Loan Think

Here's some more intelligence about the Matawin III fund that is now forming to invest in toxic mortgages: Sponsor Tourmalet Advisors of Connecticut is seeking a minimum investment of $1 million from individuals and $5 million from institutions. Tourmalet is taking a 1.5% management fee on capital pledged to the fund. Its prime brokers on nonperforming loans are Morgan Stanley and Goldman Sachs. As I noted on Friday, the fund is the brainchild of Michael Corasaniti, who worked at the Pequot Capital hedge fund, and also did time in research at Keefe, Bruyette & Woods. Pequot is also the name of the Indian tribe in Connecticut that owns a couple of top earning casinos in the state...

In today’s business environment communication is critical. The speed at which information can be shared and reviewed is amazing. From e-mail, IM, Blogs, Tweets, Facebook, smart phones, go-to-meetings, WebEx, PDF’s, and smart Docs, etc. Has Google created a new communications model that uses these as the foundation for creating a truly innovative solution? Will Google Wave change the way we handle communications going forward?

I love a good 'wedge issue' so here goes: There is new talk in Washington about revising the idea of instituting a .25% tax on stock transactions to help pay for the $700 billion bailout of our nation's financial system. (Roughly, $250 billion of TARP money is left in the government's kitty.) This could be a real killer of an issue for Republicans because during the Bush years they were known in Washington as the 'Don't Tax and Spend Party' and now they have religion and are sounding angry for all the 'little guys' out there back in their districts who are unemployed. So, if the GOP is for the little guy, shouldn't they like the idea of socking it to Wall Street to pay for this mess? But wait, don't all Republicans have carved into their chests a motto that says, "Read my lips, no new taxes"? Meanwhile, the Ayn Rand capitalist pundits are on CNBC ranting about the idea because it will hurt all Americans because so many of us own stocks. But wait, if you're unemployed you've probably sold your stocks by now. Yesterday both parties were venting their spleens on Capitol Hill about Treasury Secretary Tim Geithner's handling of the bailout and the economy. (A lynch mob was formed, almost.) But wasn't it the Bush White House (and Bush Treasury) that pushed the $700 billion bailout through Congress? And wasn't it the Republicans who killed the first version of the bill, sending the stock market into a death dive? As for the Democrats, they like to spend, sure -- and they're kidding themselves about how to pay for anything they propose. Come next fall it certainly is going to get interesting in Washington. The whole issue of taxes (of any kind) boils down to this: do you want government-provided services or do you want to keep more of what you earn? Right now, I would suspect that 10.2% of our nation's eligible workers would love some government help, regardless of their party affiliation...

Successful originators have a number of common characteristics.

THIS JUST IN: We're starting to hear unconfirmed reports that Aurora Loan Services of Colorado is toying with the idea of originating loans again -- either through a conduit or the wholesale channel. Presumably, these would be Fannie/Freddie/FHA credits. In the old days ALS was the king of alt-A but that was a world ago when it was owned by the now defunct Lehman Brothers, a major player in subprime and alt-A. ALS and its bank affiliate were not part of the Lehman bankruptcy. The company -- which stopped funding mortgages in 2008 but still services/subservices -- had no comment whatsoever. If you have any information drop me a line at: Paul.Muolo@SourceMedia.com...

I had an interesting conversation with Jeff Freud of LoanMarket.net the other day. LM offers individual investors (via the magic of the Internet) an opportunity to buy delinquent mortgages -- one a at time. Buyers must pay cash. Mr. Freud insists that banks are indeed selling nonperforming loans and a handful of Wall Street firms are running trading desks geared toward the product. I asked him how come no banks are publicizing their sales? His response: "If they admit they're selling it will drive down prices." It's a wild and whacky world out there. I know this: based on the brand new delinquency figures released by the Mortgage Bankers Association (which I married to data collected by National Mortgage News for its Quarterly Data Report) there has to be at least a $1 trillion in delinquent loans out there that need curing. Loan modifications aren't going to do much good unless Americans get back to work...

This is the latest article in my series about the importance of using targeted direct mail. In the first, I outlined the four important components you MUST think about. Last week we covered getting your mail delivered and an important tip that will allow you to always know it was delivered.

Now that FHA is tightening up its ship in regard to loan standards, some wholesalers are tweaking their government menus as well. Bank of America account executives sent out notices to their brokers noting that FHA has made "significant changes" on streamline refinances including a hike in minimum FICO scores. One of the nation's largest wholesalers, BoA is telling brokers that a 640 FICO is "now required on all FHA Streamline transactions." The bank says lenders must also perform a "net tangible benefit test" for the consumer"...

As I write this article I am on a plane bound for San Diego and the annual conference of the National Reverse Mortgage Lenders Association. I can't help but wonder what my colleagues and peers will be saying this year. Some may say it was an "off" year despite another record in volume. What about you? Have you met your production goals? If so, did you find it more difficult than last year? What plans have you put in place now for 2010?

We continue to hear unconfirmed reports about selected firms starting up either a wholesale unit or a correspondent division. As we noted recently, PennyMac, which started out as a vulture fund, has formed a mortgage conduit and is toying with the idea of table funding. The firms that are looking into correspondent and wholesaling tend to be midsized lenders with growth in mind. These firms likely see a lack of competition out there in these TPO channels and feel that despite all the recent (and coming) regulation of mortgage brokers and bankers that there will be plenty of opportunities. Of course, all these new entrants will be concentrating on the same loan types: Fannie Mae, Freddie Mac and FHA. What the market truly needs is a jumbo wholesaler. But don't hold your breath...