Loan Think

There are unconfirmed reports the certain USDA offices are running out of commitment funds to continue approving Rural Housing Service single-family loans. One poster on National Mortgage News' Grapevine website reported that he had a loan rejected Friday "for lack of funds." He said the local USDA office is waiting for direction from the national office. Meanwhile, the public relations department of USDA refuses to comment and rarely returns telephone calls and emails sent to them by NMN. Later today on the NMN website we will publish an update on the situation. (Don't expect a quote from USDA.) Meanwhile, in one unrelated note: the Indiana Department of Financial Institutions and Oregon Division of Finance & Corporate Securities have begun accepting new mortgage loan originator applications through the Nationwide Mortgage Licensing System or NMLS...

There's talk in the market (and in Gucci Gulch) that one Senator might be introducing an amendment to the massive regulatory overhaul bill that would drive a stake right through the heart of a regulation known as the Home Valuation Code of Conduct or HVCC. Fannie Mae and Freddie Mac had HVCC jammed down their throat by New York Attorney General Andrew Cuomo in March 2008. Loan brokers hate it because it takes them out of the appraiser picking process. Will the amendment go anywhere? Stay tuned. Meanwhile, there's talk that a New Jersey based nonbank lender could be in trouble. I know the identity of the firm but I'm waiting on confirmation. The company's main telephone switchboard defaults to an operator who never picks up. Its website appears to be malfunctioning when you click certain buttons but not all. I called an account executive there but have yet to hear from this person. It could be a false lead but we'll see...

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THIS JUST IN: Bank of America appears to be the largest warehouse lender in the nation with roughly $15 billion in commitments. Or not. The number comes from mortgage professionals who attended a recent trade show in Texas. Speaking on a panel, BoA's warehouse chief Paul Syzmanski supposedly revealed the figure to the audience. A call to Mr. Syzmanski from National Mortgage News went unreturned. A spokeswoman for the bank said it is company policy not to disclose the figure. (I'm not sure what the big secret is.) We know this, BoA (according to the Quarterly Data Report) is the largest correspondent buyer of mortgages in the nation. In years past large correspondent buyers oftentimes made warehouse lines too. The "catch" was this: you want a line, sell us all your loans, or half, or something like that. In Monday's NMN (the paper edition) we're publishing our final ranking of the nation's largest warehouse providers. To subscribe call: (800)221-1809. The table also appears in our Alternative Products Quarterly Data Report spreadsheet. To see a sample drop an email to: Deartra.Todd@SourceMedia.com...

Thanks to Redwood Trust, it would appear that jumbo loan rates may be headed south. Or not. Redwood's recent securitization of jumbo loans broke the thaw in the non-GSE securitization market and plenty of firms are now contemplating jumbo conduits, or so we're told. I was recently sent a solicitation from New Mortgage Company (whoever they might be ) offering me a jumbo loan at 4.5% -- fixed for seven years. Meanwhile, with amendments coming fast and furious in the financial regulatory overhaul process, one veteran mortgage banker I know (whose been following the action closely) quipped that Congress has turned into the "Baby Proofing Society of America"...

Does your brain go into "freeze-mode" when it comes time to create content for your blog? Jim Estill, the former chief executive of Synnex, reveals seven tricks that have helped him create awesome blogs on a daily basis.

It looks as though the loan "buy back" scourge has apparently taken down another nonbank. (For the full story see the National Mortgage News website later today.) Who's responsible for buy backs? Fannie Mae and Freddie Mac get much of the blame, but so do the "mega" banks that act as aggregators. As for investors that might serve as white knights for some of these struggling nonbank shops, private equity firms are worried about how deep buy backs might run. "When you have loans that are three and four years old getting called back, that's a problem," said one investment banker. "On every buyback, a nonbank loses money," he said...

A few weeks ago I mentioned a couple of points that bear repeating. I got a lot of feedback on these points, so please indulge me while I expand on them.

Recently, I was involved in a roundtable with mortgage industry leaders discussing technology in all phases of the mortgage process. There were a number of great discussions and insight into technology and its role in the mortgage industry. The one question that triggered numerous discussions and resulted in a lack of consensus among the participants was defining innovation.

If the TV show '60 Minutes' finally gets around to doing a story on "strategic" (mortgage) defaults then it must be a fading issue. Don't get me wrong, 60 Minutes is one of the best news shows on television, bar none, but it's usually behind the curve when it comes to financial stories. And I admit that I only caught a few minutes of its piece this past Sunday but one message should hit home to the mortgage industry: Defaulting on your home mortgage is not a "face losing" event like it was during The Depression of the 1930s. Heck, I fully expect that some mortgagors might be having "strategic default" parties in the homes they are about to abandon, especially in party towns like Las Vegas. I mean, why not? Of course, it appears the delinquency picture is looking brighter. But rest assured, loan defaults are driven (mostly) by one thing and one thing only: employment. And on that front the news appears to be improving. According to Barclays Capital, the 'Job Openings and Labor Turnover Survey' (JOLTS) showed increased hiring in March, with the hiring rate rising to 3.3% of total employment from 3.1% in February, the highest since October 2008. The job opening rate (openings divided by the sum of openings and employment) held at 2.0%, but Barclays says, "the details were more encouraging, with increases in all industry categories except accommodation and food services"...