Loan Think

THIS JUST IN: A storm could be brewing involving so-called independent contractors that are working as due diligence underwriters in the residential mortgage industry. What am I getting at? Here are the basics: some review firms are refusing to pay their contractors via a W-2. Not all firms are doing this, mind you, and we're told one of the "good guys" is Clayton Holdings. But one contractor believes due diligence firms are trying to avoid using W-2s. He writes that such firms are "putting the burden on the contract underwriters. They're also saving quite a bit of money and are able to go back to these investment banks and insurers and offer them below-market-rate fees for their services." That puts these contractors in debt to the Internal Revenue Service "because we can't find anyone who will pay via W-2 status like it used to be when we were in the height of the subprime boom." Stay tuned...

With GMAC's servicing/subservicing chief, Tony Renzi, recently thrown overboard by management, questions are popping up (once again) about the future of GMAC/Residential Capital Corp. One theory has all its mortgage assets being shifted over to its depository affiliate, AllyBank, which is spending mucho bucks advertising its CD rates on television and radio. (The plan could be to eventually sell AllyBank when the market comes back, we're told.) Banks that compete against AllyBank for deposits are none-too-pleased that some of Uncle Sam's $15 billion investment in the company is going toward marketing, but then again, some of those complainers (or most of them) likely got TARP money. It's a crazy mixed up world, indeed...

The average purchase price was $224,000 for a repeat buyer as compared to $156,000 for first-time buyers. Based on the sales price averages, real estate commission income would be over 30% more when you work with repeat buyers (not to mention the listing side of the deal.)

John Kanas, the former CEO of North Fork Bank of Long Island, knows a bit about bank failures. In 2004 North Fork bought GreenPoint Financial, a huge player in the alt-A business, and then a few years later flipped the combined franchise to Capital One. He, smartly, got out of the business while the getting-was-good. A year ago he re-entered with private equity money to reap his rewards by purchasing the failed BankUnited of Florida whose fortunes were sunk by residential payment option ARMs. There's nothing wrong with riding the cycles of financial services. And based on his maneuvers in regard to GreenPoint-Northfork-Capital One, it appears that Mr. Kanas is one of the best market timers around in banking/mortgages. When he says something, people listen. He told CNBC on Wednesday that he is standing by his prediction that a thousand banks will fail in the next year or two. The FDIC's internal projection is for at least 400 banks to fail this year...

For the next few weeks, Broker Universe will feature some of our favorite Sue Haviland columns from the past year.As a reverse mortgage specialist, you probably have a marketing plan and strategy that you can rely on that provides predictable results. If not, we need to talk! I'm sure you use a mix of tools that position you as the local expert and that you can track the effectiveness of each.

FACTS

Essent Guaranty, a new start-up mortgage insurance company, has yet to write its first MI policy but it should be any week now, we're told. Essent is the brainchild of Mark Casale, who resigned as president of Radian Guaranty in October 2007. The new company is based in Radner, Pa. In other MI news, The PMI Group reported another huge quarterly loss ($228 million), this time for the period ending December 31. Its stock continues to trade for just over $2 a share...

The words you choose for your company's ethics and value statement are important in how your employees react and conform their behavior to that statement.

Loan brokers are continuing to complain about tight underwriting requirements and a lack of financing for condominiums, especially in the devastated Florida market. One New Jersey-based broker who facilitates loans there says the mega banks are requiring at least 40% down for most condo loans in the sunshine state. Mortgage insurers continue to be negative on the state as well. Meanwhile, I continue to receive emails from brokers and loan officers concerning a lack of financing for other property types. Topping the list -- drum roll please -- is manufactured housing. No surprise there, really...

As a result of my ignorance my dog Buddie almost died this week. How? He has been eating the stalk of a palm plant on the back porch after it died from the winter freeze.