Loan Think

Marketing expert and author Maribeth Kuzmeski notes creating clients for life is all about building relationships based on real human connections. And one of the best times to help build or deepen those connections is when a client calls you after having a problem, she said.

HUD MORTGAGEE REVIEW BOARD DISCIPLINES FHA MORTGAGEES

In today’s marketplace for corporate innovation initiatives to produce results, it is critical that they are aligned with corporate strategy. For this to happen, senior management needs to takes a leadership role in implementing innovation initiatives. In order to align innovation with strategy, companies need to review and analyze how well the company is meeting its strategic objectives.

The world's biggest drug maker --that would be Pfizer -- is closing six of its 20 research facilities, reorganizing others, and cutting the jobs of roughly 15% of its scientists and related staff. What does this piece of news have to do with the mortgage industry? Everything, when you think about it. It's unclear how many people will lose employment -- and hopefully some of these workers will be snatched up by other drug firms. But wherever these six research facilities are located, there likely are "support" businesses, and retailers, and restaurants -- oh, and homes to buy and sell. Some of these laid off Pfizer scientists likely are middle-class or upper middle class workers and have nice homes -- and a mortgage on that home. And maybe that scientist has a spouse who stays at home with the kids. Well, that one-earner family is now a no-earner family income. And maybe that laid off scientist has plenty of savings and a nice severance package to hold him over until a new job comes along. Maybe. Pfizer, of course, isn't the only company that is still laying off workers in this "recovering" economy. We see drips and drabs of the layoff notices. The federal government tell us that the job situation is getting better. Let's hope so -- for the sake of the families of those getting laid off and all the servicers and investors that are on the hook for losses. And Fannie Mae and Freddie Mac, and GNMA that own or guarantee their loans...

With the abysmal jobs number for October finally unveiled, there is some good news for mortgage bankers: the Federal Reserve isn't likely to raise short term rates any time soon. Moreover, some analysts are saying it won't be until 2011, maybe 2012 before we see a rate hike on the short end. This also means that mortgage origination profit margins should remain strong for at least the next year. Servicing revenues, though, could come under pressure as refinancings continue to cause a runoff in receivables and delinquencies gallop along. Of course, if the jobs situation improves rapidly by midyear (which some Pollyanna analysts think) then all bets are off. In other words: it's all a crap shoot. Meanwhile, the new employment figures offered no relief for the mortgage brokerage sector. Broker-related employment fell to 66,900 positions, a 1,100 loss from the previous month. For the full story see National Mortgage News Online later today...

Too many businesses, too many loan originators are trying to move a lot of dirt these days with a spoon instead of investing in a bulldozer.

Irony: Stan Kurland's vulture fund Penny Mac is trying to make a tidy little profit by purchasing all those toxic mortgages that are dragging down our nation's financial institutions. Of course, $100 billion of those crummy loans were created by Mr. Kurland's old employer Countrywide Financial. Penny Mac, which went public this summer, just posted its first earnings report - a loss of less than $1 million. Its biggest problem? Answer: It appears that all those damn banks, Wall Street firms and thrifts aren't willing to sell their toxic subprime, alt-A loans, ABS and so on at a price where Mr. Kurland's firm can make a killing. Instead of buying assets at what Penny Mac believes are inflated prices, the firm is just saying no. But he isn't the only one who is displeased by the "bid/ask" out there. There are plenty of others. For the full story on why toxic loans sales haven't taken off - and likely won't - see the Monday paper edition of National Mortgage News. We're also publishing a selected list of lenders and their nonperforming assets most of which includes residential and commercial mortgages. Don't subscribe? Call 800-221-1809. If you have any thoughts about the state of the toxic asset market drop me an e-mail at Paul.Muolo@SourceMedia.com or post a comment at the end of this column...

So, is the new management group and "controlling" owners at PHH happy? Time will tell. The company just reported a $52 million loss for 3Q but says there's plenty of positive news out there: it has "uncommitted" warehouse facilities of $4.3 billion and it just secured what it calls a "major" new private label deal that could bring in $1.5 billion in new originations. (PHH is the nation's largest private label funder.) Its new president is Jerry Selitto, former CEO of DeepGreen Financial, a former player in the second lien market -- as in 80-10-10 loan structures. DeepGreen crashed and burned in early 2007. It was owned by Lightyear Capital -- an investment fund managed by Don Marron, a former Fannie Mae director who made his name at PaineWebber. (He was a director at the GSE from 2001 to 2006, during the height of its financial shenanigans.) It's amazing how few media reports on Messrs. Selitto and Marron have not mentioned the DeepGreen connection and what happened to the firm...

During the downturn, one of the first things I have noticed most originators ending is their marketing campaign. Yes, business has slowed down and even dried up totally for some. But there is still business to be had. While most originators are now chasing those new "shiny objects" like social media and the like, there is still one effective way to generate new business and that is using targeted direct mail.

The big loser in Tuesday's off-season election was Sen. Chris Dodd, Democrat of Connecticut. The Senator was not up for re-election last night. That's next year. But the results in Virginia and New Jersey strongly suggest that voters are very angry with the economy and Washington's response to it. In 2010 incumbents will be targets at the voter shooting range, regardless of what party they belong to. For Mr. Dodd, chairman of Senate Banking Committee, rest assured whoever his opponent might be, that person will hang the 'Friends of Angelo' scandal sticker around his neck like a burning rubber tire. Here's a prediction: it will not be pretty for the senator and he will lose as long as the GOP puts up a moderate Republican who stays off the Appalachian Trail. Meanwhile, HUD had egg on its face Wednesday morning after delaying the release of its much anticipated audit of the FHA reserve fund. After canceling a press conference at the National Press Club in Washington, the cabinet level agency released a statement saying it had "questions" about the accuracy of its auditor's "modeling." See the full update on the National Mortgage News website shortly...