I handed the teller at my bank a withdrawal slip for $400.00. I said "May I
have
large bills, please." She looked at me and said, "I'm sorry sir, all the
bills
are the same size."
What isn't the same size are the top 20 retail lenders in the 2nd quarter.
There
are certainly those out there that believe that DTC (Direct to Consumer)
lending
is not only coming on strong but will, at some point, pass retail channels.
Per
the MBA, internet-lending still accounts for less than 10% of mortgage
lending.
But in the meantime here are the top group of retailers: Wells Fargo, Chase,
Bank
of America, PHH Mortgage, CitiMortgage, Quicken Loans, U.S. Bank Home
Mortgage,
SunTrust, USAA Federal Savings Bank, MetLife Home Loans, PNC
Mortgage/National City,
Fifth Third Mortgage, PrimeLending, Branch Banking & Trust Co., Ally/ResCap
(GMAC),
Regions Mortgage, Mortgage Investors Corporation, DHI Mortgage, Navy FCU,
and TD
Banknorth Mortgage, per National Mortgage News.
Out in California, First Mortgage Corporation is expanding its operations.
The Southern
California Mortgage Banker is seeking an individual to develop a
correspondent channel,
it is hiring underwriters (in the Inland Empire area), regional production
managers
for Northern CA, AZ, NV, and TX, loan officers, and a corporate recruiter.
The company
has been around for nearly 40 years, and although it is primarily in
California
FMC also operates branches in AZ, NM, NV, and WA. "FMC originates, funds,
securitizes,
and services the loans it originates, services approximately $3 billion, and
is
the 24th largest GNMA issuer in the country. FMC continues to embrace the
guidelines
set forth by FHA and FNMA with little or no overlays." Please send resumes
to Clem
Ziroli, Jr. czirolijr@firstmortgage.com
I continue to receive compensation feedback. "I am writing today in hopes of
helping
other wholesale broker owners not only survive but actually thrive in this
new bank
dominated environment. After all, those of us that are left need to stick
together.
I am the sole shareholder and President of an 11 year seasoned mortgage
brokerage
and one of the few broker shops remaining in our area - the others have all
become
net branches, etc. I currently employ 6 loan originators (just hired an LO
from
a net branch), 2 processors and no longer originate loans myself; the
latter being
a first in our 11 year history.
"With that being said, I can honestly say that this company is a better
company
today than in the previous 11 years; not in terms of overall volume but in
terms
of the people it employs (true professionals), how much revenue the company
earns
per loan and how much better expenses are managed - the reasons I can now
focus
the majority of my time building a better company for my LO's. How is this
possible?
As an office, we have simply chosen to embrace the new comp plan and take
advantage
of the price disparity that has arisen with this new "bank dominated"
market. To
be specific, we have chosen a lender paid comp plan of 275 basis points with
the
originator earning 130 "bps" and the company earning 145. This is only now
possible
for three reasons: First, the vast majority of our competition (banks) have
substantially
higher rates than wholesale which allows us to remain competitive, second,
today's
mortgage broker expertise is worth substantially more than 45 to 80 basis
points
- not to mention that loans are harder to come by and equally hard to
close. Third,
and arguably the most important, we made a critical shift in our thinking in
two
areas. One, our LO's have seen firsthand and understand what a broker shop
must
earn per loan in order to keep doors open and to provide the tools they need
to
succeed and two, we all, including myself, now realize that being
transparent and
honest with our fees and credits is actually what the consumer desires -
thanks
to the distrust that banks have created for themselves over that past few
years.
In an example of how decision making works, "The Housing Policy Council of
the Financial
Services Roundtable (HPC) has made recommendations to the Federal Housing
Finance
Agency (FHFA), U.S. Department of the Treasury and the U.S. Department of
Housing
& Urban Development (HUD) in response to the request for ideas on reducing
the Real
Estate-Owned (REO) properties of the government-sponsored enterprises (GSEs)
and
the Federal Housing Administration (FHA)." "The Housing Policy Council
supports
the goal of reducing the inventory of REO properties of Fannie Mae, Freddie
Mac
and the FHA," said John H. Dalton, president of the Housing Policy Council.
"The
overhang of these properties is one of the factors preventing a full
recovery of
the housing market." The Roundtable's Housing Policy Council is made up of
32 companies
that originate 75% of the mortgages in the US.
"REO properties should be sold in a timely fashion, and in significant
blocks based
on local market conditions," said Dalton. "Purchasers of the REO properties
should
have the flexibility to sell, rent, or demolish if necessary to enable the
local
real estate market to begin to recover. Additionally, these properties need
to
be sold 'free and clear' to purchasers." According to the letter, an
effective REO
disposition program should address these factors: The GSEs should not become
landlords.
The sales of the REO properties should be on a free and clear basis; Price
for the
REO properties should be maximized by limiting the conditions attached to
the sales;
To the extent possible the efficiencies of large scale should be a factor in
determining
the size of the blocs of properties that are sold, but size should be
balanced with
the potential impact on values in key markets; Utilize contractual terms to
ensure
that the sales are conducted appropriately and the properties are
administered in
a manner that meets responsible standards; and so on.
"It is important that Fannie Mae, Freddie Mac or FHA do not remain landlords
in
the REO process," said Dalton. "We share the desire of HUD and FHFA to
reduce, in
a responsible fashion, the amount of REO currently on the books of the GSEs
and
FHA. The overhang of that property and of the REOs held by the private
sector has
reduced the pace at which the housing industry can recover from its
downturn. Creating
effective programs to reduce the GSE and FHA REO inventory is one step in
the right
direction."
In a similar vein, Bank of America is ramping up its foreclosure processing
again,
having sent out far more notices of default to borrowers in August than in
previous
months. Delays in processing artificially lowered foreclosure numbers over
the past
year due to the "robo-signing" scandal; the new surge likely addresses loans
that
have been long delinquent. Analysts believe that this will tend to keep
values down
in many markets for 6+ months.
But do foreclosure numbers tell us anything? The press sure makes a big deal
out
of them, especially the recent slowdown. Barclays Capital quantified the
lengthening
of timelines, and discussed recent trends. First, liquidation timelines have
risen
across all sectors, especially in the subprime and negative amortization
sector,
where timelines have increased by approximately 10 and 12 months,
respectively,
since 2008. "Liquidation timelines understate the true severity of
foreclosure
delays because they provide information only on loans that have advanced to
liquidation.
Once we include loans that have been frozen in the delinquency or
foreclosure stage,
the actual amount of time required to process a delinquent loan is much
longer.
Judicial states always had longer timelines, and they also experienced a
much greater
increase in processing times than loans in non-judicial states after the
robo-signing
issue came to light. Among judicial foreclosure states, New York and Florida
have
experienced some of the longest foreclosure delays. As a side effect of
longer timelines,
stop advance rates have risen and servicers have offered more loan
modifications
to distressed borrowers in longer timeline states."
Barclays goes on. "Our expectations of a prolonged slowdown from last year
have
materialized. Now we believe the situation is close to a point where
improvements
in trends should start to emerge. There has already been some improvement in
60+
to foreclosure roll rates, and we expect an improvement in foreclosure to
REO roll
rates once the composition of loans in foreclosure shifts to loans without
documentation
or filing issues. In particular, Countrywide- and Citi-serviced loans have
recently
experienced a pickup in 60+ to foreclosure roll rates. Although there may be
a lag
in the timing of when different servicers and states start to see
improvements in
timeline rolls, we expect further improvements in coming months. That said,
improvement
in rolls should not automatically result in lower timelines on future
defaults right
away. The average number of months delinquent for the 60+ and foreclosure
pipelines
is very high and unless most of them are liquidated over the next 12-18
months,
timelines on defaulting loans will not show signs of improvement."
The MBA has expanded the number of participants in its applications survey
and the
firm says it will capture about 75% of retail and direct mortgage
applications,
up from 50% previously. And the indexes were re-benchmarked as of January to
reflect
the new sample. Using the new numbers, which should be more indicative of
the industry,
apps were up last week .6%, with refi's +2.2% and purchases -4.7%.
The Fed sends out the results of its meeting today. "Operation Twist," also
known
as "Operation we don't have any new tools so we may-as-well pull out the
same old
hammer" is certainly garnering its share of time in the press. "Forward
guidance,"
was unveiled at the Aug. 8-9 meeting: the Fed pledged to hold the benchmark
rate
near zero at least through mid-2013. The odds-on favorite to debut at the
conclusion
of the two-day meeting is an effort to extend the maturity of the Fed's
portfolio,
with the goal of lowering long-term interest rates. Critics argue that
changing
the maturity of the debt on a balance sheet does nothing to change the size
of the
Fed's balance sheet.
Mortgage prices may, in some indirect way, be helped, but I have not heard
anyone
complain about mortgage rates in a very long time. Yesterday prices ended
the day
worse by a shade while the 10-yr closed at 1.95%. The markets are expected
to remain
focused and reactive to the events out of Europe and Greece, as they await
the FOMC's
decision. Currently the 10-yr is around 1.94 - fixed-income prices are
pretty much
unchanged from Tuesday.
Lars asked Ole, "Do ya know da difference between a Norvegian and a canoe?"
"No, I don't," said Ole
"A canoe will sometimes tip," explained Lars.
If you're interested, visit my twice-a-month blog at the STRATMOR Group web
site
located at www.stratmorgroup.com
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. The current blog takes a look at the recent news concerning REIT's, and
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tax implications. If you have both the time and inclination, make a comment
on what
I have written, or on other comments so that folks can learn what's going on
out
there from the other readers.
Rob
(Check out
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Copyright 2011 Rob Chrisman. All rights reserved. Occasional paid notices
do appear.
This report or any portion hereof may not be reprinted, sold or
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