Loan Think

Overall prepayment rates for mortgage-backed securities declined 6.0% in April from a constant prepayment rateof 16.8 CPR to 15.8 CPR, according to Credit Suisse.

THIS JUST IN: National Mortgage News is about to publish its 1Q edition of the Quarterly Data Report. One key finding is that mortgage bankers funded just $4 billion in subprime loans from January to the end of March, the industry's worst showing in two decades. (A year ago lenders originated $89 billion in subprime loans.) NMN soon will publish its Alternative Products Quarterly Data Report, which has rankings on the nation's top second-lien funders, interest-only lenders and much more. To order the QDR or AP-QDR, send an e-mail to Deartra.Todd@SourceMedia.com...

Today borrowers not only crave more information, it may be mandated by law that they get it. For example, demonstrating through a signed disclosure that the borrower was briefed on at least five loan products to prove they weren’t swayed in one direction over another. Technology can help, not just in order to keep lenders compliant, but in getting repeat business as well.

Innovation and orchestration are two divergent words that at first glance should not be used together. The fact-of-the-matter is that the mental images of “orchestration” appear out-of-place when discussing mortgage technologies, processes, and innovations. Why discuss music at a time when the industry is melting away? I too remember the stories about Nero and his ambivalent concern for his kingdom.

THIS JUST IN: Bill Beckmann, president of CitiMortgage, will leave the unit by the end of June, National Mortgage News has learned. For the full story see the NMN website at http://www.nationalmortgagenews.com...

THIS JUST IN: Craig Pica, the owner of Provident Funding Associates of Burlingame, Calif., is buying a Colorado thrift. For the full story visit the National Mortgage News website: http://www.nationalmortgagenews.com...

What are all these subprime loans worth now? Who knows. And if we don’t know how can we hope to restore investor confidence? As the mortgage industry looks to restore investor confidence as well as its own tarnished image, Overture Technologies suggests that a concept called re-decisioning may be the answer.

A lot of ink has been spilled about lenders working diligently with homeowners who cannot make their payments but who want to keep the house. This tale is about "James" (first name only), a loan broker who has a 2/28 mortgage with Countrywide. His loan was a no-downpayment note with an original principal balance of $330,000. James and his wife are looking at new monthly payments of $3,599 compared to a start rate payment of $2,100. (The start rate was 5.99%, the new one, 8.59%). He, his wife and two kids live in Sun Valley, a suburb of Los Angeles. His house now has negative equity but they want to stay put. They like the neighborhood, his parents are nearby. He contacted Countrywide and told them his tale. Here's the catch: his loan is not delinquent. It's current. One of the chief reasons it's current: his parents have been helping out with the payments. Nonetheless, he called Countrywide and asked to restructure the loan. Eventually, according to him, Countrywide agreed to renegotiate, promising to keep the mortgage at the original start rate, the 5.99% for five years. He was elated. Countrywide said it would send a letter confirming the details. When the letter never arrived, he called the servicer. He was told by a Countrywide rep that no such permission to keep the rate at 5.99% was granted. He said they described the permission as a "computer glitch." James is a self-employed loan broker, not a great business to be in right now. His wife just landed a new job with promise: on Monday she begins work at a collection agency. They hope to hang onto their house. But can they? Question: how many more James' are out there, people who bought homes at the top of the market, like where they live but are sitting on negative equity and note adjustments? Stay tuned...

Overall prepayment rates for mortgage-backed securities fell 6.9% in March after surging 52% in February, suggestingthat speeds "were front-loaded in February, most likely as originators tried to avoid the new delivery feesapplicable from March," according to Credit Suisse.

The days of debating the best-of-breed approach where a lender integrates several different best-in-class providers vs. the end-to-end approach where one system does everything are over. Lenders have spoken. They want everything to happen in one system, but that doesn’t necessarily mean they endorse the end-to-end philosophy. A new debate has emerged.