THIS JUST IN: A top 10 lender that hasn't been all that active in wholesale lending the past two years is ready to roll out some new programs—and not just in jumbo. The exclusive details will be in the Monday paper version of National Mortgage News. To subscribe call 800-221-1809...
Without a doubt, loan buybacks are one of the most important issues facing lenders today. One wag I know thinks the "contingent liability" on buybacks is $1 trillion. The math works like this: U.S. homeowners have $10 trillion in mortgage debt. (Figures courtesy of the Quarterly Data Report.) Roughly 10% of all mortgages are delinquent or in foreclosure which means $1 trillion are in the tank—and that means the "contingent liability" (whatever that phrase really means) is, well, enormous. (If FASB gets wind of this, watch out.) Meanwhile, I understand one of the GSEs is working on a policy statement regarding buybacks. It's all very preliminary but the idea is to come up with a maximum amount of time that a loan can be put back to a lender (no matter what). The figure being discussed is reportedly in the range of 36 months. If you have an insight on this matter drop me an e-mail at
Also, complete market share data and information on who the top 100 lenders and servicers are can be had by ordering the Quarterly Data Report. Drop an e-mail to
One loan broker who works the New Jersey market told me that the new good-faith estimate work sheet is resulting in longer hours for attorneys. What this means is simple: the fees these attorneys charge are going up. In some cases the cost is $1,500 compared to $950 previously. "Worse, attorneys and banks are continually doing the GFE wrong," he said. (In 1987 when my wife and I bought a house in Jersey City the attorney cost us $500. We closed the loan on a Friday in October. On Monday the stock market crashed.)...
Hedge fund manager John Paulson who made a killing shorting the ABX Index and investing in credit default swaps (against subprime bonds) thinks the economy could be headed for a "V-shaped" recovery and that home prices could go up 8% to 12% next year. (My initial reaction: whatever he's drinking, I want some.) Paulson of Paulson & Co. is no fool. Or is he saying this stuff publicly and secretly shorting the market again? I have no idea. Meanwhile, billionaire Palm Beach real estate investor Jeff Greene is running for a Senate seat in Florida. Greene, as some of you may know, also was shorting the ABX at the same as Paulson. (Whose idea was it first?) Greene counts among his friends retired boxer Mike Tyson so I wouldn't mess with him too much...
THE BIG PICTURE: Regulatory reform is here. It's on our door step and pretty soon the entire financial services industry will have to deal with it. Depending on who you talk to, it's either "not so bad" or it's the end of the world as we know it. A few thoughts to keep in mind: Human beings are creative animals. Even though a law or regulation says you need to do something that doesn't mean there's isn't some type of alternative. Humans are prone to evolution. Nature causes us to mutate. Residential funders (and servicers) will have to mutate. Nonbanks will have to partner with banks (to some degree). My biggest problem with the bill (both versions) is that it will actually wind up creating more "too big to fail" institutions. Having many licensed (the key word being licensed) mortgage providers is better than having less. I still would like to see a cap legislated on how many servicing rights one firm can control. Ten percent would be my suggestion. Unfortunately the top two, Bank of America and Wells Fargo, together, control almost 40%, according to the Quarterly Data Report. The Dodd/Frank bill (when it's signed into law by July) also might breathe new life into real estate investment trusts. That's right folks, these nonbanks could have a leg up on the competition. Now if only Friedman Billings Ramsey were still in business. Eric Billings was the "king of the REITs." Unfortunately the REITs he was king of were subprime...
Just a question for all readers: Whatever happened to the commercial real estate bust that was supposed to be the "next shoe to drop"? It seems the carnage has yet to hit. Don't get me wrong. There's plenty of community and midsized banks going bust because of commercial real estate loans, particularly for tract developments, but it would appear that the destruction will be a fraction of what occurred in the residential space...
MORTGAGE PEOPLE: RealtyTrac named Jesse Gant vice president of product and user experience. Gant will lead a team to develop a product plan and vision for the company.
DATA STUFF: The brand-new edition of NMN's Annual Data Report is out. In the ADR you can find rankings on the top 100 lenders and servicers in 2009 with complete breakdowns on production channels and subservicing and subprime servicing. To order the ADR 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 e-mail
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THE LAST WORD: My sources from Hungary (the country) tell me the Euro will come roaring back one day.
