THIS JUST IN: A storm could be brewing involving so-called independent contractors that are working as due diligence underwriters in the residential mortgage industry. What am I getting at? Here are the basics: some review firms are refusing to pay their contractors via a W-2. Not all firms are doing this, mind you, and we're told one of the "good guys" is Clayton Holdings. But one contractor believes due diligence firms are trying to avoid using W-2s. He writes that such firms are "putting the burden on the contract underwriters. They're also saving quite a bit of money and are able to go back to these investment banks and insurers and offer them below-market-rate fees for their services." That puts these contractors in debt to the Internal Revenue Service "because we can't find anyone who will pay via W-2 status like it used to be when we were in the height of the subprime boom." Stay tuned...
THE MAIN EVENT: If rates are, indeed, headed north that means mortgage servicing rights (in theory) should be worth more. After all, if rates rise consumers are less apt to refinance their loans. And let's face it, if a mortgagor hasn't refinanced his/her loan over the past six months when rates hit rock bottom then they never will. (I remember in the old days, the rule was: Don't refi unless you can save at least $200 a month.) The value of servicing is determined by not only the note rate (of course) but delinquencies. But now there is another item to worry about: counterparty risk. One observer of the situation explained it as such: "The counterparty risk silo has been an explicitly and commonly expressed issue with prospective servicing buyers for the last nine months or so. I have had one pretty big servicer say that he would not purchase any servicing unless the agencies (the GSEs) explicitly gave him a get-out-of-jail-free card for a prior servicer's reps and warranties." This observer did not want to be identified because he - like many in the advisory field - works with Fannie Mae and Freddie Mac. Any way, it's something to talk about at this weekend's annual servicing show being held in San Diego by the Mortgage Bankers Association. The full story will be in the Monday edition of National Mortgage News. Don't subscribe? Call 800-221-1809...
Also in the Monday's NMN is Bonnie Sinnock's "Street Smarts" column covering key MBS issues and much more. And if you're looking for complete fourth-quarter rankings on the nation's top servicers you may want to check out the Quarterly Data Report. For a sample send an e-mail to
MBA's delinquency numbers came out Friday and it wasn't pretty. (No one expected it be pretty, by the way.) But that didn't stop the trade group from spinning the numbers in a positive way. But there actually could be a real reason to believe the worst is over: economist Jay Brinkmann noted that the percentage of borrowers who had missed one mortgage payment fell sequentially to 3.63% from 3.79%. As the late Mets pitcher Tug McGraw once said, "Ya gotta believe!" Let's hope he's right...
Question: Whatever happened to Phoenix Capital of Denver? Plenty of servicing advisory firms (especially those specializing in evaluations) have been active of late but we never hear a word about Phoenix anymore. If you have any insight drop me a line at
Recently I asked readers to send me their views on loan types that were hard to fund. This comment comes from Bruce Conn of California Equity and Loan: "The home improvement financial market has collapsed. There are an enormous number of homeowners who have high scores, excellent income and strong reserves yet cannot get financial because of loan-to-value ratios"...
MEDIA COMMENTARY: The lead story in The Washington Post Friday was an "analytical" piece saying a commercial real estate "crisis" could smack the nation's capital. Do tell? A few weeks back the Post reported that the commercial RE market in Washington was improving. This time around it quoted stats from CoStar Group of Bethesda, Md., which says the market is going south fast. Hey, isn't CoStar the firm that practically stole MBA's D.C. headquarters recently - paying just 40% of its original value? It is. Funny, that wasn't mentioned in the Post story. Just a bunch of negative numbers on the market. Of course, all this negativity could create more buying (stealing) opportunities for CoStar. Where's Bob Woodward and Carl Bernstein when you need them? By the way, I'm getting really sick of newspapers reporting way too many features on their front pages and not hard news. The Post is one of the worst in this regard. No wonder why subs are down...
Earlier this week the National Mortgage News website broke the news that Essent Guaranty, the new MI firm, received its Fannie/Freddie approvals. To subscribe call 800-221-1809...
MORTGAGE PEOPLE: GMAC/Residential Capital Corp. servicing/subservicing chief Tony Renzi has departed for greener pastures. Mr. Renzi was forced out in yet another shuffle of the firm's executive corps. We heard that he wanted to beef up GMAC's third-party servicing business but was rejected.
DATA NOTICE No. 1: Planning for the rest of 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 have launched our new MortgageStats.com product, you can still subscribe to the Quarterly Data Report, a spreadsheet product that provides readers with quarterly rankings on the nation's top lenders and servicers. There's also a companion product called the Alt-QDR which provides rankings on second liens, jumbos and much more. Again, shoot an e-mail to
THE LAST WORD: New American Funding of Irvine, Calif., is entering the wholesale sector. Will others follow? Comment at the end of this column.
