Depending on who you talk to, the 'current' nonperforming loan market is either a bust or a great opportunity – or perhaps something in between. That covers all the scenarios, really, but I know of at least two firms that have exited the business over the past six months, with one more on the way. Then there are the recent layoffs at Kondaur Capital. Kondaur chief Jon Daurio recently told us that after the staff cuts his business was once again cash flow positive. That's good news, but the 'troubles' I've been hearing about of late center on mostly smaller players. One investor told me that certain private equity and hedge funds are beginning to turn up their noses on the NPL space – but not because the profits are poor. "You can get an IRR [internal rate of return] of 13% on this business still, but some of these funds are saying that's not good enough anymore – they can make 20% by trading currency," an NPL player told me. In other words, it's all about "the trade"…
Meanwhile, one investor who still sees opportunity in the space is Don Cogsville of The Cogsville Group, a private equity firm whose focus is on commercial real estate and loans. Then again, Cogsville and its various partners have been buying from the Federal Deposit Insurance Corp. As Don told me recently the FDIC "is a motivated seller." That can't be said of some of the banks holding thousands upon thousands of units of single family loans and properties. Have any insight into this NPL mess? Drop me a line at:
Then again, in theory, there should be plenty of opportunity for buyers of NPLs. The problem is (or so I am told time and time again) that accounting rules allow holders of this crap to warehouse their dirty laundry because the markdowns (allowable) are minimal. In short, they are all "kicking the can down the road." Perhaps, but eventually the piper must be paid…
AND THIS JUST IN: Within two weeks a handful of large residential NPL portfolios may hit the market. We shall see…
THE LOAN OFFICER COMPENSATION SAGA CONTINUES: All week National Mortgage News has been breaking key developments on the Federal Reserve LO comp story. As the weekend approached a judge was ready to combine separate suits against the Fed filed by NAMB and NAIHP. But the most important development may be that certain key Congressmen and Senators are now putting major heat on the Fed to postpone the rule. Paul Mondor, your move…
A SHORT EDITORIAL: So, why does everyone (except for those employed by the Obama Administration) hate Elizabeth Warren, the "organizer" of the Consumer Financial Protection Bureau? Is it because she's a female attorney from one of those Eastern liberal elite schools (Harvard)? Is it because she's a Red Sox fan? Is it because of those mean things she said about loan brokers a few years back? Or is it because she's the one who is supposedly pushing 'cram downs' (er, I mean, principal reductions) as part of the AG settlement with the megaservicers, even those she's not a party to those talks? I'm not sure what to make of the venom or some of the bad reporting that's been done on her. I'm not a big fan of cram downs either -- because of the legal precedent it would set. Also, I see no way to process cram downs in a manner that is fair to both consumers and lenders. But I'll stick to my guns on getting the housing market back to health. This is how you do it: Get all those struggling homeowners back to work…
SOME GOOD NEWS: Mortgage rates are beginning to fall again…
KEY DATA POINT: Mortgage lenders funded roughly $33.2 billion of jumbo mortgages during the fourth quarter, a handsome 57% gain from the same period a year earlier, according to survey figures compiled by NMN and the Quarterly Data Report. Interestingly, none of that production wound up in any jumbo MBS deals during the quarter. If you are looking for a ranking of the top jumbo and interest-only lenders check out the brand new 4Q edition of the Alternative Products Quarterly Data Report. To view the AP-QDR send an email to:
MORTGAGE MEDIA NOTES: Congrats to NMN and Mortgage Technology editor Austin Kilgore who's getting married this weekend. There goes the most eligible bachelor in the mortgage media sector. Also a hats off to Jeff Horwitz of our sister publication American Banker. Jeff won the American Business Editors and Reporters award for investigative reporting for his series on force placed insurance.
I LEFT MY MORTGAGE IN CHARLOTTE: The Wall Street Journal this past week reported that Bank of America mortgage chief Barbara Desoer sold her Charlotte, N.C. home in November 2009 for $930,500 – resulting in a loss of roughly $533,500. As you may recall Desoer left Charlotte for San Francisco to takeover the bank's mortgage business. (That must've been a tough choice: Charlotte or San Francisco? Okay, when do I leave?) Anyway, the newspaper said B of A took the loss for Desoer. It also reported that the bank paid "$1.5 million for costs related to the purchase of her new home in California and $1.1 million in tax costs, according to a 2009 securities filing."
MORTGAGE PEOPLE: In case you missed it, FHA chief David Stevens will take over as CEO of the Mortgage Bankers Association June 1. Also, rumors were spreading that Iowa AG Tom Miller might be up for the CFPB job. We're told that those rumors are, well, rumors and not very good ones, but that doesn't prevent 'bloggers' from spreading such talk. And former jumbo chief Larry Goldstone has teamed up with Saul Sanders, ex of C-BASS.
OTHER COLUMNS: Check out Jim Israel's 'Mr. Gripes' blog at:
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:
DATA STUFF: If you're going to weather the market you need to know who's on top in originations, servicing and more. You may want to check out NMN's Quarterly Data Report, an Excel spreadsheet and database product that tracks the top 100 every quarter without fail. To order the QDR send an email to:
A MUST ATTEND SERVICING SHOW: The MBA's servicing show ended three weeks ago, 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 email:
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THE LAST WORD: What I'm reading now: 'Franny and Zooey' by J.D. Salinger; and 'Theodore Rex' by Edmund Morris. I've been reading the latter for six months on and off. It's a long book but anyone interested in what Republicans were like 100 years ago it's a must read. You will be shocked: back then the GOP acted like Democrats! It's too bad that none of the GOP are going to bust the 'Banking Trusts.' More on that next week, perhaps. Also, check out the TV show 'Justified' on FX.
