Loan Think

I just got back from the beach and had a really good time. Who cares, right?

In today’s economic climate companies that are looking to do more than just survive understand the impact that sales results have on their bottom line. The challenge is to increase sales while reducing the cost of each sale. Travel expenses continue to soar. As a result, companies are placing tighter restrictions on travel budgets. Organizations are operating “leaner” than ever before, and are attempting to streamline operations by keeping the sales staff in the office much more. Yet, travel is critical to close deals in today’s dynamic marketplace, and severe restrictions hinder business growth. Therefore, companies must find innovative ways to communicate and collaborate with prospects, customers, and partners.

This morning National Mortgage News was the first in the trade press to break the news that the Mortgage Bankers Association was tossing Fannie Mae and Freddie Mac overboard in favor of creating many, mini-GSEs. Of the commentary I've heard thus far, here's a few quick take-aways (paraphrased by me): MBA's ideas are dead on arrival; it's a good starting point; it will hurt smaller lenders and favor the giants. In other words, strap yourselves in, folks. This is only the beginning of a long and drawn out debate to decide the future of the Congressionally chartered and now publicly owned mortgage giants, one of which posted a profit in the last quarter (Freddie). Keep in mind this one thought: Fannie and Freddie fired all their lobbyists per the instructions of their regulator, the Federal Housing Finance Agency so they will have no say whatsoever on their future. But if there is no FanFred, do we need a FHFA? FHFA, I assume, has lobbyists...

As mortgage originators, we are constantly trying to build our "list", our database of customers and prospects. It is our lifeblood. So much effort and expense is spent on acquiring that lead and we all too often suffer from a failure to follow up once we have that prospect. Recently I was asked to prepare some comments on how we, as reverse mortgage originators can stay in front of our prospects and increase the likelihood that they will call us first when the time is right. You've heard it said in sales that for each month you don't reach out to your prospects, the chance they will contact you diminishes. It's no different with the senior population. The prospective reverse mortgage client wants to know that you are still around (especially give the current environment) and that their business is still important to you.

When Taylor Bean & Whitaker went bust last month it screwed up thousands of consumers who were waiting to close loans with the non-bank lender. Many of those deals fell apart, leaving loan officers scrambling to find new sources of funding for their clients. But the company’s BK filing also hurt other consumers who were owed money by TBW. Here’s one example from loan officer Tom Shaw: “Recently, I refinanced one of my good customers from TBW to Wells Fargo and she closed on the new mortgage on 7/10/09. There was an escrow balance of $1160 with TBW that was not netted out at closing, which, as you know, means that this customer was due a refund from TBW for the escrow balance. Well, TBW did send my customer her escrow balance. She deposited it into her account and it showed in her account as a deposit. A few days later her bank called her up and told her that TBW had put a stop payment on the check. This is an elderly disabled woman who is going to have a bit of a hard time without this money.” Tom is now looking for a way to get this customer’s money back. Meanwhile, back in March it looked like the end was near for Bank of America. Its stock hit a 52-week low of $2.53 a share on worries that its purchases of Countrywide and Merrill Lynch were ticking time bombs because of all the toxic mortgage assets those two held. Almost six months later, BoA’s shares trade for almost $18 and it’s talking about repaying $20 billion of TARP money. One last note: pending U.S. home sales rose more than expected in July to the highest level in more than two years – thanks mostly to first-time buyers. But beware: the $8,000 tax credit expires December 1…

Over the years, many women have been attracted to the mortgage brokerage business and many have been very successful at it.

MORTGAGE FRAUD JUST GOT TOUGHER - NEW FEDERAL LAW MEANS STOP DOING IT AND GET A DAMN GOOD LAWYER IF YOU HAVE COMMITTED MORTGAGE FRAUD

James G. Hicks of Lawrenceville, Ga., staked a claim for $9 million in bankruptcy court, saying he's owed that money from now defunct mortgage banker Taylor Bean & Whitaker of Ocala, Florida. In this past weekend's column I asked for information regarding Mr. Hicks' business ties to TBW. (The BK filing only mentions his address with no details about his relationship to the non-depository.) According to industry sources, Mr. Hicks managed a retail net branch of some sort called Home America. The unit was based in Gwinnett County, a suburb of Atlanta. One mortgage banker said Hicks "agreed to a buyout or settlement of some kind with TB&W/Farkas [company CEO, Lee Farkas] around the same time as TB&W/Farkas purchased Platinum Bank. I heard that the plan was to roll the Home America folks under Platinum Bank together with TB&W's other retail franchise." It appears that something went wrong with the deal and Mr. Hicks is owed $9 million or so he claims...

Most readers know the obvious: the nation’s top four residential lenders are banks and they have a “cartel” like hold on the origination business. In case you’re wondering who the top four are, next week National Mortgage News will release its Quarterly Data Report but here’s a preview of the top four and it’s the same four that have been dominating the business for well over a year: Wells Fargo, Bank of America, Chase, and CitiMortgage – all of which received sizeable TARP money from Treasury last year. Meanwhile the SAFE Act (Secure and Fair Enforcement for Mortgage Licensing Act) is coming. According to Scott Stern of the Lender’s One cooperative depositories are exempt from the pre-licensing and continuing education requirements of the legislation. Non-banks must foot the expense of these items which Mr. Sterns calls a “tax” on the non-bank industry. The question now becomes: how did the mega banks – all recipients of government aid – pull off such a lobbying coup?

Credit. Besides values and down payment, is there any one particular subject keeping you from closing loans more than the credit and the resulting score of your borrowers?