Loan Think

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.

Lend America laid off roughly 550 workers on Tuesday, and already we're hearing reports that several are plotting their next career move in mortgages. "A few plan to start up their own thing," one Lend America source said. Company executive Michael Ashley is still arriving for work at the nonbank along with a skeleton crew. We still haven't heard word on what will happen to the GNMA servicing rights that the company controlled. Also, there is talk that FHA is eyeing other so called "sloppy" lenders that work in the Long Island market...

As we look forward to 2010, we continue to see stories of companies closing their doors or scaling back their operations. Have you taken decisive steps to be sure that in 2010 your reverse mortgage business will continue and you'll be able to serve the seniors in your community? You've heard it said, "hope is not a strategy" Are you sitting around just hoping that things will be OK in 2010? Or have you taken stock of your business and put a plan in place that reflects your goals and current conditions?

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...