I've become something of a layoff junkie. But I take no perverse pleasure in all the news of companies cutting thousands upon thousands of full-time workers. Lives are disrupted. Families are in crisis. An appraiser I know in Arizona says the "side story" to all this is that the divorce rate is spiking up. Why? Answer: financial stress leads to crumbling marriages. I watch and read the layoff news with rapt attention for this one reason: I figure 50% to 60% of these newly minted unemployed have mortgages. And if I had to guess, I would say the figure could be as high as 80%. It's hard to tell. For the white-collar folks the percentage with mortgage debt might be 90%. Who knows, really? You know the numbers by now: 500,000 U.S. job cuts in December alone and thousands more this past week - Eastman Kodak, Caterpillar, take your pick. The layoff news is unrelenting, which leads me to ask this: when's the last time a publicly traded company issued a press release saying it was actually hiring workers? Google that one. Many households these days have two wage earners but given the high cost of housing the past decade it doesn't take much to send a mortgage into delinquency. Of course, housing is starting to become a whole lot cheaper but there's a Catch-22: if you don't have a job you can't buy. Next Friday, the new unemployment numbers come out. In a few weeks National Mortgage News will release its delinquency numbers for 4Q. The results likely will not be pretty. If you want to look at the 3Q results drop an e-mail to
THIS JUST IN: In December, the ARM share of loan applications fell to 3%, the lowest ever recorded in Freddie Mac's survey. During the peak of the housing boom, the ARM share was around 36%, Freddie said...
This big news this past week in Washington was the "bad bank" concept being talked up by sources "close" to the Obama administration. The idea appears to be this: the White House (with the blessing of Congress) sets up a Resolution Trust Corp.-styled agency to buy troubled mortgages, MBS, ABS, CDOs, CMBS, credit card debt (whatever) from banks, thrifts, credit unions, insurance companies and Wall Street firms. Keep in mind this one thought though: the RTC did NOT buy troubled mortgages from banks and S&Ls. The RTC got those assets from the FDIC, which seized control of insolvent banks and thrifts and shifted the assets over to RTC for eventual disposition. A majority of what the RTC dealt with was real estate and junk bonds, though it did handle a decent amount of residential and commercial mortgages. It also sold quite a few mortgage banking companies that were owned by depositories. Upon placing a lender into receivership there was no immediate price paid for anything. It was just a straight government seizure. I covered the RTC startup and wind-down along with my National Mortgage News colleague Brian Collins. I will say this: it took a long time to get the RTC up and running and to work the kinks out. But ultimately the idea worked. This time around there seems to be a fear that whatever price the "Mortgage RTC" pays for bad loans/securities it will somehow force non-sellers to mark down their holdings to match the sale price paid by the Mortgage RTC. Is this true? I have no idea but I do recall that when the RTC was selling certain real estate properties those sales dragged down the value of "good" properties in the same neighborhood. I heard these allegations time and time again. My response is this: So what. You have to start somewhere. Suspend mark-to-market accounting or something and get on with it...
The next shoe to drop in the housing market is, you got it, the vacation home market. That's just one man's opinion. For more details, see the new book "The $700 Billion Bailout." Visit:
NBC News is working on a "Dateline" show about the mortgage and credit crisis. The special is supposed to air sometime in February...
Mark your calendars for Tuesday, Feb. 3. That's when GMAC Financial Services releases fourth-quarter and year-end results. GMAC chief financial officer Robert Hull will host a conference call at 9 a.m. EST to review the company's performance. I have the sense the lender will not be posting a profit...
WASHINGTON NEWS: Housing secretary Shaun Donovan was sworn in last week but mortgage bankers are still waiting for President Obama to name a new housing commissioner to run the Federal Housing Administration. To find who the possible candidates being mentioned are read Brian Collins' story at
MUST ATTEND CONFERENCE: National Mortgage News/SourceMedia's third annual servicing conference. The show will be held April 6 and 7 at the Marriott Dallas/Fort Worth. (Believe it or not, I'm speaking, among others including Larry Litton. Topics include REO, loss mitigation and much more. For more information call 800-803-3424.
DATA NOTICE No. 1: Bank of America is doing a nice little business in reverse mortgages. In the third quarter, for example, BoA funded $1.2 billion in reverses, compared to $426 million for the same period a year earlier. For a full ranking of reverse lenders see the Quarterly Data Report. For more information on the QDR contact
DATA NOTICE No. 2: The Mortgage Industry Directory is still available as well as the online version of the book, the eMID. If you need rankings on the top 400 lenders and servicers, loan brokers and much more, this could be your product. Order the MID and receive a free Quarterly Data Report, too. The MID/eMID also provides executive names and telephone numbers, mailing addresses, delinquency info - and news updates (the eMID only). Buy the book and receive a free Quarterly Data Report. For more information e-mail
AND LASTLY: Go Steelers!
