wrote in last week and liked the idea of using nostalgia or the "back in the day" type of story to illustrate the benefits of the reverse mortgage. Often a story can make a point that is much more poignant than all the facts and figures we like to collect.

At the recent Mortgage Bankers Association's Secondary Market Conference in New York City, I got to moderate a panel that discussed both originations and servicing issues.

First the good news: it appears that mortgage profits should stay healthy for some time. How do I know that? The answer is simple: the cost of funds for mortgage lenders (depositories, that is) continues to be quite low and the yield on the 10-year Treasury is at just under 3%. Mortgage rates are at 4.5%. Do the math. Of course, with the jobs picture looking (to put it nicely) not-so-good, applicants that want to purchase new and existing homes will continue to fence sit until they see a clear sign the economy is improving and their jobs are secure. Cash is king, and based on what's been going on in the stock market the past 60 days it appears that investors are content to sit on huge wads of money. They are not putting it in stocks or real estate. It's just sitting there, a trend that may continue for two, three, four years. Of course, market conditions can change on a dime but the stock market has a significant effect on consumer confidence and most people believe the market is a leading indicator for the overall economy...

I saw an advertisement on TV last week that really made me think. It was for a handyman service so not at all related to our industry, but no matter. It painted a picture and transported you immediately. Does your marketing allow the senior to really visualize how the reverse mortgage can change his/her life?

RESPA CAN BE VIOLATED EVEN WHEN THERE IS NO OVERCHARGE ON REFERRALS