Loan Think

Before we continue our discussion about the books I read, let me go over the four areas you should be looking to cover in your reading:

As 2009 winds down and many of us are traveling to see friends and family over the next week or so, it's easy to get sidetracked in the hustle and bustle.

ARIZONA REAL ESTATE AGENT PLEADS GUILTY TO FRAUD

Yes, being the e-mortgage booster that I am, I am still in withdrawal over the loss of AmTrust Bank. They were so critical to the e-mortgage movement. They did such great things for the cause. But sadly, they are no more. So, what happens to e-mortgages from here?

Residential jumbo lending is beginning to show some signs of life again, according to recently compiled figures by National Mortgage News. Bank of America increased its jumbo fundings by 187% in 3Q but there are some caveats to consider here. There is "normal" jumbo lending above the standard Fannie Mae/Freddie Mac loan limit and then there's the "GSE jumbo limit" which is temporary and will sunset someday but don't hold your breath on that one. Meanwhile, there is not much of a secondary market for jumbos unless, of course, your institution is selling them servicing-released to BoA, Wells, and a few others. These mega banks hold the loans in portfolio and why not? They carry a yield 1% higher than the GSE rate (at least) and the mega banks have a cost of funds that is next to nothing. Can you spell 'profits'? Readers know that there is no jumbo securitization market any more. Will there ever be a "covered bond" market in the U.S. that includes jumbos? We shall see. And one last point. New FASB rules that go into effect January 1 will force banks to consolidate some of their off-balance sheet assets. What does this really mean? Answer: banks will need to hold additional capital against these assets because, well, they are now on the books. More capital and more balance sheet means that some depositories might be less inclined to hold jumbos...

How to Make Next Year a Stronger OneLeadership is what will make 2010 a better year for your company than 2009 was, declared one expert on the topic. Businesses must have a long-term fix to turn things around, not a magic bullet or a trendy program or a charismatic leader. There must be a culture built on good, solid, time-tested leadership principles.

As January is quickly approaching and the end of 2009 is in sight, it provides a great opportunity to review and reflect upon some of the most talked about technologies of 2009. In 2009 there were a number of innovative technologies that were either introduced or gain market acceptance. In looking back here are some of the top technologies.

Now that Bank of America has repaid the Treasury Department its $45 billion in TARP aid, does that mean it won't be lopping off any large chunks of nonperforming loans in the coming year? It stands to reason that BoA can ill-afford to take any significant "hits" on its huge holdings of non-performing mortgages and MBS. After all, accounting rules allow the bank to treat its NPL holding benignly as long as they are placed in a "held for investment" account. Translation: it's better to keep than to sell. According to figures compiled by National Mortgage News and its Managing REO newsletter, BoA has roughly $34 billion in non-performers on its books, most of which are mortgage-related. Meanwhile, we're still waiting to hear what, exactly, BoA's plans are for its Merrill Lynch mortgage affiliate in Jacksonville, Florida...

We continue to hear reports that Federal Deposit Insurance Corp. may peel off a large chunk of residential whole loans at its receiverships and issue a security backed by the notes. At press time the agency had not returned telephone calls about the matter. Investment bankers familiar with the agency's plans say the situation is still somewhat fluid. Meanwhile, in a few weeks Joe Falk's term as a member of the Federal Reserve's Consumer Advisory Council will be up. He was the only loan broker on the CAC and a new broker rep has not been named. Is the Fed trying to send a signal to the broker community? As one loan broker told me: "Interesting how they seek to limit our compensation, but don't believe we deserve a seat at the table"...

Over the years, I have given advice to a number of friends and associates who have gone through some trying times. Everyone always asks, "When will this change?"