Loan Think

Most loan officers view this industry as their career and a job. That is very dangerous thinking. Once you get a job your mind works on it as a job. Even the best, most successful and organized loan officer is rarely able to get it "all" done. You know what I mean. Originate, follow up, market. Well it is a daunting task and worst of all our income depends on being able to do each part successfully.

Even though Grandma no longer has to worry about the Obama Administration 'death panels,' non-bank financial institutions do. At least, that's what you might gather if you heard Rep. Barney Frank's opening remarks this morning during a House Financial Services Committee hearing. He said -- and I do quote -- that there will be "death panels for non-bank financial institutions." Barney was going off on a tangent (somewhat) and later clarified that he was talking about large 'too big too fail' institutions such as AIG and Lehman. Supposedly, in a memo that's floating around Washington, Rep. Frank (when it comes to the Consumer Financial Protection Agency) says he wants depositories and non-banks to be treated equally -- and that this supposedly applies to mortgage lenders. Meanwhile, AIG's stock, once again, is on the rise. It's at $47 compared to a 52-week low of $6.60 and a high of $114. Since I (and my fellow Americans) own most of AIG, my recommendation is this: sell it, baby!...

There were so many good questions that resulted from last week's article (see just a few of them at the end of last week's post) that I decided to follow up and continue the discussion.

As the mortgage industry looks to rebound from the mortgage meltdown and current economic conditions, transparency in the lending process can help lead the way. Transparency is the full, accurate, and timely disclosure of information. Transparency can help restore investor and consumer confidence in the mortgage market as we work to rise from the ashes.

Details are still being worked out regarding the upcoming sale of $12 billion in jumbo servicing rights belonging to the bankrupt Thornburg Mortgage of Santa Fe. (The bankruptcy court, of course, has a say in the matter.) A source close to the deal expects that bidder turnout should be strong for a few reasons: the quality on the underlying loans is very strong and "there's no agency counter-party risk" which means Fannie Mae and Freddie Mac cannot seize the receivables and transfer them to a third-party servicer, which (given rising delinquencies and the shaky condition of some firms) is becoming somewhat of a trend. And in case you forgot: at yearend Fannie is raising its minimum net worth requirement for seller/servicers to $2.5 million...

For a recent family gathering, my wife cooked a whole turkey. And like with many families, this means plenty of turkey leftovers.

HUD/FHA PROPOSES TO INCREASE NET WORTH OF DIRECT ENDORSEMENT LENDERS TO $1 MILLION

If you want to bid on a Federal Deposit Insurance Corp. non-performing loan pool (or any private auctions) it's going to cost you money. To bid on government packages the 'pay to play' cost can range from $20,000 to $250,000, according to various investors and brokers. The good news is that the money is refundable but it keeps out the novices who aren't serious. Meanwhile, we heard an unconfirmed report that Bank of America was recently offering (for bid) $100 million in collateral tied to a warehouse line. The collateral came from a bankrupt non-depository...

One of the most under-reported stories of the past few months is the amount of bottom fishing that hedge funds have been doing in the residential mortgage-backed securities market -- in senior tranches, that is. Back in the spring when the value of senior tranches fell off a cliff certain 'quants' (working for hedge funds, of course) saw a golden opportunity and pounced. Marathon Asset was a buyer, according to one official there. Among the banks, we know that JPMorgan Chase was an active purchaser as well. Flash forward to the present. The secret is now out and more buyers are appearing. Does that mean prices are getting frothy? Keep in mind this one thought: the Federal Reserve has been actively buying MBS -- billions worth. Does this mean that Uncle Sam is sitting on a boatload of profits -- money that belongs to the taxpayer? Think about it...

As discussed last week, Assets produce income. Everything else is a liability. What about your house? Does it produce income daily? No, and therefore it cannot be listed as an asset for the purpose of this discussion.