Loan Think

Mortgage bankers and brokers that specialize in FHA (or want to) start your engines. Late this past week the House passed landmark legislation that provides $300 billion in FHA mortgages to troubled (presumed) subprime borrowers who are ready to go kaput on their notes. According to the Quarterly Data Report, there is roughly $1 trillion in outstanding subprime loans in the U.S. The top servicer is Countrywide, which is now the ward of Bank of America. To get a complete listing of all subprime servicers order the QDR by e-mailing Deartra.Todd@SourceMedia.com. For complete coverage of the new bill (which the Senate is expected to approve this weekend) see the Monday edition of National Mortgage News. Don't subscribe? Call (800)221-1809...

According to a 2007 report by the Government Accounting Office (GAO), FHA’s product restrictions and lack of process improvement relative to the conventional market was largely responsible for the decline in market share, despite comparing favorably in cost to the subprime programs that largely eclipsed them. The collapse of the subprime market has led to the resurgence of interest in FHA, and recent revamping has positioned the agency to reclaim the volumes it once enjoyed. GAO expects FHA to fund 10% of home purchases in 2008 and 15% in 2009, continuing to levels not seen in over a decade. So how do lenders get their piece of the pie?

The struggle or dissonance between what is right and what is easy could be written as the epitaph for the mortgage industry. However, I’m not prepared to go quietly – how about you? As our industry begins a rebirth with new ideals and new players, we are confronted with a contemporary set of principles of operations that cannot be ignored and are not necessarily simplistic or intuitive – the ideals of “going green.”

This week we present a special treat; a sneak peek at Paul Muolo and co-author Mathew Padilla's book "CHAIN OF BLAME: How Wall Street Caused the Mortgage and Credit Crisis."

Big shocker, I was flipping the channel and watching some TV this weekend. I get over 200 channels, but there’s still nothing good to watch. As I channel surfed the one thing that stood out was a commercial by Esurance about the value of going paperless. If the mortgage industry got it the way Esurance does, it would be a lot better off, I think.

The answer is 23. 23? 23 what? Not what, just 23. I could have just as easily substituted the 23 for any acronym – SaaS, various standards, SOA, CRM, ITIL, CMMI, BRE, AVM, “e-something,” or a multitude of other advocated approaches. Have we become an industry more worried about the implications or catalysts over the operating principles, rationale and outcomes these very important solutions were designed to facilitate? What is there efficacy?

It's always darkest before dawn, right? On Friday, with Fannie and Freddie's share prices plunging, it felt as though no matter what Treasury secretary Henry Paulson said about the situation the markets didn't believe him. All week long as the "negatives" mounted against the two, their stocks kept going down. There's one simple solution to the mess: Federal Reserve chairman Ben Bernanke opens the borrowing window to Fannie and Freddie, which would end this "crisis of confidence" immediately. The common shareholders would be left intact with the hope that one day their investment might come back. It's no secret that short sellers are targeting the GSEs big time and it's making commercial paper lenders nervous. Why hasn't Bernanke stepped forward to do this? I have no idea. It did it for Bear Stearns. Maybe Ben will step forward over the weekend. Are Fannie and Freddie insolvent? Answer: not that I know of. But keep in mind this one thought: we are no longer living in "normal times." A company that appears "solvent" one day can find itself on the ropes within hours. It's all about cash flow, folks. If a line of credit gets pulled, a "solvent" company can go bust within a few days. We're in unchartered waters here…

Here's how I opened the SourceMedia annual Mortgage Servicing Conference, held recently in Dallas. Let me knowwhat you think of my remarks! Enter your comments below and hit submit.

William Blake’s poetry and quote of “Seeing the world in a grain of sand…” continues to hold inspiration for many business leaders and technological dreamers dealing with globalization and the “flat corporation.” Yet as a pragmatist, I muse that if this is true, whose grain of sand provides improvement and profit out of the countless trillions of particles available? Furthermore, within a troubled industry clinging to dogmatic approaches, can invention really be spawned by the spear of consolidation, or worse, regulation?

It's no secret that origination volumes are suffering - but none are suffering more than in the wholesale and correspondent channels. According to exclusive survey figures compiled by National Mortgage News and its affiliate the Quarterly Data Report, retail production accounted for 51% of all loans funded in the first quarter, the highest reading ever recorded by these publications. From January to the end of March, mortgage bankers originated $525 billion in home mortgages, $267 billion through the retail channel with correspondent and wholesale accounting for $153 billion (29%) and $105 billion (20%), respectively. In the first quarter of 2004, for example, retail accounted for 42% of all loan production with wholesale capturing 28% and correspondent 30%. For the full story see Monday's NMN or order the QDR. For more info on the QDR e-mail Deartra.Todd@SourceMedia.com...