THIS JUST IN: Craig Pica, the owner of Provident Funding Associates of Burlingame, Calif., is buying a Colorado thrift. For the full story visit the National Mortgage News website:
If anyone in the industry is wondering why loan brokers in California haven't pushed FHA loans as an alternative to subprime mortgages, they should talk to Heather Peters, the state's deputy secretary for business regulation and housing. At a Congressional hearing this past week, Ms. Peters noted that long ago brokers working in the state abandoned FHA because the loan cap was too small. She said that during the peak of the subprime boom, FHA endorsed just 2,600 loans in the state. In other words, the volumes weren't there so brokers instead pushed products created by Wall Street and table funded through Argent, First Franklin and other now defunct firms. Now that the FHA loan limit is almost $730,000 in many parts of the Golden State, brokers are scrambling to get FHA approved. According to Ms. Peters, during the subprime boom many brokers let their FHA approvals lapse. It now takes three to six months to get approved by HUD and the agency is moving at glacial pace, she said. House Financial Services Committee chairman Barney Frank of Massachusetts promised he would talk to HUD about speeding things up. For the full story see the Monday edition of National Mortgage News. Don't subscribe? Call (800) 221-1809...
Meanwhile, not all lenders are abandoning the wholesale channel. We understand that Wells Fargo is still committed to conventional wholesaling and American Home Bank of Pennsylvania is growing its business. AHB chairmanJames M. Deitch recently said, "This is an excellent time to increase our market share"...
Moody's Investor Service, which already has egg on its face for all those great ratings it gave to subprime-backed mortgage bonds, has a new problem to deal with. It reported that a computer coding error may have led to some debt products receiving a higher rating than they should have received. For now, it appears these computer glitches only affected ratings on European debt...
Former Fannie Mae chief James Johnson reportedly has been tapped by Democrat Barack Obama to head his search committee to find a vice presidential running mate. Mr. Johnson appears in an upcoming book on the mortgage crisis...
Is there life after mortgage banking? In last week's column I mentioned what some former mortgage executives are doing to make a living. Jack Martin, a former wholesale official, writes, "I have a very large database of past and present broker clients. About 80% to 90% of my past customers have closed shop. That is, the majority of offices I have called on in Orange County are no longer in business. What I think has happened is they haven't really gone out of business, but are now working out of their houses (low overhead). Many more have hooked up with Amerisave (a virtual lender and probably the best run net branch type operations I have seen). That said, I know of one LO who is selling Toyotas and making a living again. I tried selling Infiniti's but got really bored due to little or no customer traffic. The recession has affected car purchases"...
National Mortgage News is starting to put together its annual Mortgage Industry Directory. We'll publish a section on "Winners and Losers of the Mortgage Crisis" -- which firms might benefit and which crumbled. If you have any candidates (not the obvious ones) drop me an e-mail at
We keep hearing stories about how some residential wholesalers are skirting the rules when it comes to using non-FHA-approved loan brokers to source product to them. One reader told us that some table funders pay a "consulting referral fee" to the broker for bringing the loan in. He notes that the procedure is legal but says that the Federal Housing Administration in several guideline letters stipulates that the fee (for education and counseling of a prospective FHA customer) must be "reasonable." Supposedly, some lenders are paying huge amounts for counseling services when in fact the money is really a brokerage fee in disguise...
This past week the Press-Telegram of Long Beach reported that California Congresswoman Laura Richardson made only a few payments on the Sacramento house she bought in 2007, failed to pay property taxes, and then defaulted on her mortgage. Her lender was Washington Mutual. The congresswoman would only say that her house is not in foreclosure. Maybe she needs a pay increase? Stay tuned...
INNOCENT VICTIMS OF A BAD MARKET: (Edited, in part, by me) "What am I to do? Last week I had a contract on my house for $316,500 with a qualified buyer who is an attorney. The appraisal came in $36,500 less than the agreed upon sales price. So the sale fell through. I live in Lake County, Ill., just north of Chicago. There are a few homes in my neighborhood for sale but no foreclosures that I know of. Because of all the hype of doom and gloom buyers are sometimes making low offers and some sellers are grabbing on like it's a lifesaver. A little over six months ago my neighbor took $287K for their home. It was the first offer after only three months on the market. I have the same floor plan but theirs required painting of the interior and new carpet and it didn't have the upgrades that mine has. That was the main comp that was used even though they also showed others in the same neighborhood over $300K. Is my only alternative to come down to the $280K appraised value, hope for a cash buyer, or not sell? My buyer didn't have cash to pay the difference. They were getting a 97% FHA loan. The value of something is the price an educated willing buyer is willing to pay. The lenders are going to drive the prices down even further because of a few scared or desperate sellers. I can only imagine what foreclosures do to a neighborhood when the lenders agree to fire sales to investors." -- Debbie
WASHINGTON NEWS: The foreclosure crisis is getting worse, and efforts to modify loans are "not moving fast enough," according to Sheila Bair, chairman of the Federal Deposit Insurance Corp. "I think it is time we come to grips with the need for more pro-active intervention," the FDIC chairman told a Brookings Institution seminar. "And we need to act soon." The FDIC has proposed a program of providing small government loans to struggling homeowners with "underwater" mortgages so they can pay down their mortgage by up to 20% and make the payments more affordable. The lender or noteholder would pay the government's financing costs for the first five years.
MORTGAGE PEOPLE: The Mortgage Industry Advisory Corp. has named Doug Mayers vice president of sales and marketing.
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
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: Need an accurate ranking of the top 100 lenders and servicers in 2007, including subprime? Order the new Annual Data Report which comes in Excel. Send an e-mail to
