Loan Think

Recently I saw a trailer and some scenes from a movie about used car sales people called "The Goods: Live Hard, Sell Hard." And while I haven't seen the entire movie, the parts I saw exploit the worst stereotypes about sales people.

Even though financial firms have lost billions of dollars on their mortgage holdings the past two years that doesn't mean the industry's elite shouldn't party. (Of course, there’s been a changing of the guard in regard to ‘the elite.’ More on that in another column.) The annual Midwinter Conference will be held once again in Park City, Utah, on February 24 to 27. According to conference organizer Brian Hershkowitz, the ski meet-and-greet will be held at the brand new St. Regis hotel. He writes: "No doubt this will be one of the best conferences to date." I remember the good old days when one Countrywide executive, during the Q&A, declared "contain, contain, contain" when asked about the all-encompassing power of Fannie Mae and Freddie Mac. (It wasn't Angelo Mozilo.) Last year former Ameriquest executive Adam Bass was in attendance and dined with our own Lew Sichelman. Who knows: maybe Bill Dallas will show up again this year...

There's plenty of chatter out there about non-performing loan (NPL) auctions but it doesn't seem like a whole lot of deals are getting done -- or so it seems. One NPL broker told us that "there's still a wide gap between the bid and ask price." Requesting anonymity, he said FASB's decision to allow financial firms to 're-mark' their portfolios to more friendly values is having a major impact on the NPL auction business. He believes there's at least a 15 point difference between bid/ask (on some portfolios) and that sellers have unreasonable expectations. "Some sellers that had marked sub-performing loans down to 60 cents [on the dollar] have marked it back up to 90 cents," he said. Meanwhile, later this afternoon National Mortgage News will publish on its website a story about a fairly large M&A deal...

Last week's article dealt with the cornerstone of your customer's credit problems, interest. Well a few readers disagreed with me. They said that consumer's biggest problem is that they purchased a home that they could not afford. Do you agree? If so, please e-mail me. I'd like to know what you think.

THIS JUST IN: There's a sticky little situation brewing involving Sovereign Bancorp, the Government National Mortgage Association and the Federal Deposit Insurance Corp. - or so we're told. It all has to do with a loan Sovereign was involved in made to Taylor Bean & Whitaker (now defunct). As reported in National Mortgage News recently, TBW borrowed heavily against its $80 billion servicing portfolio. It's the loan collateralized by the GNMA servicing that's causing potential woes for the Pennsylvania bank. The FDIC is sort of caught in the middle. For the full story see the Monday edition of NMN. Don't subscribe? Call 800-221-1809. A sub gets you access to the website's premium contact as well as the weekly newspaper...

Some time next week a winning bidder should be picked on the $1 billion servicing portfolio being offered by Interactive Mortgage Advisors on behalf of the Federal Deposit Insurance Corp. The receivables once belonged to Franklin Bank Corp. of Texas which failed 10 months ago. Franklin's demise wasn't subprime, but construction lending to home builders -- an asset class that is in deep trouble and causing many small to mid-sized banks to fail, especially newly chartered depositories that bet big on one or two projects. Meanwhile, we're hearing that Freddie Mac might be looking for a senior communications executive and that Fannie Mae has hired some new marketing people...

Below is a great question I just received from one of my One On One Closed Door Coaching members. I believe this is a very common problem, one that is not only limited to our industry, but happens in all businesses. I have left off my member's name not to protect his privacy but really to avoid embarrassing his co-workers. Here is the question.

You've heard the story before and now you're hearing it again -- that existing payment option ARMs (those that haven't been refinanced or already gone bust) are a ticking time bomb, waiting to explode, wreaking havoc in the housing/foreclosure market. Fitch tells us that $134 billion of POAs will recast over the next two years. But wait: rates are low. Will the 'old' rate 'recast' higher or lower? And just which mega banks are holding these loans? According to National Mortgage News' Quarterly Data Report, no one is making these loans any more. The POA market peaked in late 2007. And which firms were the market leaders then? Answer: Wachovia (now the headache of Wells Fargo); Countrywide (now the headache of Bank of America); EMC Mortgage (now the headache of JPMorgan Chase); MortgageIT (Deutsche Bank's nightmare); and Aurora Loan Services whose parent, Lehman Brothers, went bust a year ago...

I've received a great many calls and e-mails lately from coaching clients regarding seniors who "just won't make a decision right now about the reverse mortgage." Those readers who know me are fully aware of my typical advice in this situation: "Look in the mirror."

A REMINDER ABOUT TRUTH-IN-LENDING LAWS, REG Z, HIGHER COST MORTGAGE LOANS AND ADVERTISING RATES TO AVOID LITIGATION