A lot of ink has been spilled about lenders working diligently with homeowners who cannot make their payments but who want to keep the house. This tale is about "James" (first name only), a loan broker who has a 2/28 mortgage with Countrywide. His loan was a no-downpayment note with an original principal balance of $330,000. James and his wife are looking at new monthly payments of $3,599 compared to a start rate payment of $2,100. (The start rate was 5.99%, the new one, 8.59%). He, his wife and two kids live in Sun Valley, a suburb of Los Angeles. His house now has negative equity but they want to stay put. They like the neighborhood, his parents are nearby. He contacted Countrywide and told them his tale. Here's the catch: his loan is not delinquent. It's current. One of the chief reasons it's current: his parents have been helping out with the payments. Nonetheless, he called Countrywide and asked to restructure the loan. Eventually, according to him, Countrywide agreed to renegotiate, promising to keep the mortgage at the original start rate, the 5.99% for five years. He was elated. Countrywide said it would send a letter confirming the details. When the letter never arrived, he called the servicer. He was told by a Countrywide rep that no such permission to keep the rate at 5.99% was granted. He said they described the permission as a "computer glitch." James is a self-employed loan broker, not a great business to be in right now. His wife just landed a new job with promise: on Monday she begins work at a collection agency. They hope to hang onto their house. But can they? Question: how many more James' are out there, people who bought homes at the top of the market, like where they live but are sitting on negative equity and note adjustments? Stay tuned...
Calling all hard-money lenders: for now, you are the subprime industry. National Mortgage News is putting together its annual directory and is looking for nonprime lenders to list. (The listing is free). If your firm would like to be surveyed drop an e-mail to
He's back: Frank Curry, the former president and co-founder of Acoustic Home Loans, a California subprime wholesaler that folded two years ago. Frank is chief operating officer of a new startup that's a bit east of the Mississippi. For the full story read one of the upcoming issues of National Mortgage News. Don't subscribe? Call 800-221-1809...
For months Merrill Lynch has been trying to sell its subprime servicing platform, Home Loan Services of Pittsburgh, which, according to the Quarterly Data Report, has $47 billion in receivables. But what about Merrill's other subprime platform, Wilshire Credit, which Jay Memmott started? Any information, drop me a line
LIFE AFTER MORTGAGES: In last week's column I wrote about Don Henig, a former wholesale chief at American Home Mortgage who has a new career investing in foreclosed Long Island real estate. I asked for other "post-mortgage career" stories. Here's one that caught my eye (edited a bit by me): "After 25 years in lending (mostly wholesale) I sent out no less than 50 resumes, responded to numerous job postings and found only scammers and insurance companies willing to talk to me. I never reaped the huge incomes that most of my peers did so I had nothing to fall back on. I enrolled in insurance school (90% of enrollees were also mortgage casualties) and am now working for AFLAC. I make straight commission, cold calling on businesses. I have distanced myself from any association with lending because of the negative stigma attached to anybody in the lending business. Although the demise of lending is rooted with Wall Street, the lack of regulation played a big role resulting in the large number of 'crooks' and opportunists in the business. I have found that the insurance industry is a bureaucracy and heavily regulated and as such is considered at least an honorable career untainted by scandal." -- Jack. If you have any other stories about people leaving the industry and finding new careers but also starting over in mortgage banking please send them my way. I will publish some of them --
HSBC Finance Corp., the U.S. subprime arm of the British bank, is having major problems in its second-lien portfolio. At the end of March, the delinquency rate (60-days-plus) on its correspondent-produced second-lien portfolio was 16.9% compared to 6.4% a year ago. Roughly, $1 billion in (correspondent) seconds are 60-days-plus late. In the year-ago quarter $600 million in seconds (correspondent produced loans only) were 60-days late. HSBC Finance -- the old Household Finance franchise -- no longer buys subprime seconds from correspondent lenders. The company would not provide any other delinquency figures except for the 60-days-late category...
Stories continue to abound that some wholesale mortgage bankers are allowing non-FHA approved loan brokers to originate government insured products for them. Sources tell us that the wholesaler gets around the rules by putting the broker on what has been described as a "quasi W-2 form." In other words, the broker appears to be an employee of the brokerage firm (covered by its licenses/approvals) when it fact he/she is not. The Department of Housing and Urban Development is beginning to investigate the matter, we've been told...
Friedman Billings Ramsey has dropped coverage of mortgage insurer Triad Guaranty whose stock has been trading at about $2 a share compared to a 52-week high of $47. In the first quarter Triad lost $150 million. The nation's smallest MI, Triad is in negotiations with private investment fund Lightyear Capital to sell its business to them...
WASHINGTON NEWS: The Senate Banking Committee will try again on Tuesday to mark up and vote on a GSE bill to strengthen regulation of Fannie Mae and Freddie Mac. It's also working on a foreclosure prevention measure that uses the Federal Housing Administration to refinance struggling homeowners with underwater mortgages. For full details see Brian Collins' report on NationalMortgageNewsOnline at
MORTGAGE PEOPLE: Mike McMahon has joined Redwood Trust. He is a former mortgage/thrift analyst who worked at Sandler O'Neill. Mike also did time at First Interstate Bank, working in warehouse lending.
IMPORTANT SURVEY NOTICE: NMN data maven Deartra Todd and her associate Sharon Hutcherson are still finalizing all annual surveys for National Mortgage News. We're looking for responses from ALL lenders, servicers and loan brokers. Send her or Sharon an e-mail if you would like to participate. It's FREE publicity for your firm. Her e-mail is (again)
LOAN OFFICER SURVEY NOTICE: National Mortgage News has launched its new 2008 Loan Officer Survey. To participate (it's free), just visit
DATA NOTICE: The Mortgage Industry Directory and the online version of the book are still available. (Mention this notice and receive a free Quarterly Data Report.) Besides listing detailed information on the top lenders and servicers in the U.S., the MID ranks the nation's top funders of commercial mortgages. There's also information on loan brokers. The book has valuable contact information on the top executives and department heads at each firm. For more information e-mail
