The big story of this past week? Answer: the Obama administration's plan to take over the entire banking/mortgage/investment banking industry and dictate pay for every executive! Can you imagine: mortgage traders in New York trying to get by on $200,000 a year when their secretaries are making only half that. Surely, I'm kidding but the White House isn't. It can limit pay for TARP recipients but how can it scale back compensation for non-TARP firms or will it even try? I would guess the idea is solely a trial balloon floated by some left-wing undersecretary at Treasury (probably someone who attended Berkeley; hey, wait a minute, my co-author Matt Padilla went to Berkeley), but seriously, folks, it ain't gonna happen. But then again, one can argue that after using $2 trillion in taxpayer funds (or whatever the current figure is) to bail out our financial system perhaps Uncle Sam has the right to dictate pay scales for certain uber traders, especially those involved in credit default swaps, MBS, ABS, take your pick. Again, I don't see it happening, but I've been wrong before...
Our sister publication American Banker ran an interesting story this past week on PennyMac, the brainchild of Stan Kurland, the former No. 2 at Countrywide. Reporter Kate Berry notes that when she visited PennyMac (an investor/modifier of troubled loans) only 10 workout professionals were manning the phones. The space could've fit 250 phone jockeys. An official at one of PennyMac's backers told me not to worry - that they are more than pleased with Kurland's operation. (Stan is also a character in the book "Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis.") Kurland got the boot from Angelo Mozilo two years before the shinola hit the fan at Countrywide. (He should be forever in debt to Angelo for that move.) Anyway, the gang at PennyMac - and their financiers - see nothing but blue skies ahead for their business. And the reason there's so much empty office space at the company? Answer: because it's dirt cheap. They're practically giving away office space in Orange County. PennyMac will eventually use all that space. Got that?...
As for Angelo Mozilo, it appears the Securities and Exchange Commission is ready to slap him with a civil suit regarding the downfall of CFC and possibly his insider stock sales. But let me tell you something about Mozilo: he is smart, tenacious and he's already hired the best legal talent in California. He doesn't suffer fools and if you think the SEC is chock full of qualified staff attorneys, you then can ask: uh, where were all those attorneys during the buildup and the height of the subprime ABS and derivatives boom? There has been a brain drain of talent from the SEC since the Clinton years. Why do you think lawyers work at the SEC? Answer: so once they learn the ropes they can make a killing in the private sector. Here's a prediction: if the SEC files against Mozilo he will fight the case and eventually he might settle for a pittance without admitting or denying anything. But like I said, I've been wrong before...
THIS JUST IN: Treasury could be warming up to the idea of using TARP funds to help the mortgage insurance industry. For the full story see the Monday edition of National Mortgage News. Don't subscribe? Call 800-221-1809...
By the way, if you need a list of the nation's top MI firms, warehouse lenders, commercial funders, second-lien servicers and so on it's all in the Quarterly Data Report or a sister product called the Alternative Products Quarterly Data Report. For more information e-mail
In case you haven't noticed the yield on the 10-year Treasury has been creeping up of late which means mortgage rates should be doing the same. A few months back - during the darkest days of the economy - the yield on the 10-year was at 2.03%...
Earlier this past week the telephones weren't being picked up at Precision Financial, a licensed mortgage banker based in Syosset, N.Y. (that would be Long Island or as the native Islanders might say, "Lawngiland"). I tried again on Friday and got an automated recording that switched me over to an operator's extension that put me on hold forever. I also e-mailed an official at the company but with no luck. Precision, according to its website, has licenses to lend in several states including California, New York, New Jersey and Pennsylvania, among others...
In a few weeks California's 90-day foreclosure moratorium will expire and then servicers can pull the ripcord and start filing the appropriate paperwork to take over the real estate securing delinquent loans...
So, how's the recovery going? According to Barclays Capital, recent first-quarter figures suggest "the recession is even deeper than we thought, particularly in Europe. Weak U.S. retail sales data for April are a reminder that any upturn in growth is likely to be slow. However, the inventory cycle, easy monetary and fiscal policy, and an easing of the capital markets crisis all argue for a second half recovery. When it comes, the recovery will be slow as consumers and financial firms lick their wounds." There you have it...
There's been sporadic press coverage of the nonperforming loan auction market and it's hard making heads or tails of what's really going on, but one veteran of the business insists that not many mortgage portfolios are actually changing hands. Reason: banks are still reluctant to sell at discounts of 50% or more. Buyers are telling sellers: take it or leave it and so far it appears the sellers are leaving it be - for now...
Meanwhile, LoanMarket.net of California, the brainchild of Jeff Freud and his partners went national May 1. It's an interesting site - and it allows mom and pops to invest in first deeds of trust...
NO LONGER WITH US: William Seidman, former chairman of the Federal Deposit Insurance Corp., died this past week. I had the pleasure of interviewing Bill a few times for a book I wrote about the S&L crisis. He was always a straight shooter and knew it was good policy never to snow the press. I recall asking him during one interview when the FDIC was going to sue Neil Bush, a former director of Silverado Banking, a defunct Colorado thrift that blew a $1 billion hole in the old FSLIC. At the time I popped the question FDIC attorneys were sniffing around the case but hadn't filed charges. When I asked Bill the question he gave me a funny look and assured me that they were still looking into the matter. The very next day the FDIC filed the case.
How would you like to be the guy who throws this family out of their home for non-payment of the mortgage: Victoria Gotti, daughter of the late Gambino crime boss and former star of the reality-television show "Growing Up Gotti," is well behind on her McMansion's "super jumbo" mortgage. She blames her ex-husband, Carmine Agnello. Always the ex-husband!...
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MUST ATTEND CONFERENCES: Our Mortgage Servicing Conference recently held in Dallas was such a success that we're holding another one: July 20-21 in Dallas. For more information e-mail
MORTGAGE PEOPLE: The Blackstone Group has named Tom Kelly managing director of its corporate advisory group to head a new initiative to provide capital fundraising services to a broad variety of businesses and corporations. These fundraisings will include private placements of equity and debt for privately held and publicly traded corporate clients. Mr. Kelly was previously a managing partner at KEMA Partners.
SURVEY NOTICE No. 1: Loan officers for retail shops and brokerages, we want to know all about your business last year and what you expect for this year. To fill out our annual LO survey, please visit
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