Loan Think

The debate over regulatory reform is moving the Senate toward legislating mortgage underwriting standards as part of its massive financial services bill.

Residential servicers, especially the 'HAMP' kind, should be dancing in the streets today. The U.S. economy added 290,000 new jobs -- the most in four years -- and for lender/servicers that means one very important thing: 290,000 consumers (figure 65% of them, at least have a mortgage) now have a paycheck that can help them make a monthly payment. (At least, that's how it looks on paper.) "Clearly companies have a newfound confidence in the future of the economic recovery and on the part of their own business prospects," said Joel Naroff, president of Naroff Economic Advisors. He added that the job gains are a clear sign that businesses are feeling more comfortable about expanding their work forces. If his prediction proves tree, the delinquency picture should improve dramatically the next 12 months -- and along with it the home buying picture. Keep your fingers crossed...

The concept/law of Continuous Process Improvement begins with the concept that a plan-a process-is needed in most areas of your business and your life. Process simply is defined as the way, the best way, to accomplish a business plan and even a basic task.

THIS JUST IN: Last week's story on "funded indemnifications" sparked e-mails and telephone calls. In case you missed the column, an "FI" occurs when a correspondent buyer requests that a seller set aside money in a reserve account to cover possible future losses. A spokeswoman for Bank of America told me, "In the past, we have in very rare circumstances asked our correspondent partners to set up reserve accounts."

So, is the loan buyback crisis (sort-of) over? Don't bet on it. In a new filing with the Securities and Exchange Commission, Freddie Mac notes that one way it manages credit losses is by forcing seller/servicers to repurchase questionable loans. The GSE, which lost $6.7 billion in the first quarter, has made calculations on "projected recoveries" from buybacks but hasn't yet shared those estimates with the public. Meanwhile, one investor I know said the secondary market for "kickback" loans has exploded over the past five weeks. A "kickback" loan is a performing mortgage that Freddie (or Fannie Mae) sends back to the seller/servicer...

How long have you been saying that you're going to update your image? Just like the "refresh button" on your computer, I'm here to suggest that you refresh your image and your brand at least once a year.

I'm starting to hear plenty of complaints about the SAFE Act and how it treats residential loan officers for banks quite differently than LOs working for nonbanks licensed by the states. As one trade group official told me: "We're looking at this and wondering how the heck did it get passed?" More on this story shortly. Meanwhile, the yield on the 10-year Treasury bond continues to fall. At press time it was 3.56% but our Wall Street editor Bonnie Sinnock informs me that although the Treasury yield is dropping, not necessarily so for MBS rates. Stay tuned...

It's no secret that much of your reverse mortgage outreach and advertising is geared toward education on the program overall and the benefits to the borrower. As promised, I am reporting on some topics of discussion from the National Reverse Mortgage Lenders Association Road Show in Philadelphia in April.

A NEW METHOD OF SHORT SALES GIVING THE SELLER MOVING MONEY

The mortgage business is shrinking. Why that is good news for those who remain.