Here are a few "housecleaning" items to start the new year. At the top of the list, a correction. I recently reported that New York Community Bank was going to sell a large chunk of the AmTrust servicing portfolio. The portfolio eventually will be sold but the seller won't be NYCB. It will be the FDIC, which kept the receivables and didn't pass them on to NYCB which purchased AmTrust in early December. Sorry about that. And in a related matter, there's some good news for the wholesale/broker community. NYCB recently told our colleague Marc Hochstein of the American Banker that it will "continue to operate" AmTrust's third-party wholesale channel. Of course, this raises a question: If NYCB is keeping AmTrust's wholesale division why didn't it take control of that thrift's servicing portfolio? NYCB has never been a player in single-family lending/servicing. Its forte has been multifamily. Then again, with single-family profit margins on new originations strong, NYCB likes what it sees, at least for now. AmTrust's EVP in charge of mortgage banking is Jon Baymiller. A few years back Mr. Baymiller was promoted to that position when the institution was known as Ohio Savings Bank...
A few predictions for the new year which may not seem all that surprising but I'm sending them your way nonetheless:
The employment picture will improve more rapidly than some economists predicted, spelling additional relief for lenders and servicers. However, part of the reason will be that more people who can afford to retire early are exiting the workforce. Also, some firms will finally realize they initially cut too deeply and quickly. Unfortunately, "underemployment" will remain high.
Origination volumes will total about $1.5 trillion, not a great number, but profit margins will be very strong. Also, going forward the value of these loans and the servicing rights will be "golden." Why? Answer: Extremely tight loan underwriting.
Specialty servicers, default management servicers, foreclosure and auction firms will continue to prosper in 2010. Vendors that play in this space should do quite well.
We will see more auctions of nonperforming loan portfolios in 2010 than in 2009. Some big bank holders of NPLs will finally accept their fate and get rid of their mortgage "toxins."
A handful of midsized banks and nonbanks will continue to expand via the wholesale channel.
Even though the employment picture will improve Democrats will get creamed in the midterm elections. However, look to the governor mansions for the job implications. If GOP governors want to prove they are (state) deficit hawks they will slash government payrolls, which will exacerbate unemployment, and therefore, mortgage delinquencies.
Congress will not address (legislatively) the future of Fannie Mae and Freddie Mac. The federal government will not put any type of explicit guarantee on their MBS and debt instruments.
And lastly, a few letters from readers. Some of these were sent earlier in the year but touch on topics near and dear to the industry at large. (Comments edited for spelling and brevity.)
"In my opinion, the mortgage cartel issue is playing out exactly the way that politicians and regulators in D.C. want it to. It's my belief that the decision has been made that a lot of small independent mortgage companies are too hard to regulate and doing away with them is the way to go." - Gary (last name withheld)
"Mortgage brokers morphing into bank LOs and net branches? For those of us who resisted fear mode, we will be doing FHA in 2010 with a good net worth and credit. Joining the net branch and bank crowd would put our service on the same level the borrowers I am closing were getting at the 'Big Five.' Brokers will fill a need and prosper." - Anne James
"For all the bad publicity that mortgage brokers have had, there is nothing better than a good mortgage broker. If the wholesale market dies it will be a huge loss for the consumer." - Mary Norrod
"As far as the YSP and rebates go, if the servicing value on a loan decreases for an investor, there isn't any YSP to pay. Again, going back to the 'old days' we lived on our originations and built the company by servicing or selling loans. We considered it an asset, not a fee to pass on to the originator so that they could live high on the hog." - Kevin (no last name given)
"At a time when the federal government should be aggressively initiating policy to improve property values and reduce foreclosures, the big debate taking place in Congress is whether or not to continue the $8,000 first time buyer tax credit. I find this very pathetic and demonstrates just how far out of touch Congress is." - Brian Johnson
SPEAKING OPPORTUNITY: SourceMedia, the folks that own NMN, American Banker, Credit Union Journal and other publications is looking for topics and speakers for its fourth annual mortgage servicing conference in Dallas. We already have some "topics and talkers" but continue to look for more. For more information contact
DATA NOTICE No. 1: Planning for 2010 and need soup-to-nuts statistics on the nation's top residential (and commercial) lenders and servicers? The new MortgageStats.com data product might be what you're looking for. The user-friendly M-Stats is Web-based and incorporates both the Quarterly Data Report and our annual Mortgage Industry Directory. Among other things, it has annual rankings on the top 400 lenders and servicers, including breakdowns on retail, wholesale and correspondent - and news archives. There's contact info, too, and plenty of data on servicing. And here's the best part: you get quarterly updates. To see a sample send an e-mail to
DATA NOTICE No. 2: Even though we offer MortgageStats.com you can still subscribe to the Quarterly Data Report and Alternative Products QDR, spreadsheet products that provide readers with quarterly rankings on the nation's top lenders and servicers. The new 3Q edition of both is now available. For more info shoot an e-mail to
THE LAST WORD: Drive carefully. Go skiing if you can. Pitchers and catchers report to spring training in 45 days.
