Loan Think

FORMER MORTGAGE BROKER FROM CALIFORNIA SENTENCED TO PRISON FOR TAX FRAUD AND PAYING KICKBACKS

For the next couple of weeks, I'll be providing updates from the NRMLA Philadelphia Roadshow which I attended last week. For those who are interested, I suggest you consider becoming a member of the National Reverse Mortgage Lenders Association if you are not already.

How is the annual deficit (and national debt) a lot like a payment option ARM? Interesting question, when you think about it. The POA -- which Herb and Marion Sandler promoted heavily years ago at World Savings -- entails a consumer keeping his payment as low as possible each month through negative amortization. (This financial slight of hand only keeps working if home values keep increasing.) With a POA loan 'neg am' allows the borrower "affordability" by adding onto their overall debt -- sort of like borrowing by our federal government keeps adding to the nation's debt. I really like this analogy and I hope some of our more intelligent elected officials (do we have any?) see the similarities and get real about tackling the problem. Meanwhile, as I write this, Goldman Sachs is getting to tell its side of the story in front of Sen. Carl Levin's Permanent Subcommittee on Investigations. Goldman and a top official there, "Fabulous" Fabrice Tourre, were accused of civil fraud by the SEC last week for selling a subprime CDO to investors in early 2007 without telling those investors that one of the firms helping pick the collateral was also shorting parts of the bond. Tourre declared to the committee Tuesday morning that he denies (totally) all charges against him. "I will defend myself in court against these false claims," he said in a stern classic French accent. Jean Valjean (of Victor Hugo's 'Les Miserables') couldn't have said it better. Oh, but poor Cosette...

It takes more than mere persistence and refusing to take no to make a sale sometimes. Sometimes you have to sit down with the prospect and hunt for a workable option.

If only the federal tax credit for first time homebuyers were extended by another year -- then home prices might rise 4% from where they stand now, so says a new report. Meanwhile, is the jumbo market really poised for some type of revival? Redwood Trust is pricing its MBS deal this week (see Bonnie Sinnock's story in National Mortgage News) and stock market gains should be giving wealthy investors more money to play with when buying a home. But one market wag writes in his blog that, "Out of the last 30 Mondays 27 have seen higher prices as every decline (very few) is seen as a buying opportunity by those with available funds. At the other end of the investment spectrum widespread bearishness is at a record high with Barron's big money poll reporting only 1% betting on lower interest rates this year versus 78% betting on higher rates"...

In the Monday print edition of National Mortgage News we'll be providing an update on the nonperforming loan (NPL) market. We're hearing solid reports that auctions are gaining steam -- all this comes despite scattered reports that certain hedge funds might be leaving the sector. One interesting thing we hear is how quickly some purchasers of distressed loans "flip" the pools they're buying. (Certain Wall Street trading desks are notorious for this.) Moreover, we're told that some "primary" bidders are buying based on a flip price that they have already negotiated. I'm not sure if this is fact or fiction. Meanwhile, if you're looking for a solid sign that the U.S. economy is really on the mend try this one: Over the past few weeks the dollar amount of C&I (commercial and industrial loans) extended to businesses had grown by $31 billion. Now if only, this business activity would lead to new hiring and an increase in the number of potential home buyers...

THIS JUST IN: A former Bear Stearns mortgage official is on the hunt for a commercial bank and has one in his sights. But will it come off? For the full story see the Monday paper edition of National Mortgage News. Don't subscribe? Call 800-221-1809...

The April 30 deadline is fast approaching for consumers to sign a purchase contract allowing them to get a huge tax break for buying a home -- especially if they happen to be a first-time buyer and not just a "move up" customer. And with all this focus on meeting that deadline, it stands to reason that third-party vendors that serve the mortgage and Realty industries must be overwhelmed. One of my colleagues at National Mortgage News who's been searching for a home reports this: "My Realtor said there are so many people scrambling to meet the deadline that it's impossible to get an appointment with a home inspector. They're all booked solid. She's also seeing a rush of foreclosures that were short sales -- short sales that had multiple offers but the banks dragged their feet for so long the buyers gave up and found another house." My colleague is looking for a home in the suburban Washington, D.C., market which is one of the healthier markets in the nation...

This economy has changed the way you attract clients-it's now by referral. These personalized gift suggestions will not cost you and arm-and-a-leg and are so memorable--that when they hear the word "mortgage," they will think of you.

By now, you're probably sick of all the espousing from pundits on the Goldman Sachs/SEC case so I won't give you my view until the weekend but here's a few mortgage-related facts to keep in mind: Goldman (unlike many of its Street competitors in mortgages) didn't really own a nonprime lender until late in the game. It looked at buying plenty, but never bit, which tells you something about what it thought of the A- to D market. Over in the U.K. Goldman, in January 2008, bought a small subprime lender called Money Partners, previously owned by Kensington Mortgages and their subsequent owners, the South African firm Investec. Goldman has since mothballed Money Partners, according to my colleague over in London, Robert Thickett. What does all this mean? I'm not sure, but certainly Goldman wasn't bullish on the U.S. subprime sector...