Loan Think

This has been the most turbulent year in the history of mortgage lending for sure. Some have called this the biggest downturn since the Great Depression. However, in the midst of the doom and gloom, we at Mortgage Technology magazine still think there’s something to celebrate. We think you should be recognized.

Michael Strauss, CEO of American Home Mortgage which crashed and burned back in the summer of 2007, is reportedly looking to re-enter the mortgage business. One former executive at AHM -- once a publicly traded REIT -- said Mr. Strauss is "building" a new mortgage related business adding that he "hopes to be in position within a few years to jump on the next opportunity." AHM was an alt-A and prime lender that was margin called by its warehouse lenders. Most of its servicing was eventually bought by bottomfisher Wilbur Ross...

If you are reading this article, you are one of the winners. Pat yourself on the back. Even I these turbulent times, you are taking steps to not only survive, but thrive. Why not supplement your business with the fastest growing product ever to hit the mortgage industry, the reverse mortgage. Get ready the time is now.

Now that Citigroup's earning a ton of money again, the next question becomes: what about Fannie Mae and Freddie Mac? Not so fast. First let's look at today's "Citigroup Rally." At press time the stock market was soaring because Citigroup's CEO Vikram Pandit "leaked" a company letter that said the bank had an operating profit of $8.3 billion before taxes and special items through February -- its best performance since 3Q 2007. "Special items" might include hits to its subprime and CDO portfolio. In other words, that $8.3 billion may not look so impressive if writedowns wipe out most that profit. Then there's Citi's commercial real estate portfolio to think about. And what about all those European loans? But let's just say Citi does turn a profit in 1Q. Does that mean the GSEs might soon do the same? (Citi, Fannie and Freddie are all huge players in home mortgages, including subprime.) Meanwhile, according to new estimates made by Zacks Equity Research of Chicago, Freddie will lose $39.50 per share in 2008 (the government controlled company has yet to report earnings), and $13.12 per share in 2009…

Executives are working feverishly to deal with the current economic downturn, cutting costs, and working to develop strategies for survival. There is tremendous pressure on executives to meet payroll, launch new initiatives, reduce costs, streamline operations, and meet shareholders expectations while navigating these difficult times. Often times employee’s morale is not a top priority given the current circumstances. What executives fail to realize in these challenging times is that employees are the key to new innovation. Innovations that will not only help the company survive but thrive in these current market conditions.

Even before the collapse of subprime lending, the mortgage broker industry seemed to have two strikes against it when dealing with the trust of consumers.

The Daily Journal, a newspaper geared toward the legal community, is reporting that Countrywide Financial co-founder and former CEO Angelo Mozilo and possibly other (former) high-ranking executives at the company soon could face civil charges from the Securities and Exchange Commission. The SEC's goal is to demonstrate how Mozilo and other executives misled shareholders about the risks Countrywide was taking on. (It was once the nation's largest subprime lender and servicer, according to the Quarterly Data Report.) CFC's shares once traded as high as $50. Eventually, the company sold out to Bank of America for just $7. If BoA had not stepped in, CFC, more than likely, would have been taken over by the government, wiping out shareholders entirely. The Daily Journal reported that a final decision on filing charges could take at least two months and lawyers for the executives could ask for one more meeting before a decision is made. The newspaper's source is "attorneys familiar with the case"…

Maybe there's some life out there in the economy after all. Yes, the mortgage industry has hit the skids (an understatement, for sure) but one boutique investment banker I know told me this morning that he's the busiest he's been in five years. "I'm working on M&A deals," he said. "There is such a need for capital." His speciality is mortgage finance. Also, Wells Fargo Home Mortgage said Friday that it originated more home loans in the first two months of 2009 then it did for the fourth quarter. Of course, the fourth quarter was a complete disaster for lenders. See National Mortgage News Online later today for an update…

THIS JUST IN: The Government National Mortgage Association might be open to providing (in some manner) warehouse financing to non-depository mortgage banking firms, helping alleviate the credit crisis in that sector. GNMA isn't ready to talk about it but there are rumblings out there. Meanwhile, some regional banks are warming up to the idea of becoming warehouse providers, one investment banker told us. These banks understand that the profit opportunities in warehouse could be quite good. "I know one Illinois bank that's looking at it but they only want to lend in their state," said a source. "They're telling me: 'If it's not in my backyard I don't want to do it.'" For the full story see the Monday edition of National Mortgage News. To subscribe to the paper and website call 800-221-1809...

Over my career I have had many struggles, and maybe right now you are having the same ones I did. When I started out rates were in the mid teens and the country was in a recession.So I am going to share a thought I heard from a good friend of mine named Lee Milteer who is a motivational and productivity guru. She always says, "You can choose whether you want to be a victim or not." I'm not here to tell you everything is always rosy and great. I am here to let you know that HOPE is not a strategy.