Loan Think

Remember Richard Wilkes, the former mortgage banker who ran the IMX Exchange and other mortgage businesses during his long career in residential finance? Well, he's not back in mortgages (by any means) but is working on a side project with Google. I recently asked him about the state of the mortgage industry today and this is what he said (in part): "If I were in the business these days I would have gone berserk by now and might have gotten hurt. Sam, our Uncle, has made a trash heap of our mortgage finance system and the tenets upon which it has evolved into the best in the world. We made mistakes; we failed. That’s what happens with capitalism. Where we’re headed, however, is into a system that prevents failure…but it also will prevent success. Unchecked, what we now are creating will be the end of entrepreneurism and the unrestrained, stifling sloth of bureaucracy.” Richard, of course, is a Texan...

What do real estate agents love more than anything in the world? Lunch!

The Federal Housing Administration wants to raise the minimum net worth requirement for its lenders to $2.5 million within three years, an idea that doesn't warm the hearts of small correspondent lenders. However, we're told that at least one large wholesale/correspondent lender thinks the minimum should be hiked to $3 million (for the first year) and $4.5 million by 2012. If this happens a correspondent that is light on capital would be forced to find another source of funding, merge, or close their doors...

The phrase "short sales" was probably the most popular usage at the Mortgage Bankers Association's annual Servicing convention in San Diego. No, make that definitely. Everyone was talking about short sales and how they can help tame the massive foreclosure and/or modifications mess, helping out the borrower, lender and vendor in the process.

Every once in a while I get a slew of questions and comments centered on the family members of the seniors. And yes you guessed it, those questions and comments are about the kids.

Everywhere you look, there's loan "buyback" requests: Fannie Mae and Freddie Mac are sticking it to their seller/servicers, the Federal Home Loan Banks are trying to get Wall Street firms to repurchase the crummy nonprime ABS sold to them a few years ago, and large correspondents are jamming product back to the little guys. Well, at least, the Government National Mortgage Association hasn't gone that route -- yet. Or is that the next shoe to drop in the industry? Meanwhile, last week it appeared that a large wholesaler was ready to introduce a new "stated income" program. (Don't faint.) But alas, there was no such program. The way the story was told to me, a new account executive mislabeled a program as such. "It turned out that the new program was really a Fannie 'DU Plus' at 110% with no debt ratio and a Freddie HARP up to 125% at no debt ratios," one loan officer told us. Readers of this website should be familiar with both Fannie DU Plus, and HARP...

There have been plenty of stories in the media about the cash flow crunch facing many small businesses today. Many business owners have been making cutbacks looking to get by.

HUD TO ALLOW LOAN CORRESPONDENTS UNTIL APRIL 30, 2010 TO FILE THE ANNUAL RECERTIFICATION FINANCIAL AUDIT FOR 2009

In the Monday edition of National Mortgage News, we report that former Government National Mortgage Association chief Joe Murin is advocating that the agency should be cut loose from the Department of Housing and Urban Development. Mr. Murin goes as far to suggest that GNMA should be given a new charter that provides the agency with independence. Mr. Murin's idea comes at a time when GNMA issuance volume (not surprisingly) is booming. Mr. Murin runs The Collingwood Group, a somewhat new advisory firm based in Washington. Its website declares that the financial services industry "is transformed. From the global economic crisis has come permanent change. It is change that is evolving by the day. It's unsettled. It's uncertain." You can't argue with those sentiments...

Is Citigroup's stock a "buy"? That's a tough call. Renowned bank analyst Richard Bove said this morning that it could be a $7 stock in a few years. Of late, its shares have been trading in the $3 range but got a boost today after Mr. Bove made some positive comments on CNBC. But anyone who works in mortgages knows that Citigroup is no longer the fierce competitor it once was. Even though it has made some new overtures to loan brokers, its wholesale channel is a fraction of its former self, and according to the new 4Q edition of the Quarterly Data Report, CitiMortgage of O'Fallon, Mo., was the only lender among the top 10 to experience a decline in production. In 4Q the lender's residential volume fell 38% to $11 billion. Everyone else among the top 10 had gains of 16% to 116%. And keep in mind that the fourth quarter of 2008 (the comparable here) was the worst in 10 years. If a lender couldn't manage a gain in 4Q09 (compared to 4Q08), then something is definitely amiss...