Loan Think

FTC FILES SIX NEW LAWSUITS AGAINST LOAN MODIFICATION COMPANIES AND ATTORNEYS

Recently I chaired the SourceMedia Loan Modifications Conference in Dallas.

Just how bad was the loan underwriting at some top ranked mortgage firms during the 'go-go' years? I recently heard from a former internal auditor at Countrywide Home Loans in Plano, Texas, who was asked to look at mortgages funded by CHL's subprime division, Full Spectrum Lending. He said that what he examined "horrified" him. "I'm an accountant by training," he told me "and had always been taught that financial transactions should make sense. But the approval process by that time seemed to be checking for a pulse. That was all. We even told applicants what to drop off the application so we could pass them. I remember one loan officer hanging up the phone after a 'successful' close and remarking to his co-workers 'If they last six months in that house, I will be surprised.'" Of course, Countrywide's problems are now the problems of Bank of America. Meanwhile, the new job numbers come out on Friday. The only reason I mention this is because maybe the Treasury Department doesn't quite understand the concept of "loan modification." A servicer can't modify a loan if the home owner doesn't have a job...

It is important that small businesses have a plan and budget for conducting operations, just as their larger competitors have.

A handful of large banks and investment banking firms currently have nonperforming loan packages in the market place. "There's at least six deals that I know of," said one hedge fund manager, requesting his name not be used. He said the packages range in size from $20 million to $30 million "and there's a few $100 million pools out there," he said. To date, banks and Wall Street firms selling their NPLs have kept a tight lid on publicity surrounding their deals. "There's really not a lot out there," said the hedge fund manager, "but compared to a few months ago it looks huge." Meanwhile, what effect, if any, will the problems of real estate developer Dubai World -- which is $59 billion in debt - have on sovereign wealth funds investing in U.S. real estate and mortgages? Will sovereign wealth funds have less money to invest here or will they view the U.S. as a safe haven? We shall see...`

Remember how the Federal government said it's okay to do FHA streamlined refis with LTVs up to 125%? In a new memo to loan brokers Franklin American Mortgage says it will only go as high as 100% on the LTV, citing "continued constrictions" in the secondary market... Will the nonperforming loan (NPL) auction market finally begin heating up next year? It's hard to tell, but FDIC chief Sheila Bair made it clear last week that she wants the agency to play a role in legacy loan auctions by open institutions. Plus, there's $5 billion (at least) in whole loans the agency owns from dead banks. Meanwhile, there's talk that Fannie Mae and Freddie Mac are beginning to ask the "big question" which is this: should we be selling our NPLs too? For the complete analysis see the Monday edition of National Mortgage News. Don't subscribe? Call: (800)221-1809...Friday, December 4, is "e" day -- that would be the new employment numbers from the federal government. Will the 10.2% jobless number climb higher? Economists and analysts keep telling us about lackluster reports on consumer confidence and how it's affecting everything from home buying to retail sales and beyond. As my teenage daughter would say, "Duh." I've said this before and I will say it again: the job picture needs to come back in earnest before we see any meaningful recovery in housing. The jobless are anxious about their prospects and workers who have managed to stay employed are left wondering, "Am I next?" Even though jobless claims are starting to level off, we still see reports of profitable businesses like Verizon and AOL cutting heads...PennyMac Mortgage Investment Trustchief executive Stan Kurland is putting his money where his mouth is regarding the future of his publicly traded vulture fund, recently purchasing $429,000 worth of stock in the open market. The REIT has kept a low profile since going public this summer. A spokeswoman for the company said, "We're keeping our heads down, doing good work here"...The paperback version of "Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis" will be out in late January with new chapters on TARP, vulture funds and the rise of the "mortgage cartel." I co-authored the book with Matt Padilla of The Orange County Register...Need a ranking of the top GNMA issuers in the third quarter? It's in the upcoming issue of NMN's Quarterly Data Report. To order a copy send an email to: Deartra.Todd@SourceMedia.com... WASHINGTON NEWS: A 10% risk retention requirement for mortgage securitizations? Congress is softening its stance. See Brian Collins' story in Monday's NMN.DATA NOTICE #1: Just a reminder but the new Mortgagestats.com data product is ready. M-Stats (which you can subscribe to) is web-based and incorporates both the Quarterly Data Report and our annual Mortgage Industry Directory. Among other things, it has annual rankings on the top 400 lenders and servicers, including breakdowns on retail, wholesale, and correspondent - and news archives. There's contact info too - and plenty of data on servicing. And here's the best part: you get quarterly updates. To see a sample send an email to: Deartra.Todd@SourceMedia.com. Site licenses are available.DATA NOTICE #2: Even though we have just launched our new MortgageStats.com product you can still subscribe to the Quarterly Data Report, a spreadsheet product that provides readers with quarterly rankings on the nation's top lenders and servicers. There's also a companion product called the 'Alt-QDR' which provides rankings on second liens, jumbos and much more. Again, shoot an email to: Deartra.Todd@SourceMedia.com.THE LAST WORD: Read Managing REO, the only publication dedicated to covering the clean up of the nation's housing and loan markets. For a free sample copy send an email to: Jennifer.Harmon@SourceMedia.com.

On this day before Thanksgiving 2009, I hope you all get to spend some time with family and friends over the holiday weekend. We have so much to be grateful for. I thank all the readers of this column for your commitment to the senior market. At a time when so many of our seniors are facing financial challenges, you remain in the forefront bringing the information they need. I hear from you week after week telling me the success stories that make what we do so unique. At the National Reverse Mortgage Lenders Association conference last week, I was able to speak with our peers from around the country and heard that many of us are dealing with the same issues. Property values remain a challenge in many parts of the country, the press is often mentioned as painting us in a less than favorable light. We can deal with all this; because we know what we do is important and brings real value to our clients.

It appears that PennyMac chief Stanford Kurland is buying shares of his company on the open market. For the full story see the National Mortgage News website later today for the full story. Meanwhile, with the Thanksgiving holiday upon us the economic "recovery" is beginning to look not quite like a turkey, but maybe a baby chick -- as in: will this small fluffy creature make it to adulthood and become something. (Sorry but it's the only analogy I could come up with at press time.) Here's a few not-so-positive economic indicators: a lackluster consumer confidence report; a retroactively reduced GDP number; and the FDIC's list of "problem" institutions jumping 33% to 552 in the third quarter with assets at those banks totaling $346 billion. Then again, mortgage rates are low and likely will stay that way forever, and "used" home sales are up. And we still have that nice $8,000 first-time home buyer tax credit. You decide...

Nancy Friedman, the Telephone Doctor, has compiled a list of what she calls the top 15 things not to do in terms of customer service when dealing with clients on the telephone.

HUD/RESPA WILL EXERCISE RESTRAINT IN ENFORCING THE NEW GFE/HUD-1 RULE FOR THE FIRST 120 DAYS BUT IT IS STILL THE LAW