Loan Think

HUD ISSUES FINAL RULE THAT ELIMINATES THE FHA APPROVAL PROCESS FOR MORTGAGE BROKERS

Editor's note: Today we are rerunning one of our favorite Sue Haviland columns. We hope you enjoy it.

I'm not an accountant (nor do I play one in this column.) However, I was talking to a mortgage banking professional recently about tax season. He told me that when he filed taxes in California, his accountant told him that the state (for tax year 2009) disallowed the use of 'net operating loss carry forward' to shelter income. His firm (which I promised not to name) earned money last year but he owned a small lender several years back that lost money. He can still use those old NOLs to shelter income -- at least he thought he could. Even though California disallowed the NOLs for 2009, the state was kind enough to extend usage by one year to 2013. The reason California banned NOLs is simple: the state is broke and needs as much revenue as it can get its hands on. Will the Golden State pull the same stunt next year? We shall see. Meanwhile, I've been holding off on commenting on the Securities and Exchange Commission's civil fraud complaint against Goldman Sachs. It's been pack journalism (to say the least) and I usually don't play that game unless I have to. But I will note this: the 'reporters' and 'anchors' on CNBC seem to be bending over backwards to dismiss the SEC's charges before a trial even commences. (Note: last night on Comedy Central Jon Stewart lambasted CNBC stock picker Jim Cramer. Go view the bit on YouTube.) But I guess that's what happens when you have a bunch of wealthy TV personalities (and not necessarily objective reporters) trying to protect their friends on the Street. (I guess it's all about government bashing and blaming 'The Man.' In this case 'The Man' is the SEC.) But I guess when you work for the 'hometown' newspaper (which is what CNBC is to Wall Street) that's what happens. I'll opine more about Goldman in my upcoming weekend column...

This Thursday (April 22nd) is Earth Day, making this the perfect time for small businesses such as mortgage brokerages to make the effort to "go green."

Icon Residential, a nonbank that is still actively funding residential loans using brokers, recently lost two wholesale account executives in the New York/New Jersey area to Chase, the mortgage arm of JPMorgan Chase. We're told these AEs will be working as retail loan officers. Meanwhile, Icon -- which doesn't reveal much about itself on its corporate website -- is looking to hire an internal compliance auditor in Irvine, Calif. And it's also seeking wholesale account executives nationwide. According to the Quarterly Data Report, wholesale lending as a percentage of all loans funded, increased slightly in the fourth quarter from the third but is still bumping along the bottom...

The government's Home Affordable Modification Program has plenty of critics who are disappointed with its slow implementation and limited impact in preventing foreclosures.

It appears the nonperforming loan market is once again heating up. Investors in NPLs say over the past few weeks they've seen an increase in offerings by sellers -- and that deals are actually getting done. "It's not like it used to be when sellers were just testing the waters," said one West Coast based NPL investor, requesting anonymity. "I actually might go out and raise more money for my fund." However, there is one "caveat" in this good news. The improvement in activity is for smaller sales only -- portfolios of $50 million or less...

Editor's note: Today we are rerunning one of favorite Joel Pate columns. We hope you enjoy it.

THIS JUST IN: A (somewhat) large investor in scratch and dent and nonperforming loans is about to close down. At press time details were still sketchy. The company, backed by private equity money (what other kind is there?) is based in the Western U.S. Any unused money will be returned to investors. Its holdings will be liquidated. Interestingly enough, sources told me this past week that some investors are now paying upwards of 85 to 90 cents on the dollar for performing loans that have been sent back to the originator because-for one reason or another-they violated Fannie Mae or Freddie Mac underwriting standards. Have any information about all this? Drop me a line at Paul.Muolo@SourceMedia.com or comment at the end of this column...

It being April 15, a day in which many rich Americans gladly pay Uncle Sam what is rightly owned to the Treasury Department, we present this bit of tax-related news: distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. According to one reader, enacted into law recently was California Senate Bill 401 which aligns the state's tax treatment of mortgage debt relief income with federal law. He writes that, "For debt forgiven on a loan secured by a 'qualified principal residence,' borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000." At press time, I could not verify this information but it sounds about right...