Loan Think

In the past two weeks we saw two very big technology mergers and acquisitions with global IT companies acquiring firms with heavy ties to the mortgage market. Specifically, IBM intends to acquire ILOG and Wipro Technologies has acquired Gallagher Financial. What’s next?

By now, Freddie Mac chief Dick Syron must be scratching his head, wondering why he ever left Boston to take the helm of the GSE. Mr. Syron is a big Boston Red Sox fan. Since moving to the D.C. area the Sox have dominated the American League East and won two World Series. And what has the "local" team, the Washington Nationals, done? Answer: floundered in last, and looked miserable. What does all this have to do with Freddie Mac? Hard to say. We listened on Freddie's hour-long conference call. One thing stuck out - CFO Buddy Piszel's comment that 90% of the "marks" that the GSE is taking "will flow back to us." I'm not going to pretend to be an expert on all the arcane accounting rules facing Freddie and every other mortgage company. But if it does get to recapture those "hits" that would be good news for the company and the nation's remaining seller/servicers. Meanwhile, Freddie needs to raise $5.5 billion in new capital. As I write this, Freddie's market cap is just under $5 billion (share price multiplied by common). How do you raise $5.5 billion when your company is worth $4.9 billion? There is one answer: sell your stock to the Treasury Department. Getting back to the Nationals and Mr. Syron. Maybe one day this awful baseball team - one that only MICA's Jeff Lubar can love - will finish first and maybe even make it to the World Series. If there's hope for the Nationals, perhaps there's hope for Freddie Mac. The government is not going to let this company go down. I repeat: the government is not going to let Freddie go down. Short sellers, take note. On CNBC Wednesday, Mr. Syron hinted there could be a slight glimmer of hope that the housing market may have reached bottom. He went no further than that. Stay tuned. For more analysis read Monday's National Mortgage News. Don't subscribe? Call: (800) 221-1809...

In a recent blog I talked about a vendor offering to outsource FHA processing for struggling vendors looking to tap this new opportunity. But what if the lender doesn’t want to outsource? Vendors with their finger on the pulse of the industry are responding to help these lenders out.

What technology reaches one-half of the world’s population of six billion? Some individuals even have several of them. Nearly one billion are replaced every year as new innovation and solutions are bundled into multi-functional devices rivaling personal computing power of just a few years ago. It sales outpaces laptops and desktops by over a four-to-one ratio and landlines by over three-to-one. It is the mobile handset –an indispensible consumer extension that is growing in importance and functionality. To date, it has been a minimally explored channel for an evolving financial consumer with specific demographics and behaviors. Yet can it help an ailing industry, vanishing consumer base, and potentially mitigate delinquencies and foreclosures?

What have your experiences with reverse mortgages been like? Enter your comments in the box beneath this blogand hit submit!

THIS JUST IN: Yet another major wholesale lender is pulling the plug on using loan brokers to originate home equity lines of credit. But this wholesaler, at least, will continue to table fund first liens. The full story will be in the Monday edition of National Mortgage News. Don't subscribe? Call: (800) 221-1809...

The new federal housing bill taking shape at press time early last week appeared to be a net positive for the mortgageindustry and welcome news given the tough times the business has seen recently.

Prepayment rates for mortgage-backed securities fell 9.5% overall in June from a constant prepayment rate of 13.1CPR to 11.9 CPR, according to Credit Suisse.

When we reflect on innovation, especially technological innovation, we envision multi-faceted solutions, global teams, and well, lots of technology. Mention the individual within technological innovation and it appears to be an oxymoron – a necessary evil but hardly innovative. After all, individuals are devious, self indulgent, and egotistical, no? Just as team builders advocate “there is no ‘I’ in team,” there is also no “team without I.”

What does it mean to be tech-savvy? And can lenders afford to invest in technology now anyway? Actually, the better question is: Can lenders afford not to invest in technology? In this market it’s all about efficiency and the way to be efficient is to utilize technology. So, if lenders aren’t tech savvy, they better be soon.