Loan Think

Some say the mortgage industry lost its way. Greed and the need for short-term profit was too much to pass up. Lenders took on too much risk. But why? And more importantly, how can these practices be changed so they don’t occur again? It comes down to standards.

We understand there are plenty of willing sellers of mortgage servicing rights these days but mortgage bankers will not unload their receivables because the "bid/ask" is too wide. In other words: the prices being offered are so underwhelming that mortgage bankers would rather hold onto what they have rather than sell at a possible loss. However, now that we're in the fourth quarter some deals could get done. Meanwhile former Treasury Department Assistant Secretary Neel Kashkari was on CNBC this morning discussing TARP and the $700 billion bailout of our credit markets. He hinted that without the money, the U.S. unemployment rate would be much worse than today's 9.8% figure but declined to speculate on whether it might be close to the Depression-era rate of 25%. He admitted that the government "underestimated" the length and depth of the crisis but one of Treasury's biggest problems was explaining this "complicated" mess to members of Congress. In other words, our federally elected officials are intellectually challenged...

In a recent Weekly Ethics Thought, Christopher Bauer has suggested taking a look at four books that aren't about ethics. But each has something important to say, about ethics.

I recently attended the 96th Annual Mortgage Bankers Convention in San Diego and had the opportunity to speak with many vendors and lenders. We discussed technology’s role in successfully navigating the mortgage industry. Many discussions revolved around how technology can assist with compliance, new rules and regulations, fraud and valuation. They also included loan modifications, HVCC, appraisal independence, the new GFE and potential M&A activity to name a few. Lenders and vendors are embracing technology to streamline their operations while dealing with many of the challenges listed above.

You would think that after seeing MGIC post a $518 million loss in the third quarter that stock analysts wouldn't be fawning all over the nation's largest MI firm -- but think again. In a new report, FBR Research says it is maintaining its "outperform" rating on the company. FBR says MGIC has a tangible book value of at least $13.81. On Monday the stock was trading for about $6.20, down slightly on the day. According to the Quarterly Data Report, MGIC is the nation's largest MI in terms of policies in force ($220 billion) and new business written. FBR says MGIC may be over over-reserving for losses...

Ken Lewis says Bank of America's credit losses may've peaked in the third quarter but who really knows for sure? Keep in mind that when BoA bought Countrywide Financial Corp. in July 2008 it inherited roughly $80 billion in whole loans (residential mortgages) that were (to put it kindly) problematic. (CFC kept the loans on its balance sheet because it could not sell them. Not even Fannie Mae, CFC's 'BFF,' would buy them.) And let's not forget that BoA also bought Merrill Lynch and its far-flung mortgage units: First Franklin Financial, Wilshire Credit Corp., and the investment banker's jumbo lending unit in Jacksonville, Fla. We don't hear much about J-ville division anymore. For years, executives at Merrill Lynch Credit Corp. refused to answer National Mortgage News' regular quarterly lending/servicing surveys. On one occasion someone at the company filled in the survey, faxed to us, and then called to tell us that they had done so mistakenly and didn't want us to publish their numbers. (Too bad for them -- we published them anyway.) That Merrill unit originated mostly jumbo loans to its brokerage clients basing loan decisions (in part) on their stock portfolios. Meanwhile, former HUD attorney Howard Glaser -- now with Scott Stern's Lenders One group -- was on CNBC late this morning defending the Federal Housing Administration and its underwriting policies. But CNBC host Larry Kudlow wasn't buying his arguments. Also on the show was Rep. Scott Garrett (R-N.J.) who recently introduced legislation requiring FHA borrowers to make downpayments of at least 5%...

What is the difference between marketing and selling? In my world, marketing is knowing what to do or finding out what to do and selling is executing on the marketing plan.

THIS JUST IN: Wells Fargo & Co. reorganized its MBS and loan trading desk. The action went down in St. Louis a few days ago. For the full details on who's in and who's out see the Monday, Oct. 19 paper edition of National Mortgage News. Don't subscribe? Call 800-221-1809...

Time is running out on the $8,000 first time home buyer tax credit and lenders and Realtors are letting their clients know this ASAP. In a recent advertisement in The Washington Post, Navy Federal Credit Union shopped a 4.625% 30-year fixed rate loan, telling the reader that "time is running out" on the tax credit. The FTHB expires November 30 and lobbyists from the housing and mortgage industries are camped out in Gucci Gulch (the halls of Congress) this week and next, pleading with their elected officials to extend this "benny" at least for six more months. Some groups want the credit to be offered to all home buyers -- first timers or not. (We'll see about that.) To date, the FTHB has cost the U.S. Treasuryabout $15 billion. As the old saying goes: It's only money...

Last week we spoke about smiling and how important the way you feel determines the success of your sales efforts. I told you about a little trick I use - a mirror - and using it because they way you look is the way you sound on the phone. If you look grumpy than you probably sound grumpy on the phone. No one wants to do business with someone who is grumpy.