Loan Think

SIX MORTGAGE BANKERS TO GET $9.9 BILLION TO HELP REDUCE PAYMENTS FOR EXISTING BORROWERS

As more and more seniors and their families are faced with the decision about where mom and dad will live as they age, it is crucial for the family to be sure that the individual needs of each person is met. How can we as reverse mortgage professionals become a resource and guide our clients through the maze of issues to be considered?

We have us a refi boom, indeed. At least that's what it looks like if you gauge the first quarter origination figures released thus far by the nation's mega lenders: Bank of America, JPM Chase, and Wells Fargo. But how's the wholesaler/broker market holding up? How is it being in the trenches for the nation's remaining independent loan brokers, a group whose future looks less than rosy? One broker we interviewed recently said he's considering changing jobs to become a retail LO. This broker, who requested anonymity, gave us his perspective on dealing with Bank of America's wholesale department: "Their rates are simply not competitive. I have at least 20 other wholesale lenders that will offer my borrowers better terms. Their warehouse/correspondent rates are just as bad." This broker didn't want to be quoted because he still might use BoA and is on its "approved list"…

For those familiar with my editorials over the past few years, one of the points I have consistently made is that customer service will win out in attracting new customers and retaining old ones.

Social media makes it extremely easy for people to share information. This information can be in the form of opinions, ideas, complaints, specific needs and whatever a person is thinking at any given time. People are providing this information in blogs, tweets, videos and comments on online message boards, including employee activity. The mortgage industry is beginning to embrace social media as an additional business development and marketing strategy. While there are numerous benefits and opportunities for mortgage industry participants to engage in social media activity there are also some pitfalls if this activity is not monitored properly. As a business what are you doing to monitor this activity? Are you protecting your company’s good name and strong brand reputation?

When will the private label MBS market return? And will it need the government's TALF program (Term Asset-Backed Securities Loan Facility) to spark its revival? Both are good questions. For now it's safe to assume that the privatel label MBS market is dead and won't be back any time soon. Some may argue that it will never come back. Meanwhile, there's a more important question to ask: when the refi boom runs its course, what will mortgage originators do then?

Monopolies are good for one thing: profit margins. In a handful of conversations with analysts and mortgage executives this past week one thing seems clear: earnings on new originations are expected to be quite strong in 1Q. We're already seeing evidence of this from Wells Fargo. But keep in mind: the nation's mega lenders are now a cartel. They've marginalized loan brokers -- and correspondents. Non-banks are having a tough time getting a warehouse line and most of the top five mega banks/mega residential lenders are loathe to give them one or get too heavily involved in that business. And why should the top five? They have it good right now: little competition and the ability to heap on adder fees to new borrowers. Can anyone break the cartel?

Have you heard the story of the donkey that falls into a well? The story is that the old donkey had been a part of the farmer's life since birth. The farmer loved the donkey and the donkey was a great donkey. One day, the donkey got too close to the well and fell in. The farmer was very dismayed. He knew if he didn't get the donkey out of the well, the much beloved donkey would die and ruin the water well at the same time.

THIS JUST IN: Guess which banks - some recipients of billions of dollars in TARP funds - have been buying, in the private secondary market, AAA-rated "toxic" mortgage bonds for prices as low as 60 cents on the dollar? That's right, folks, it's JPMorgan Chase, Wells Fargo and Citigroup. One mortgage manager who works for a REIT that also is a buyer said the AAA-rated securities are being scooped up at bargain basement prices. "It's sort of ironic," said the manager. "Citi is on government life support and they're buying this stuff at 60 cents on the dollar." Keep in mind that in its 1Q earnings statement, JPM chief Jamie Dimon proudly announced that his bank had scooped up $34 billion in MBS during the quarter. Translation: if you think private sector banks want to partner with the government to buy toxic mortgages, think again. It's believed that quite a bit of JPM's purchases involved senior tranche discounted MBS. Other buyers of toxic assets include Blackrock Financial and PIMCO, Bill Gross' outfit. As we reported a few months back some 'scratch and dent' investors are buying performing mortgages for prices as low as 70 cents on the dollar. Why would an institution sell at those prices? Answer: because they're re-underwriting loans, discovering that there were program violations...

Congressional TARP cop Elizabeth Warren (and a friend to mortgage brokers everywhere) was on The Daily Show with Jon Stewart last night, slamming (to some degree) Treasury's accounting of how much bailout money has gone out the door. Ms. Warren says $590 billion in taxpayer cash has been spent. The Treasury's figure is a bit lower. "There is a dispute over" how much has been spent, she said. Meanwhile, she also said that for every $100 of tax dollars spent buying preferred shares in banks, the government (taxpayers) have received just $66 in value. Why? Because the secondary market value of these preferred shares has fallen. At least that was her argument. And I was just kidding about Ms. Warren (she of Harvard) being a friend to loan brokers. Ms. Warren does not like loan brokers in the least…