Loan Think

THIS JUST IN: Late this past week there was a bunch of chatter about the nonperforming loan market including a rumor that the Federal Deposit Insurance Corp. might be offering for auction a $1.4 billion package of troubled whole loans, including some FHA product. An agency spokesman had not returned a telephone call as this column went to press. As one nonperforming loan investor told us, "They have a bunch of that crap to sell." Meanwhile we understand that Bank of America has been quietly disposing of some of its troubled whole loans (which likely came from Countrywide) by selling them to two different hedge funds, one of which goes by the name of Waterfall. (At least $2 billion may've been sold.) We Googled the name Waterfall and could only come up with a Waterfall Investments in York, Ontario. Stay tuned. Also, in Monday's National Mortgage News we're publishing a story about a smaller pool being offered by BoA. Don't subscribe? Call 800-221-1809...

We keep hearing talk that American International Group is going to peel off and securitize another chunk of the $9 billion non-prime whole loan portfolio belonging to its American General Financial Services unit in Indiana. But will the now-publicly traded PennyMac get a piece of the deal like it did last time? (Its stock has floundered since its IPO.) Meanwhile, Guaranty Bank of Texas is expected to be taken over by the government and then sold. Guaranty announced its intentions to exit the warehouse lending business earlier this year but still has a few lines open. And in one other warehouse note, Bank of America has sued the troubled Colonial Bancgroup (the nation’s largest warehouse lender) seeking the return of $1 billion in collateral. BoA is the collateral agent for $1 billion in loans made to Ocala Funding LLC, a commercial paper vehicle sponsored by (are you ready for this?) Taylor, Bean & Whitaker. TBW – once thought to be a white knight for Colonial – is expected to file for bankruptcy protection shortly...

As with every issue of this newsletter I will share with you many ideas you can instantly apply to your business and your personal life. Here is an article that is particularly fitting to the changes we are currently experiencing in our industry as we move from a refinance market to a purchase market.

It appears that the state of Missouri is looking for new sources of revenue and is going after loan brokers. Donna McCallister of All Credit Mortgage reports to us that this week she received a package from the Missouri Division of Finance which is asking for a $300 “investigation fee (I guess to prove that I am a mortgage broker?)” and another $300 for licensing. To add insult to injury, the state also is asking for a $50,000 surety bond which will cost $500. Ms. McCallister says she has been in business for 13 years – eight as a HUD approved broker. She notes: “It is hard enough to keep the expenses paid and now they want more and more. It seems like they want us to fail.” I’ve been receiving similar emails for the past year. Meanwhile a new survey says that 57% of economists believe the recession is over! Tell that to all those unemployed Americans who are struggling to pay their mortgages and can’t find a decent job. Here’s one thought: what will happen to the home buying business when the federal $8,000 first time home buyer tax credit expires -- along with the $10,000 tax credit in California? And what about the “cash for clunkers” auto relief act? Congress has already voted to extend the program – but one day the sun will set. Stay tuned...

Our story today comes under the heading of "you just never know" but it got me thinking. I've been doing that a lot lately in response to requests from coaching members who want some unique and creative ideas to spark some new business.

Who says Uncle Sam doesn’t care about non-bank mortgage lenders that rely on warehouse lines of credit? Follow my logic here: Uncle owns 34% lf Citigroup which this morning revealed that it would use $2 billion of TARP money to make new warehouse lines of credit to non-bank residential funders. Now that Colonial Bancgroup’s warehouse division in Florida has been cordoned off by yellow “keep out, this is a government raid” tape that means Citigroup (thanks to Uncle) could soon be the nation’s largest warehouse lender. We called Colonial this morning to get a response but a person answering the phone wasn’t commenting. The bank’s warehouse chief wasn’t in today. Meanwhile, it appears the Federal Deposit Insurance Corp. is taking a keen interest in the warehouse issue. For the full story see the National Mortgage News website later today. And one last thing: We’re hearing some interesting things about the TARP IG probe of the Taylor, Bean & Whitaker/Colonial deal. Hear anything, drop me a line at: Paul.Muolo@SourceMedia.com...

If people who are in charge of marketing for mortgage companies don't have enough to worry about in terms of ethical perceptions by consumers, a survey by business intelligence firm Kognitio, Chicago, is just one more hurdle to overcome.

FEDERAL TRADE COMMISSION EXTENDS TIME TO HAVE RED FLAG IDENTITY MANUAL IN HOUSE TO NOV. 1, 2009

Because we are all taxed with trying to accomplish more within every 24 hour period of time, many of us have turned to innovative technology for answers. Cell phones have come a long way with the introduction of smart phones and broadband connections, which allow us to stay connected to the office where ever our travels take us. Busy mortgage executives, road warriors looking to close the next deal, and parents rushing to get their kids to practice on time have all turn to mobile e-mail and texting to stay connected while on the go. While this technology has been widely adopted and proven to be extremely effective, it can also pose significant risks.

Now that Taylor, Bean & Whitaker has hit the wall, what will become of its $78 billion residential servicing portfolio – much of which covers Freddie Mac loans? Some might recall that when American Home Mortgage of Melville, N.Y. went bust two summers ago Freddie Mac pulled its servicing rights from that shop (hiring Bank of America to temporarily service those receivables) while Fannie Mae allowed American Home to continue servicing for them. (AmHome was in Chapter 11.) For the full update see the National Mortgage News website later today. Meanwhile, I just got back from a week long vacation on the (New) Jersey shore and vacation property values seem to be holding up in certain towns like Avalon, Margate, Ocean City, and Sea Isle City. Rental prices have come down a bit (say 20% or so at worst) but units are still being rented out which means the mortgagor can still make his payments. Absent from all the freebie real estate pamphlets: mortgage advertisements from lenders that are willing to finance vacation properties. I only spotted a few...