THE MAIN EVENT: Traditional M&A activity-where one buyer actually pays cash for a lender-could be returning to the mortgage market. Then again, this "fragile" recovery in mergers and acquisition could blow apart at any time, it seems. The recent hike in rates seems to have abated the past few days but there's no doubt that loan volumes are not where many lenders would like them to be. As we reported on our website Friday, several medium-sized nonbanks are exploring the possibility of buying depository institutions using cash from stellar residential profits enjoyed over the past 18 months. We're not ready to name names yet, but stay tuned. Of course, any recovery in M&A is dependent on housing values. If the housing market gets whacked by a "double-dip" in prices, all bets are off...
Meanwhile, I heard a report that one Michigan-based wholesaler earned $29 million last year on originations of $1.6 billion. One advisor told me this profit performance is "unheard of." The reason is that loan brokers in the Midwest (where this wholesaler operates) are so desperate for a table-funding source that brokers are accepting less in the way of compensation. Have an opinion on this? Drop me a line or comment at the end of this column. My e-mail is
Also, it appears there could be some minor improvement in the servicing-released premiums paid by correspondent loan buyers. Glen Corso of The Community Mortgage Banking Project told me he's hearing that "the posted SRPs do not change very often. But what the aggregators do is change the base price used in the calculation, which can either increase or decrease the net paid to the mortgage banker. A month ago the net to the mortgage bankers hit an all-time low, but recently the net has been improving. One member told me that the improvement came at a time when the increase in mortgage rates from below 5 to above 5 took place. He speculates that the increase has diminished volumes (which I think the MBA weekly survey reflects) and therefore the aggregators have increased their prices in the face of less available product in an attempt to maintain their purchase volumes"...
Marc Savitt, a former past president of the National Association of Mortgage Brokers, is mad as hell about HVCC and he isn't going to take it anymore. His new trade group, the National Association of Independent Housing Professionals, is staging an HVCC-related rally in Washington next week. (As you might imagine, this won't be a "pro" HVCC rally.) His young trade group has 400 members already. A few months back Savitt resigned from the NAMB board...
Our research director is putting the final touches on NMN's Annual Data Report which will contain a final ranking of the top 100 lenders and servicers for 2009. Breakdowns will be available on retail, wholesale and correspondent lending. For more information send an e-mail to
COMMENTARY: I'm starting to wonder whether these financial crisis hearings are turning out to be a total waste of time (and taxpayer money). The commission is calling witnesses (players in the crisis) to testify about how they screwed up. It's been almost two years now and these "players" (Dan Mudd, Charles Prince and regulator Jim Lockhart) have had plenty of time to come up with rationalizations about what went wrong. Rob Levin, a former executive at Fannie Mae, told the panel that the success of the private-label MBS market "threatened" the GSE and drove it into the arms of the alt-A market. In other words, if they didn't buy this crap their seller/servicers would've bolted for Wall Street. (Gee, that would've been awful.) And then Lockhart said FanFred encouraged poor underwriting standards by not aggressively forcing their seller/servicers to repurchase bad loans. (Note: FanFred certainly are not shy about buybacks now.) OK, if things were so bad, why did Lockhart, in the summer of 2008, say there would be no takeover of FanFred? What we're lacking in this crisis is a Washington hero, a regulator like Ed Gray (of the S&L crisis) who should have stood up to the power elite (in this case, FanFed, the Federal Reserve, Wall Street) and laid down the law or at least spilled his guts to the press. But we had none of this. In seems the days of Washington regulators having the guts to leak information to the press (ala the Pentagon Papers or Watergate) are long gone. I guess these government bureaucrats are too concerned about keeping their jobs or securing for themselves a golden parachute in the private sector. But make no mistake about it: we in the press don't break into offices and steal documents (e-mails). Someone needs to leak it to us. Feel free to leak away in the future and send me some confidential emails, a bank examination report, anything. Am I begging? OK. If you're concerned about being detected, mail it to me at 4401 Wilson Blvd./Suite 910/Arlington, VA 22203. (P.S. Don't waste my time with "imagined" crimes)...
DATA STUFF: The brand-new 4Q issue of the Quarterly Data Report is out. In it you can find information on a handful of fast-growing wholesalers based in California including Provident Funding, Sierra Pacific Mortgage and Stearns Lending. To order the QDR drop a line to
SURVEY NOTICE No. 1: Our annual "Top Producer Survey" (a k a LO survey) is at
SURVEY NOTICE No. 2: It's survey time once again for sellers and servicers. Look for our annual survey in your computer mailbox. Or send an e-mail to
I'm
THE LAST WORD: Ken Posner, a former Morgan Stanley securities analyst who covered FanFred for many years, believes their future is "anyone's guess." Indeed it is.
