Loan Think

So, things are looking up in the economy, huh? Let’s look at the events of the past 24 hours or so: Chipmaker Intel reported strong earnings and gave a somewhat positive spin on its business going forward; Goldman Sachs knocked the ball out of the park with its earnings (thanks to stock and bond trading profits); and, yikes, a newspaper company (Gannett) reported an unexpected profit of $70 million. That’s right folks, a newspaper company. Meanwhile we keep hearing stories about how the nation’s big five residential lenders – Wells Fargo, Bank of America, Chase, and Citigroup – have a monopoly on the home mortgage business and are making money hand-over-fist. True or not? Who knows for sure but we also keep hearing stories that many lenders continue to tighten underwriting guidelines. This bit of intelligence comes from a reader in the greater New York Metro area. He told me that one savings bank in the New York City area is telling correspondents that it will only fund mortgages on homes where the price is no greater than $700 a square foot. (There are, apparently, exceptions to the rule.) This lender is telling loan officers that it may reduce the loan size and/or add to the interest rate. Reportedly, a few New Jersey lenders won’t even fund mortgages in Manhattan anymore if the LTVs are north of 80%. And I would guess the once red hot Hoboken condo market is suffering too. I used to live there many moons ago. Stay tuned...

Yes, I know those are the words to an old song, but one of the most common questions I hear is, "how to I get the senior to want to use me and not shop around for a reverse mortgage?" Even seasoned reverse mortgage originators sometimes struggle with this. Every once in a while we need to be sure that all of our marketing and outreach is sending a consistent message to our prospects and their children. Do not forget or ignore the children. In fact, I recommend you target them.

It’s unlikely that legislation to create the proposed Consumer Financial Protection Agency will pass this year but that hasn’t stopped the industry from talking about it. (At press time a Congressional hearing was underway on the CFPA.) It’s a foregone conclusion that some type of CFPA will be birthed next year but what will it lead to? Some industry veterans believe the mortgage industry will be commoditized around the 30-year fixed rate loan but a whole new lending segment will be born anew. These lenders will be depositories that keep on their balance sheets non-conforming loans – sort of like the old consumer finance companies used to do -- except instead of borrowing money from Wall Street, these ‘consumer finance’ thrifts will use depositors’ money to fund originations and may even employ nationally certified loan brokers. Wishful thinking or not? Drop me a line...

Whether making a live presentation, having a meeting with a client or referral source and/or using the social media or e-mail, it is, to use the cliché, not what you say, but how you say it.

WHAT SERVICES MAY A NON FHA-APPROVED MORTGAGE BROKER PERFORM AND HOW DOES THIS PERSON GET PAID?

Taking aim at Microsoft in its most dominant market, Google announced that it is developing its own computer operating system based on its Chrome Web browser. Google Chrome OS is an open source, lightweight operating system that will initially be targeted at netbooks, which are small, compact, low cost and extremely popular sub-notebooks. This announcement from the official Google blog post is a clear departure from years of denying any interest in challenging Microsoft or Apple in the computer operating systems market. Both Microsoft and Apple have announced plans to release new operating systems in 2009.

We’re picking up more intelligence on Wells Fargo’s recent auction of $600 million worth of non- and sub-performing subprime loans. (This is the portfolio that Arch Bay Capital of Irvine bought.) The bank asked bidders to post good faith money of $75,000. Wells supposedly had valued the loans (on its books) at 12 cents on the dollar. The sale price to Arch Bay was reportedly 35 cents on the dollar. Arch Bay, meanwhile, does not have a large staff and is known to outsource some of its underwriting and servicing functions. Meanwhile, there is talk in the market that a large holder of subprime and alt-A loans is contemplating some of these assets to get them off its books – as opposed to trying for a sale in the distressed loan market...

Mortgage bankers and brokers are continuing to complain about the Fannie Mae/Freddie Mac ‘Home Valuation Code of Conduct’ or HVCC. This from Mark Allen Mortgage’s Rich Tachine: “What a crock. Lenders having to create appraisal ordering departments they didn't want, to deal with strangers whose values they don't trust. The end result for the consumer? Terrible turn times and a 40% increase in price. That's right -- did you notice the old $350 to $375 appraisal is now $475 to $500? Why?” Meanwhile, as the weekend approaches more consumers are once again contemplating the housing market. Home prices are continuing to fall along with 30-year fixed-rate mortgage rates...

This week, BrokerUniverse is rerunning one of Joel Pate’s more popular columns. We think you will enjoy it again.

By now you've seen the exclusive on the National Mortgage News website about Arch Bay Capital of Irvine being the winning bidder on the $600 million Wells Fargo non-performing subprime loan portfolio. The full details - including the price paid - will be in the Monday morning edition of NMN. Don't subscribe? Call: (800)221-1809. A subscription includes both the newspaper and full access to all the exclusives on our website. Meanwhile, many players in the non-performing loan market say that Arch Bay - a vulture fund originally grubstaked by once high-flying alt-A giant Impac Mortgage - likes to stay under the radar and out of the newspapers. Oh well...