Loan Think

SEC SUES THREE OF FORMER NEW CENTURY EXECUTIVES FOR FRAUD

Debra Denny, a net branch operator for True Compass Lending in Idaho, says she's looking to hire some of the loan officers who were recently laid off by Lend America of Long Island. Among other things, TCL is a mortgage banker that funds FHA loans, reverses, and SBA loans. The parent company is based in Oregon. I have not had time to conduct much due diligence on the company but Ms. Denny can be emailed at: denny.idaho.acs@gmail.com. She said the former LA employees can work from Long Island. Meanwhile, another bottom fisher has scuttled its IPO plans. This time it's Ellington Financial. See Bonnie Sinnock's story on the National Mortgage News website shortly...

The net worth position of Americans rose 5% to $53.4 trillion in the third quarter, according to newly released figures from the Federal Reserve Board. Included in that net worth number is the value of residential real estate -- houses. Even though the increase is good news for the economy it is far below the peak $64.5 trillion number posted before the recession started. Then again, it can be argued that perhaps the earlier number was inflated by the housing bubble -- and the evilest mortgage of all time, the payment option ARM. One mortgage sector that is not likely to recover any time soon is the "cash-out" refinancing business. Many lenders are no longer making these loans unless there is substantial equity in the house. Meanwhile, new figures compiled by National Mortgage News and the Quarterly Data Report show that 91% of mortgages originated in the third quarter were fixed rate...

As with many parts of the country, it was cold in Mobile Ala. last night - 38 degrees - summer right?

THE WORD ON LOAN BROKERS: "A lot of firms have no interest in our broker research," said David Olson who runs Access Research of Columbia, Md. Earlier in the year Access was called Wholesale Access and you can pretty much figure out why he removed the word 'Wholesale' from the firm's name. In an interview with National Mortgage News Mr. Olson said the only large bank wholesaler that still believes in brokers is Wells Fargo. "We've been having a debate with Wells," he said. "They think the channel is coming back." When it comes to mortgage acumen, Wells and its mortgage chief Mark Oman are well regarded. Over the years, Mr. Oman's reputation in the industry has grown steadily. Some industry veterans refer to him as the "anti-Angelo" because he was everything the former Countrywide chief was not: quiet and out of the public eye. And (of course) Wells is still standing whereas Countrywide had a choice to make: sell to Bank of America or go bankrupt. As for Mr. Olson, Access is now plying its expertise in other mortgage areas including compliance and servicing. Discussing all the coming regulations that are being heaped on loan brokers he made this poignant observation: "Maybe someone in the federal government will realize that what they've been doing is very anti-small business," he said. If you care to comment see the end of the column or shoot an email to: Paul.Muolo@SourceMedia.com...

If you're wondering what specifically HUD's Mortgagee Review Board found wrong with Lend America's underwriting practices, it's all in a new document I obtained via a Freedom of Information Act request. I'll be writing more about it in my weekend column, but here's one example: back in 2007, in approving a borrower, Lend America allowed the customer to count his expense check reimbursements as income. HUD says the company's 'dba' Ideal Mortgage Bankers "failed to verify" that these expense check reimbursements would continue. In the loan file, the travel expenses are referred to as 'per diem' income. Call me old fashioned, but I thought when you traveled for your company the idea was not to make money on your expense reports but to only get reimbursed for what you actually spent. The FOIA document I received omitted the customer's name but says he was an "inspector traveling through Florida"...

Just to bring you up to date we are talking about the importance of direct mail and how effective it can be now that so few are using it. We started with an overview of the four components you must satisfy and so far have covered three of them.

So, is 2010 going to be a measly $1 trillion production year for mortgage lenders? Don't bet on it. The $1 trillion figure was a "worst case" scenario and predicated on rising rates and the $8,000 first-time home buyer tax credit ending. Of, course, the big question is whether, come this spring, will the Federal Reserve keep buying GSE debt and MBS? The short answer is yes -- but how much? Meanwhile, the job picture continues to improve. Yesterday Cisco chief John Chambers said his firm is in a strong hiring mode. Also, Deutsche Bank put out a new research note saying the hiring of temporary workers is very strong. "We have found the trend in temp hiring to be an excellent leading indicator of labor demand"...

I was recently speaking with an experienced reverse mortgage originator who has a bit more time on her hands than she would like right now. She asked what she could do to keep her activity level up, set her apart, and above all, not spend a lot of cash doing it.

The rub on banks is this: that they're not lending, right? We hear it time and time again from the pundits on CNBC. In fact, I saw a few pundits this morning on the station, saying it. The problem appears to be "business lending" per se. But should a bank extend credit to a venture that isn't on solid footing? On occasion, you'll see a bank take out a full-page ad in The New York Times or The Wall Street Journal, bragging about all the lending it's doing -- and all the loan modifications. Is it a matter of perception? Of facts? Well, we know this: that mortgage bankers (depositories and non-depositories alike) funded $503 billion of home mortgages in 3Q which works out to an annual run-rate of $2 trillion. (Figures courtesy of the Quarterly Data Report.) As for next year, estimates range from a low of $1 trillion to a high of $1.8 trillion. That's quite a disparity. Then there's the loan modification "situation." New Home Affordable Modification Program figures were released this morning. As of mid-November, 680,000 borrowers are in active modifications -- but very few of those are "permanent." (See the National Mortgage News website early this afternoon for a complete update.) When it comes to loan mods the 'elephant in the room' is this (and it's an issue that government officials don't recognize): you can't safely restructure a mortgage for those who are unemployed. Meanwhile, The Washington Post recently published a story about the first TARP Czar Neel Kashkari who is now decompressing in the woods of Northern California. He reveals this interesting fact about the early days of TARP: that his friends back in Ohio wanted him to use some of the money to buy the Cleveland Browns football team...