My Perspective

Don’t you wish, as I do, that we could somehow make this out to NOT be the train-wreck it’s going to be? Ya know, probably 19+ months in the making, only to end up doing two things we should actually AVOID. (1). Being one Big reason to keep the consumer residential real estate mortgage lending from bouncing back in the mean-time because of this ‘unknown’ and, (2) The new legislation ultimately being confused, weak and generally worthless when it’s completed because the Congress won’t get real input from people who actually understand … unlike them.

Housing Finance Future Hearing Scheduled for March

The House Financial Services Committee will hold its first hearing on the future of the housing finance system on March 2. Treasury Secretary Timothy Geithner and Housing Secretary Shaun Donovan are scheduled to testify. “The hearing will focus on all the private and public entities that support the housing market,” the committee said. “It is the first step in a legislative process to determine the future of housing finance and the federal government’s role in responsible homeownership and the supply of affordable rental housing.” On Feb. 10, the committee will hold a hearing on the Federal Reserve’s mortgage-backed securities purchase program and other Fed liquidity programs. The hearing is entitled “Unwinding Emergency Federal Reserve Liquidity Programs and Implications for Economic Recovery.”

The Federal Trade Commission said it is proposing a new rule that would make up-front fees illegal. It would also bar modification firms from advising borrowers to stop making their payments or stop communicating with their lenders. The move is being made “so companies can’t take the money and run,” the FTC’s chairman said in the statement.

Boy, this is sure long overdue – but better now than never I guess!

More than 7.2 million mortgage loans are now behind on payments and one million properties are now in real estate-owned status, according to the January 2010 Mortgage Monitor report from Lender Processing Services in Jacksonville, Fla. Home delinquency rates have surpassed 10%. The total foreclosure inventory rate is 3.2%, and the total non-current rate, which combines foreclosures and delinquencies, sits at 13.3%. The percent of “new” serious delinquencies is 4.64%, higher than any other year analyzed for the same period. Of loans that were current as of Dec. 31, 2008, by Dec. 2009 there were 2.3 million new loans that were considered seriously delinquent. Prime loans, including agency, non-agency and jumbo, have experienced deterioration at a worse pace on a relative basis than subprime, FHA and all loans as a whole. Within the prime category, loans with current unpaid principal balances between $417,000 and $600,000 have performed the worse, LPS said. States with most non-current loans include Florida, Nevada, Mississippi, Arizona, Georgia, California, Indiana, Michigan, Illinois and Ohio. States with fewest non-current loans are North Dakota, South Dakota, Alaska, Wyoming, Montana, Nebraska, Vermont, Colorado, Oregon and Washington.

So … how about that?

What a great way to help clean up the bottom feeders still in our industry! It’s LONG Overdue.

“Consumers now have access to the National Mortgage Licensing System and Registry to check the credentials and background of state-licensed mortgage lenders or brokers. The online NMLS system allows consumers to see the 10-year employment history of the loan officer or broker, the name of their current employer and the states they are licensed in. Starting in 2011, any adjudicated enforcement actions taken against a loan officer or broker will be listed on the system and accessible by consumers. State regulators initiated the mortgage licensing system to enhance the supervision of the residential mortgage industry, according to Neil Milner, president and CEO of the Conference of State Bank Supervisors. “NMLS Consumer Access is one more initiative undertaken by the states to empower consumers with information while they take on what is usually the most significant purchase of their lifetime: their home,” he said. To date, 45 states and territories are participating in the NMLS system. All states and U.S. territories are expected to be on the system by the end of this year. Loan officers employed by federally insured banks and thrifts will start registering on the NMLS system during the second half of 2010.”

Hell, that’s a no brainer – of course we don’t need them to ever revert to that pivate/public silliness ever again, and surely we don’t need THREE Government Agencies (FHA, FNMA, FHLMC) to handle housing. What we need today is the securitization market back for non-agency loans … “IF” Congress had any sense (and on that point I would bet some serious money they don’t) they would combine the 3 into one. And do that fast, before those small-time chumps who now run FHA blow it up completely.

“Fannie Mae and Freddie Mac could be history after the House Financial Services Committee completes its review of the housing finance system, and makes its recommendations, according to committee chairman Barney Frank, D-Mass., once a huge supporter of the two. “I believe this committee will be recommending abolishing Fannie Mae and Freddie Mac in their present form,” Rep. Frank said during a committee hearing. Earlier this month, Chairman Frank said he plans to hold hearings on restructuring the U.S. housing finance system and he has no desire to see Fannie and Freddie return to the former “hybrid” status as a private companies with a public mission. The White House is expected to lay out its blueprint for the two in the next month or so but has offered little guidance on the issue. Rep. Frank’s remarks sent the share price of the two tumbling Friday afternoon. The government-sponsored enterprises have been wards of the government for 17 months. Since their takeover, Treasury has pumped $110.6 billion into them to keep their net worth positions above zero, allaying investor fears about their debt and MBS. Presently, the two provide liquidity for roughly 70% of all originations in the U.S. mortgage market with FHA accounting for most of the balance.”

And, yes it’s long overdue – kick those cheating bastards to the curb!

“The Department of Housing and Urban Development has issued the mortgagee letter that implements the recently announced plan to suspend any Federal Housing Administration lender’s operations in a whole state or metropolitan area for six months if the company’s default rate in that area is three times the norm. According to that mortgagee letter, HUD will “systematically review” all FHA direct-endorsement lenders’ defaults and claim rates for mortgages originated in the past 24 months. These reviews will be conducted every three months. Default rates (90 days or more past due) will be based on retail and broker originations within the HUD office area, which can be a state or metropolitan area. “HUD will focus its attention on those mortgagees showing particularly high default and claim rates,” Mortgagee Letter 2010-03 says. The initial suspension threshold is 300% above the national and field office default rate. It will drop down to 250% on June 30 and to 200% at year-end. At a press conference on Jan. 20, FHA commissioner David Stevens said these suspension powers have not been use by HUD before. But he is prepared to use them use them to stop bad lending practices and to protect the FHA insurance fund. ”

Sounds like a bunch of nonsense to me, hell all they gotta do is call Provident where they can get the best rate quote in America any day, and then take that loan (after they go through the significant brain-damage the Provident train-wreck process will give them)

“Google this week is rolling out a new search function allowing consumers to shop and compare mortgage offerings from roughly 15 participating lenders. Google says the service — called AdWords Comparison Ads — will be fully deployed over the next few days. The rates will be visible in specific states where there is matching mortgage coverage from participating lenders. One Google partner in the service, Mortech, will enable participating lenders to list instant mortgage rate quotes through the service. PriceMyLoan is also a participating partner that will offer up mortgage pricing through Google. With Google’s new offering, potential borrowers can view live rate quotes from mortgage professionals in a consistent manner. The feature, which does not require Google visitors to enter any private information, was designed to make the lending process more transparent, allowing applicants to access rate quotes instantly online. Clicking on the link takes the borrower to a page where they can view a variety of related mortgage offerings from lenders in that geographic area.” <– in todays NMN news.

Now, before you get all scared about this news story today, let me tell you (from my own memory) that 25% of the numbers they’re talking about below is PLENTY of business for the small (recently down-sized remember?) industry we now have! Just Do The Right Thing!

New MBA Forecast: Originations Will Fall, Refis ‘Choked Off’

“The Mortgage Bankers Association believes residential originations will fall to just $1.28 trillion in 2010 — a 33% decline from last year and the industry’s worst year since 2000. In early December, the trade group had forecast loan production of $1.5 trillion but lowered its estimate Tuesday morning. (According to National Mortgage News, the industry funded $1.9 trillion in 2009.) The MBA now believes 30-year FRMs will average 5.8% this year and recent increases in rates have already “choked off” refinancings. Refis will fall to $166 billion in the first quarter compared to $363 billion in 4Q. However, home sales will see a steady improvement. “We do expect purchase originations in 2010 to be about 5% higher than in 2009,” MBA chief economist Jay Brinkmann told reporters. A few months back veteran mortgage analyst David Olson of Access Research said some large lenders were bracing for just $1 trillion in production for 2010. Despite the poor outlook on originations, many mortgage lenders are continuing to earn strong profits (thanks to the wide yield curve). The profit picture also improved, in part, because of a lack of competition. In 2000 mortgage bankers funded just over $1 trillion in new loans.”

Some good news from Friday:

“The residential mortgage industry added 200 full-time employees to their payrolls in November, the first uptick in industry employment since July. The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector rose to 255,700, compared to 255,500 in October. The BLS data shows the increase is entirely due to more mortgage brokers having jobs. Employment at mortgage banking firms was flat in November. Overall, the mortgage industry experienced a 10% drop in its workforce over the past 12 months. Major lenders have relied on outsourcing and temporary workers to deal with fluctuating demand. Meanwhile, the nation’s unemployment rate held steady at 10% in December, but 85,000 workers were laid off, according to the new jobs report. This disappointed analysts who were looking for a sign that the job market had finally turned the corner. It is also the second disappointing economic report this week. On Tuesday, the National Association of Realtors reported that its index of pending sales plunged 16% in November. (There is a one-month lag in BLS reporting of mortgage industry employment data.)”

BUT as we all know, those stats DO NOT include people who violate the Federal Fair Labor Standards Act and the Federal Wage & Hour Act by unlawfilly being paid via 1099 (what many cheap-assed employers do), as they claim those people are independent contractors’ (IF you were to actually read what an ‘independent contractor’ is according to the Government) then you would know, as I do, that they most likely are not.

As reported by Editor Paul Muolo of National Mortgage News yesterday: “Warren Buffett wants to enter the residential mortgage banking business. The details are far from clear, but apparently Mr. Buffett’s firm, Berkshire Hathaway Holdings, has been poking around the industry’s ashes for several months. Representatives of Berkshire have been looking at not only “whole” companies but some of the larger servicing offerings out there. Keep in mind that in years past Berkshire has been a large investor in Wells Fargo & Co., as well as Fannie Mae and Freddie Mac. (The company dumped its GSE holdings many moons ago.) Also, Mr. Buffett, at one time, personally owned shares in Countrywide Financial Corp.”

I promptly e-mailed and asked him to send me a check!