Reading the tealeaves of mortgage banking is never easy. I remember back in 2000 when the industry was struggling.That summer I asked Countrywide chief executive Angelo Mozilo how business was. His answer was bluntand to the point: "It stinks." Then in 2001 production doubled to $2 trillion and in 2003 the industryfunded an eye popping $3.9 trillion. (Figures courtesy of the Mortgage Industry Directory.) So, what dothe tealeaves say right now about the coming year? The good news is that lenders aren't complaining about volumes.(In 2005 the industry will fund close to $3 trillion.) The gripe is about the flat yield curve and profit margins.One non-conforming lender told us that whole loan buyers (Wall Street, among others) aren't paying up for productanymore. This executive, requesting his name not be used, said that through November investors had bought so manyloans that their balance sheets are "full up." He added that some funders are having what he called "aninteresting" fourth quarter. A small California lender we know said that until November his shop was earningmoney, but now investors aren't paying up and his firm is in the red. If the market doesn't turn by February he'sprepared to trim staff drastically. Meanwhile, subprime giant Ameriquest laid off 800 in November, and Countrywideis trimming staff by 300. On the other hand, government figures show strong industry employment -- but those numberslag by 60 days
On the brighter side of things the U.S. unemployment held steady at 5% (for October) and the yield on the 10-yearTreasury is at a benign 4.5%. And new homes are still selling like hot cakes
As the year winds down many firms are calling National Mortgage News looking for rankings, analysis,and contact information. NMN recently discounted its new Loan Officer Compensation and Production Report(LOR) and the equally new Loan Origination Software Report (2006 edition). Mention the Weekend Updateand receive either for $375. For more information contact:
Another top executive has left Ohio Savings Bank, the Cleveland-based correspondent lender. The privatelyheld thrift is owned by the Goldberg family. For more details see Monday's NMN. (To subscribecall: 800 221-1809.) Ohio Savings is also one of 15 mortgage firms featured in the new "15 (Mostly)Private Firms to Keep an Eye on in 2006." For more information email Ms. Washington as well
When the going gets tough the tough start selling their wholesale operations. Guaranty Residential Lending,an affiliate of Guaranty Bank, Austin, Texas, has put its wholesale division on the auction block. A yearago Guaranty Bank signed a cease and desist order with the Office of Thrift Supervision. OTS had levieda host of allegations against the company, including Home Mortgage Disclosure Act reporting violations. OTS alsosaid Guaranty had trouble with record keeping and "Suspicious Activity Reports"
Genworth Financial, which owns a top ranked mortgage insurance company, has been added to the Standard& Poor's 500 Index. The firm's shares are trading near a 52-week high
According to Banc of America Securities, publicly traded homebuilders are down 18% from their peak inlate July
Morgan Stanley has downgraded the nation's largest mortgage banker, Countrywide, to "equal-weight"from "overweight"
WASHINGTON NEWS: The Department of Justice has sent letters to several mortgage bankers whose2004 Home Mortgage Disclosure Act filings revealed wide disparities between the pricing of subprime loans to minoritiesand the pricing of such loans to whites. The Justice Department's Civil Rights Division is asking lenders to "voluntarily"provide additional loan-level data, according to Leonard Bernstein, a partner at Reed Smith. Formore details see Brian Collins' story in Monday's NMN.
MORTGAGE PEOPLE: Mortgage M&A specialist, Classic Strategies Group, has hired Amy Karsonas a financial analyst. Ms. Karson, with a background as a financial planner and product controller, will workclosely with the company's founder, Dale Kurland, the former head of Bear Stearns' mortgage bankingM&A team. PMI Mortgage Insurance said CEO Roger Haughton will retire next June. Stephen Smith,president and chief operating officer, will succeed him.
DATA NOTICE: The new 3Q edition of the Quarterly Data Report is now available. For rankings ofthe nation's top 100 lenders and servicers (plus subprime) contact:
