Loan Think

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...

Many of us enjoy attending parties this time of year as an opportunity to meet with old friends and let off some of the stress the previous 11 months has built up.

FHA WILL NO LONGER APPROVE LOAN CORRESPONDENTS

As recently as three weeks ago AmTrust Bank -- a top ranked residential wholesale lender -- was still trying to sign up brokers and correspondent lenders. One New Jersey mortgage official told me, "They were pushing me to join. They wanted the brokers to act as their retail operations." AmTrust -- formerly known as Ohio Savings and Loan -- was shut down Friday night. Meanwhile, I continue to hear reports that Lend America was refinancing customers and then not paying off their old liens. The Melville-based company apparently knows about the problem, and according to a spokesman, is trying to rectify the matter. A reader told me that his son and daughter-in-law closed on a refi with Lend America in November. "Since then, the previous mortgage holder has not received their payoff. However, they (the kids) have made their first (December) payment to Lend America, while still receiving bills from the previous mortgage holder." It's believed that Lend America, a nonbank, had only one major warehouse provider: Gateway Bank of California. This might sound like an unfair question but why did the Long Island-based Lend America have to go all the way across the country to find a warehouse financier?...

First, off I'd like to thank the White House and Congress -- and all those consumer activist groups (accept maybe ACORN) -- for putting the heat on mortgage servicers to do more with loan modifications. We can talk all we want about the $787 billion "stimulus" package but the swelling tidal wave of delinquent loans, to some degree, creates jobs. The more loans go south, the more need there is for loan modification experts, REO managers, auctioneers and so on. So, this morning when I saw that the national unemployment rate had fallen to 10% in November, I thought, "Wow, can that number be right?" On Thursday word was already leaking out that the White House was anticipating that the October reading of 10.2% might edge even higher. Today, the White House staff is giving each other 'high fives,' while praying that they don't have to revise the number upward next month. One mortgage lender in New Jersey told me this morning, "I know a lot of guys who were on the trading floors are saying their jobs are just gone and never coming back." In a few months we'll know whether the job picture is truly better or whether it's all a mirage. Let's hope for the sake of the nation's workforce (and all the state and federal budgets that depend on worker tax revenue) that we've turned the corner. In an hour or so National Mortgage News will post the mortgage employment numbers on its website: http://www.nationalmortgagenews.com/...

THIS JUST IN: A once-major Wall Street player in mortgages that was contemplating re-entering the warehouse lending arena has pulled the plug on the idea. For full details see the Monday print edition of National Mortgage News. Don't subscribe? Call: 800-221-1809...

Why do mortgage rates go up or down?Do you want to speak intelligently about the financial markets to your current or future referral sources so you are not thought of like the next originator or last originator that tries to get their business?

First the good news: residential mortgage rates are now at an all-time low: 4.7% with 0.7 points, according to new figures released by Freddie Mac. Now the bad news: Everyone from FHA to Fannieand Freddie are hiking their credit standards, which means that consumers are going to need really low rates (and more cash) to qualify. Let's put this in perspective: the government needs the housing market to revive to help stabilize the economy and increase tax revenue. Uncle Sam presently controls 90% of the market through Fan-Fred-FHA but all three are making it tougher to get a loan. But at the same time the Federal Reserve is keeping rates low -- intentionally. Got all that? See our news updates on these topics on the National Mortgage News website shortly: http://www.nationalmortgagenews.com/. Meanwhile, don't forget the "big event" comes Friday when the Department of Labor releases the new unemployment numbers...

So far we have spoken about the importance of using targeted direct mail and I outlined the four important components you must think about. The past two articles we dealt with getting it delivered and getting it opened.