Loan Think

The rumor mill keeps throwing out names of additional firms that are toying with the idea of coming to market with a new jumbo securitization. Most of the firms working on a jumbo MBS hope to originate recently funded loans. These are not (I'm told) "re-securitizations." Anyway, these firms are said to be toiling in the jumbo lab: Chimera Investment Corp., The Carlyle Group, PIMCO, and Goldman Sachs. (See the National Mortgage News website later today for an update on the jumbo MBS situation.) Keep in mind that any new jumbo loans being originated today are being held on the balance sheet of the funder or sold to a mega bank. But just because many firms are toying with jumbo MBS structures doesn't mean it will happen. The biggest boost to a jumbo deal getting done is this: with the Dow at 11,000 wealthy Americans that invested in Dow 30 stocks a year ago are sitting on phenomenal gains. At some point, certain "rich" investors will cash out and plow that money into their abode. And that means 'high end' homes will move. But will the financing be there to aid in the market's revival? Stay tuned...

NATIONWIDE FORECLOSURES AND DEFAULTS STILL PREDICTED TO GO UP AND HOUSING PRICES STILL PREDICTED TO GO DOWN

Marketing expert Joy Gendusa, the chief executive of PostcardMania, recently posed the following question "Have you started thinking about your 4th of July promotion?"

Readers of National Mortgage News know that we've been covering the loan buyback crisis extensively. Most of the 'mega' lenders that have been on the receiving end of buyback requests from Fannie Mae and Freddie Mac have not been saying much about the issue but they've been kind enough (sometimes) to disclose the dollar volume of their buyback requests. One executive at a top ranked lender recently told me that mortgage insurance companies, to some degree, are driving buybacks. He explained the situation like this: "MIs aren't paying on nearly all they insured and instead are finding any creative way to back out." He explained that this suddenly leaves a GSE-purchased loan without a mortgage insurance policy which is a charter violation for both Fannie and Freddie. He noted that this instantly turns a loan into a buyback candidate...

During the height of the financial crisis it was thought that nonbank mortgage lenders might be looking at a dim future. But over the past month I've been hearing increased reports about nonbanks kicking many tires of ailing commercial banks. Profit margins have been so fat the past 18 months that several highly profitable nonbanks are looking at taking control of depositories that are (shall we say) "capital challenged." The play is this: take over the bank and use it as a source of warehouse funds. Of course, it's not all that simple. The buying nonbank must pass muster with the Federal Deposit Insurance Corp. But the real challenge, I'm told, is this: if a nonbank is successful in purchasing an ailing depository, how will it manage the "real estate" risk on the books of that bank?

Do you live in fear? Stop and think about it for a moment. Are you afraid your business will fail in the next few days, weeks, months? Has fear gripped you and you seem unable to shake it, this time? If that is the case, it is time to do something about it.

THE MAIN EVENT: Traditional M&A activity-where one buyer actually pays cash for a lender-could be returning to the mortgage market. Then again, this "fragile" recovery in mergers and acquisition could blow apart at any time, it seems. The recent hike in rates seems to have abated the past few days but there's no doubt that loan volumes are not where many lenders would like them to be. As we reported on our website Friday, several medium-sized nonbanks are exploring the possibility of buying depository institutions using cash from stellar residential profits enjoyed over the past 18 months. We're not ready to name names yet, but stay tuned. Of course, any recovery in M&A is dependent on housing values. If the housing market gets whacked by a "double-dip" in prices, all bets are off...

Some call it a Foreclosure Bus Tour. Some call it a Real Estate Investment Bus. Others say that it's the real estate version of "speed dating."

I've been on assignment in Spain the past 10 days. If you think America has problems with delinquencies, visit the Costa del Sol region in the South of Spain. In certain quarters almost 30 percent of renters are behind on their payments. In the north, the ratio is about 25 percent. Over the past few years many citizens of Great Britain have flocked here, purchasing beach properties as investments. When Europe´s economy cracked up, renters couldn't pay and you can figure out the rest. Something else to think about: AIG is the lead sponsor of Britain's beloved futbol (soccer team), Manchester United. AIG, of course, also owns a U.S. subprime lender and a mortgage insurance company, United Guaranty. Still, there appears to be hope. The beach 'high season' starts in a few weeks and bargains abound -- if you have the cash...

Today's piece will be something of a follow up to last's week's entry. As we continue to deal with pricing changes at a rapid pace, let's not lose focus and start marketing based only on price. It's important to remember that we all have marketing strategies in place and long after these pricing shifts are behind us, our seniors will still look to us as a source of information and advice. Stay on pace with your current plan- do not deviate. You are in this for the long term and the commitment to your well thought out marketing plan is crucial. That being said, remember these tips to reach out to your prospects who may have been on the fence, or simply did not qualify-