THIS JUST IN: Loan brokers are starting to get a glimpse of their new wholesale contracts and the early reviews aren't good. One broker who works the mid-Atlantic market said he has reviewed three contracts so far (one from CitiMortgage) and the most he can make on any loan is 2% with a $7,000 maximum. If you care to share what you're seeing in your contracts drop me a line at
THE BIG PICTURE No. 1: Here's a little joke for you: What did the banking industry say after it woke up from its five-day drunk? Answer: I agreed to pay how much to settle all those servicing abuse claims? The figure, by the way, is $20 billion except it's not real. From what we understand the number was leaked by regulators to The Wall Street Journal (directly or indirectly, I'm not sure) but there is no way the banking industry (which controls 80% of the servicing market according to the Quarterly Data Report and National Mortgage News) would agree to cough up that much money for servicing claims. Yes, the robo-signing scandal is bad and servicers were sloppy and were rightfully pilloried in the press. But $20 billion? Come on. Most mortgagors are losing their homes because they didn't make the payments. Again, servicers should not have cut corners on their foreclosure paperwork, but if you don't pay the piper, he kicks you out of the house. (Let this be a lesson to our state governments and Uncle Sam.) Keep in mind that if the FDIC and OCC agreed on the $20 billion figure that means the banks they regulate would have to come up with that much cash, thus hammering their bottom lines. Again, the $20 billion figure must be a joke. April Fool's Day is just around the corner…
THE BIG PICTURE No. 2: Trying to figure out whether Fannie Mae and Freddie Mac actually made any money in the fourth quarter is like trying to decipher the Talmud, the Dead Sea Scrolls, the Book of Revelations and any William Burroughs novel. Most of the financial press reported that Fannie and Freddie lost money in 4Q, even though the first line in Fannie's press release plainly states: "Fannie Mae reported net income of $73 million…" Of course a paragraph later the GSE notes that the "net loss attributable to common stockholders" was really $2.1 billion. What's with the sleight of hand? Fannie had to pay the Treasury Department $2.2 billion in dividends in 4Q. This is sort of like charging your live-at-home college graduate kid $200 for rent, which he (sort of) gladly pays you, but then he eats up $250 worth of food every month. I mean, what's the point here, really? Freddie was in the same boat during 4Q: an operating profit of $1.2 billion but a dividend payment of $1.6 billion to Geithner & Co. The funny thing is that you look all around the financial services industry and firms that were on life support (or already dead, one can argue) are now turning a profit: Ally Financial, AIG, UGI, take your pick. As I noted back in the summer, the GSEs are buying the most pristine of loans and by using buybacks and hammering mortgage insurers, they're starting to recoup the billions they lost over the past three years. But does anyone in Congress understand this—or care? I'm not saying bring back Frank Raines and Leland Brendsel but I'm convinced that giving the mortgage market to the megabanks is pointless. They're all “too big to fail”— just like FanFred. Maybe it's time to reread “Naked Lunch” because on certain days I'm not sure I understand the difference between a debit and a credit any more…
Meanwhile, if you're looking for a ranking of the nation's top sellers of loans to Fannie/Freddie drop a line to
In case you missed, it the National Association of Independent Housing Professionals has launched a legal defense fund to sue the Federal Reserve over the LO compensation rule. Visit
He's back: That would be Chris Orlando, a former top spokesman for Ameriquest and its (late) founder Roland Arnall. Orlando is working for Carrington Capital Management, a specialty servicer and mortgage bottom feeder. Some might argue that if it weren't for Arnall and Angelo Mozilo of Countrywide there might never have been a housing bubble. But I wouldn't make that argument. I blame Wall Street which supplied the gasoline to both men via subprime securitizations. (The key word here is subprime.) If you're somewhat new to the industry you may want to read “Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis.” I penned the book with Matt Padilla, a former reporter from The Orange County Register. In other book news, a new tome is coming out on the downfall of Washington Mutual. It should hit the bookstores (what's left of them) by yearend…
By the way, Ameriquest's unofficial motto was: we never met a borrower that we didn't like. If the borrower had a pulse, Ameriquest would make the loan…
WASHINGTON NEWS: In a new letter industry trade groups are urging the Federal Reserve to reject a recent staff interpretation regarding its loan officer compensation rule that would restrict payments between mortgage companies and “affiliated” real estate brokerages and title agencies. The compensation rule becomes operative April 1. Trade group officials recently learned that the Fed staff believes fees paid to affiliated title or real estate brokerage servicers could run afoul of the rule. “This would, in effect, prohibit—for no justifiable reason—a successful and long-established business model…that offers consumers one-stop shopping for services through a network of affiliated companies,” the letter says. (Reporting by Brian Collins of NMN.)
CALLING ALL LOAN OFFICERS: We want to know how you did in 2010 and your outlook for this year. NMN's new LO survey can be found at http://originationnews.com/losurvey.
DATA STUFF: Although the mortgage origination sector faces challenges this year, there's plenty of money to be made in servicing. A ranking of the nation's top 100 servicers can be found in the Quarterly Data Report, an Excel spreadsheet and database product offered by NMN. The QDR also ranks certain firms by their cost to service. To order the QDR send an email to:
A MUST ATTEND SERVICING SHOW: The MBA's servicing show ended on Thursday, but if you missed that event try the SourceMedia show. The publisher of NMN and American Banker will hold its fifth annual servicing show in Dallas April 5-7. Top servicing and subservicing executives will be there. For more information e-mail
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UPCOMING KEY WEBINARS: Need to know the latest about loan officers and all new rules? Check out this important webinar on March 23. For more information visit:
THE LAST WORD: Beware the Ides of March – Billy Shakespeare.
