Loan Think

GOOD NEWS ABOUT THE NMLS SAFE ACT TEST

Financial services analysts are already handicapping what the pending regulatory reform bill will do to bank earnings. We don't know what exactly will be in the final legislation sent to the White House, but the "hit" on bank earnings is said to be in the range of 15% to 30%. It's all guesswork, though. Then again, if the bill kills proprietary trading (and derivatives trading) by some of the mega banks, will it force these institutions to get more involved in residential and commercial real estate lending? Of course, many of the big boys -- Bank of America, Wells Fargo, JPMorgan Chase -- are already in residential and commercial. Meanwhile, if banks are trying to figure out lending strategies for the future, they might want to consider Afghanistan. That's right, Afghanistan. According to a report in The New York Times, there's a treasure trove of untapped minerals in that troubled nation, including iron, copper, gold, cobalt, niobium and lithium. (It sounds like a potential boom town. Lithium is a key ingredient in electric car batteries.) The potential mineral value: $1 trillion. (So long poppy fields.) I would guess that in a few years we'll see names like Kabul Mortgage, and Afghani Home Loans popping up. Of course, Muslims aren't too keen on borrowing money and charging interest. Then again, there are ways around this...

Even without the pressure being put on mortgage originators today by regulatory changes, by business problems and more, being in sales always comes along with a certain amount of stress.

It's good to be king. Last month PHH Corp. named mortgage industry veteran, Luke Hayden, president of its mortgage division "effective immediately." A recent SEC filing by PHH notes that Hayden was granted 15,000 stock options. The conversion price is $20.85 which means the options aren't yet "in the money" but are getting close. Over the past six months insiders at PHH have bought (or been granted) 36,500 shares, according to figures compiled by Thomson Financial. But insiders have been selling too. Among mortgage banking firms, PHH Mortgage ranks among the nation's top 10 lenders and servicers, according to figures compiled by National Mortgage News and the Quarterly Data Report…

It's unconfirmed, but there could be a buyer for a $1 billion nonperforming loan package being peddled by the Federal Deposit Insurance Corp. The NPLs belonged to the now defunct AmTrust Bank of Cleveland, once a major player in correspondent lending. It's believed the sale will be accomplished through a structured transaction, which means there likely are multiple parties involved on the buy side. Stay tuned. Meanwhile, earlier in the week FDIC chief Sheila Bair hinted that the agency's first securitization of problems loans from troubled (or failed) institutions is still moving forward. Originally, it was believed that the FDIC would securitize billions worth of loans. But market sources say the first deal will be in "the hundreds of millions." And in case you missed it, Ginnie Mae has a new MBS program for manufactured housing loans. But there is a catch: only issuers with a net worth of $10 million or more can play...

In my world, marketing is knowing what to do or finding out what to do and selling is executing on the marketing plan.

THIS JUST IN: If you're trying to foreclose on a home in Florida it can take up to four years. That's the worst-case scenario, I've been told by some investors in distressed loans. "Usually it's at least two years," said a West Coast-based vulture fund manager. Of course, some borrowers got hosed on their loans and have every right to stay in the house. Then, there are folks who are gaming the system. It's a crazy mixed up world. Have a horror story about foreclosure problems? Drop me an e-mail at Paul.Muolo@SourceMedia.com. I'll post the best ones here next week...

Today, the government oversight panel that keeps an eye on TARP money said it's still unclear whether Uncle Sam will fully recoup the $182 billion taxpayers plowed into American International Group. "We want a profit" on taxpayers' behalf, said panel chair Elizabeth Warren (who, by the way, is not a big fan of loan brokers.) "We are holding Treasury's feet to the fire." Well, here's an interesting development that Warren may've missed: United Guaranty Inc., a mortgage insurance company, had the best performance (by far) among the nation's six active writers of new MI policies. While every MI in the nation suffered brutal declines in new policies written in the first quarter (ranging from 39% to 80%), United Guaranty had a mere 9% fall-off in new business. Who owns UGI? Answer: AIG. A year ago it looked as though AIG would sell the unit, but the deal fell apart after it realized that the bidder (Uber bottom fisher Wilbur Ross) was getting too good of a price, or so we heard. More on that story in my weekend column…

The affluent mortgage borrower, who needs to borrow a large sum for a purchase or refinance, should be easy to "catch" if you plan and prepare properly. Fishing off the dock using breadcrumbs, you are likely to catch an abundance of little sunfish. To catch the large fish, you need to row your boat out to the middle of the lake where the water is deep. The big fish congregate on the bottom of the lake.

With tech stocks getting clobbered of late and the "dot-com" bubble a somewhat distant (or is it, not-so-distant?) memory, an old news nugget popped into my head concerning Fannie Mae. Before Frank Raines got the gate as CEO he was contemplating legally changing the GSE's name to FannieMae.com. I'm not sure, but I may've heard a similar rumor about Countrywide. The two mortgage companies (as we all know) were once joined at the hip in a classic 'junkie-dealer' relationship. For many years Countrywide was the largest seller of loans to Fannie, garnering huge discounts on guarantee fees assessed by the GSE. Anyway, that's all history, but keep in mind this one thought: I would venture that today, many of Fannie's most delinquent loans can be traced to Countrywide, especially those of the 'alt-A' variety...