Not too long ago a top residential producer at Bank of America named Kevin Budde left the lender because he got a better offer from Plains Capital. Budde left not just because of financial reasons, but he was getting frustrated by how long it takes to close a loan at B of A. He had kind words for the people he worked with, but it was time to move on. Since the Budde article appeared on the National Mortgage News website two weeks ago, I've interviewed and heard from several LOs past and present at the bank. Some are staying put out of fear about the job/mortgage market, while others are moving on. (Note: Some praised B of A for its employee benefits package, saying it's second to none.) They, too, cited the problem of ultra-long processing times. One East Coast LO I spoke with (who did not want his name used) said some of his loans take 90 to 120 days to close. He vented that he's losing business because of what he called “audits” required of the bank by Fannie Mae. “During the past two and a half months I haven't closed a purchase loan on time,” he lamented. He's been with the bank since the late 1990s. If you have your own story to tell about ultra-long processing times and want to talk “on background” drop me a line at
Is the 30-year fixed-rate loan under attack? Sure it is. At a Senate hearing this week Republicans, who want to scale back the government's role in the housing market, expressed their growing doubts about the taxpayer-subsidized loan product. As many of us already know, America is one of the few nations that actually offers such an instrument. And why do Americans love 30-year FRMs so much? The answer is obvious: the principal and interest never change. It's just those pesky real estate taxes and P&C insurance payments that rise. Will the loan still be around in 10 years? Answer: Yes it will be, but it may take some intense lobbying by NAR, MBA and the NAHB. In the end, rogue factions of the GOP will come around, even if they capture the White House and both chambers of Congress…
Question to readers: How many of you out there have a 30-year FRM versus an ARM product? Are you sorry that you have a FRM?...
One argument against 30-year FRMs is the fact that the product is subsidized by the taxpayers. Ask yourself this: What isn't subsidized by the government? Crops? Oil leases? If you think we have too much “big government” go visit Europe. Prior to Greek's debt crisis, government workers over there could retire at 50. Is there anyone who doesn't like the idea of retiring at 50? OK, we'd all get bored after a few weeks of golf, surfing and skiing (OK, maybe a few months), but you can take your government pension and do something else—like start a small mortgage firm…
IN MULTIFAMILY WE TRUST: Multifamily starts spiked 50% in September to the highest level in three years while single-family starts edged up 1.7%, according to new government figures. Builders broke ground on 227,000 multifamily units in September, up from 148,000 in August on a seasonally adjusted annual basis. Meanwhile, residential rents are up almost 4% from a year ago. According to Deutsche Bank: “It makes sense that rents continue to rise because the rental vacancy rate has declined significantly over the last two years. Historically, the rental vacancy rate has averaged approximately 7.3% since 1956 but over the last 30 years the average has been closer to 8%. This rate peaked in 3Q 2009 at slightly over 11.1% and has since declined to 9.2%—the lowest level since 3Q 2002. Unless home sales and construction accelerate sharply, it is hard to envision a scenario in which rents moderate.”
It's no secret why multifamily is hot: so many delinquent borrowers have lost their homes they're flooding into the rental market. In time, though, consumers will get tired of paying the landlord and realize that it's actually cheaper to own. This is happening in many markets already, but underwriting standards are so tight that a recovery in housing is being retarded…
One reader reports: “Here in the north Atlanta area we've seen multifamily properties go from around 80% occupancy to over 96% occupancy in about 14 months. That has caused an over 16% increase in the cost of renting”...
Apparently, a petition is circulating on the Internet to re-enact the Glass–Steagall Act, which once separated investment banking (Wall Street) from good old-fashioned banking. To see the petition visit
WHAT AM I MISSING: I'm no bank analyst, but New York Community Bancorp is trading at $12 a share, has price-to-earnings ratio of 10, an EPS of $1.20, and its dividend and yield is a mouthwatering 7.8%. Its HQ is in Westbury (Long Island) and it lends in the New York metro area, which has held up fairly well in real estate values, including apartment buildings.
WASHINGTON NEWS: The Senate late Thursday approved an amendment to restore the $729,750 maximum loan limit on government-back mortgages for two more years. But will it die in the House? (Reporting by NMN's Brian Collins.)
FROM THE GARRETT, WATTS REPORT: “If you track the price of farmland against housing prices, starting in 1995, both track side by side for 10 years. Then things change, as housing prices started to crash in 2005. But farmland? It's still headed straight up. In Nebraska, farmland is up 30% over last year. Anyway, if housing prices were a bubble that eventually popped, it's impossible to look at a chart on farm prices and not see an even bigger bubble.”
A WORD ABOUT THE OCCUPY WALL STREET PROTESTS: Has any enterprising LO thought about handing out rate flyers at these events? Or are they all renters? Just a thought.
MORTGAGE PEOPLE: First California Mortgage Co. this week named Andrew Pollock president and chief administrative officer. FCMC is based in Petaluma, Calif.
IMPORTANT DATA STUFF: MortgageStats.com is alive and well. This exclusive data website soon will be updated with new HMDA information. MortgageStats boasts the nation's top 8,000 lenders and 400 servicers, including hard volume numbers and contact information. It also includes exclusive monthly analysis from me. (You can't get this information anywhere else.) For more information drop an email to
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LAST WORD: Freddie Mac's new risk sharing idea sounds interesting.
