Loan Think

The debate over client server vs. Web technology is quickly becoming moot. Some version of Web-enabled technology is clearly the way the industry has decided to go. When top vendors and lenders embrace .NET architecture, it's clear that we're no longer talking about a fad.

On Friday morning the Federal Reserve added $19 billion in liquidity to the market, then another $16billion and for the heck of it threw in $3 billion at midafternoon. According to one report, the Fed was acceptingmortgage-backed securities as collateral. Meanwhile, Fannie made its portfolio cap request public, tellingthe world it wants a 10% increase so it can help solve the nonprime liquidity crisis. In case you're wondering,10% translates into $72 billion. Why does Fannie need an increase? Because some of its top seller/servicers (itwon't say which firms) are asking it for some breathing room, as in can you take these loans off our hands? Ifyou want to find out who the top sellers are to Fannie, order National Mortgage News' HMDA Database.For more info e-mail Deartra.Todd@SourceMedia.com...

You hear a lot of horror stories about failed implementations, vendors not meeting expectations, false advertising, etc. For these reasons, when choosing a vendor it's important to choose a partner that is aligned with your business strategy. Remember, vendor selection shouldn't be a popularity contest.

I'll put it bluntly: if you operate a non-depository mortgage firm (lender or servicer) and don't have a deep-pocketedparent or hedge fund as a sugar daddy you're likely to be out of business by year-end, probably sooner. In the20-plus years that I've been covering residential finance I haven't seen a financial meltdown this swift sincethe S&L crisis of the mid-to-late 1980s. One subprime executive who closed his shop a few months ago told me,"This is a liquidity crunch the likes I have never seen." Meanwhile, the mudslide is rolling downhillfrom Wall Street to mortgage bankers, to loan brokers, and then the consumer. Nomura Securities is windingdown its mortgage conduit and three major Wall Street firms are preparing to slash their mortgage desks and orconduits…

Lenders tend to stick with the same systems for longer then they really should. Why? Most fear change and note that changing to a new system hurts sometimes, but so do vaccinations, yet they protect us from very dangerous illnesses. Along those lines, adopting a newer system can prevent the lending institution from coming down with chronic illnesses as well. After all, no lender wants to be hit with inefficient-itis, slow turn-time fever, or worse go out of business entirely because of can't-keep-up disease.

Who couldn't use more business nowadays? In the latest issue of National Mortgage News it was reported that Mark Zandi of Moody's economy.com doesn't see a recovery until 2010. And David Seiders of the National Home Builders was quoted as saying, "most indicators point toward further deterioration."

Paul Muolo is on vacation this week. We're running this story in place of his usual column.

It never ceases to amaze me to hear, as I did today at lunch with a prominent vendor, that there are several large, top 20 lenders that they know of in the market for one end-to-end loan origination system to go across all their channels of business. I equate this to the search for world peace in that everyone wants to get there and has their own beliefs about the best path, but there's no one method that'll get you there if it's even possible to achieve world peace at all.

Not only is Aegis Mortgage shutting its home-equity division, but the lender is plagued by $100 millionin early payment defaults. A memo provided to National Mortgage News spells out the current stateof affairs at the Cerberus Capital-owned Aegis. Cerberus, by the way, also controls Residential CapitalCorp., the parent of GMAC. There's also talk that Cerberus will whittle down, further, the price ithopes to pay for Option One Mortgage Corp., which could spell trouble for H&R Block, itsowner. To view the full exclusive story on Aegis, see the Monday edition of National Mortgage News.Don't subscribe? Call: (800) 221-1809...

The last blog spurred some really creative thinking. In particular, Bob DeCecco, a senior vice president at Opteum Mortgage, wrote, “As a CPA, I can tell you through many years of ROI and financial modeling experience ... revenue, not just cost savings cures all ills. During this very rapid decline in origination market share, lenders will have to focus on increasing originations by leveraging bleeding-edge technology that allows us to do a better job fulfilling the entire 360-degree customer and partner experience, not just the loan closing process.”