What’s It All About, Ally?


If you’re looking for the next megabank to exit the mortgage sector the most likely candidate would be Ally Financial, the government owned bank holding company that controls No. 5 ranked servicer GMAC Mortgage/Residential Capital Corp. But perhaps the word “exit” is a bit of a misnomer. The folks at GMAC/ResCap like the mortgage business—it’s Ally chairman Michael Carpenter who’d like to throw it overboard. He’d also like to take Ally public, and as we’ve noted before the White House would like the “Ally problem” to be solved before Mitt Romney takes on President Obama. Ally, of course, isn’t sharing its future plans with me or anyone else in the press. Only its investment bankers know for sure. But we know this: the parent company has made great strides in cleaning up GMAC’s problems, and it should be profitable, especially if the profit margins on HARP 2.0 loans are as good as we keep hearing. Yes, GMAC will disappear eventually, but it won’t be liquidated. It will be absorbed into another company, which would be great news for its rank and file employees. The recent rumor that Nationstar might buy GMAC makes sense (sort of), but where will Nationstar get the money from? It recently went public, but the firm is mostly owned by Fortress whose stock trades for less than $4. But rest assured, smart money recognizes that mortgage servicing rights (as an asset) are highly undervalued in today’s market—and when something is highly undervalued, eventually the worm turns…

CLARIFICATION: GMAC is still in the correspondent channel, serving selected clients. Although it has trimmed that business back, it has not exited entirely. It’s retail and wholesale channel remains intact and from what we’re told is doing well…

Meanwhile, remember how we reported that the Federal Housing Finance Agency had given up the battle over “fee for service,” leaving the minimum GSE servicing fee at 23 basis points? We were told recently that the battle isn’t entirely over. In other words, stay tuned, but don’t lose any sleep over it…

Has the whole force-placed insurance mess been blown out of proportion by consumer groups and class-action attorneys looking for a paycheck? I’m not taking sides here, but one mortgage consultant who I’ve known for years—and whose opinion I’ve always valued—says it has. He also blames the banks for the mess, and not the vendors. After all, force-placed insurance is a needed service, he argued. This consultant also points out that it’s usually a short-term product…

AND NOW FOR A WORD ABOUT COMPLIANCE: I recently interviewed a CEO who told me his shop—a $5 billion a year lender—has roughly 20 employees working in compliance, to make sure the firm stays out of trouble with the regulators. I ran the headcount number by a few people who said that sounds about right. But here’s the kicker: 10 years ago the same shop would’ve only needed three people.

A POSITIVE DEVELOPMENT FOR THE SECONDARY MARKET: A Fitch Ratings presale report is out on the first commercial mortgage-backed security backed by nonperforming and subperforming assets to come to market in over a decade. The existence of such a deal reflects a narrowing of the bid-ask spread on distressed commercial mortgage assets to the point where secondary market trade of such assets may be picking up, according to an analyst that rated the deal. (Reporting by NMN‘s Bonnie Sinnock.)

Private equity funds are supposedly lining up for the first Fannie Mae bulk REO-to-rent auction. But what about the little guy, the local contractor who’s been playing in this market for the past two years? Is he getting the shaft from Uncle Sam?…

WASHINGTON NEWS: FHFA acting director Edward DeMarco has staunchly resisted calls to use principal reductions, claiming most underwater borrowers are current on their loans and such a move will only increase taxpayers’ costs to keep the GSEs afloat. There you have it.

MORTGAGE PEOPLE: Mortgage Master, Walpole, Mass., has hired Don Henig as managing director of national sales. Cornerstone Mortgage recently hired John Skoba as EVP/CFP and treasurer. Skoba used to work at Aurora Loan Services.

LOAN OFFICERS, YES YOU CAN STILL BRAG A LITTLE, BUT TIME IS RUNNING OUT: NMN and its sister publication Origination News, the most widely read news magazine in the broker/correspondent sector, has launched its annual loan officer survey. Eventually, we’ll publish features and rankings on the nation’s top LOs. To participate in our survey visit http://originationnews.com/losurvey.

DATA STUFF: If you need contact names and emails on the top players in mortgage banking subscribe to NMN‘s MortgageStats.com product. For more info drop an email to Deartra.Todd@SourceMedia.com and ask about our site license rates. If you want exclusive stats on the nation’s top 100 lenders and servicers ask about the Quarterly Data Report. Free samples available, the operative word being “sample.”

MUST ATTEND MORTGAGE SHOWS: From April 17-19 National Mortgage News and SourceMedia will hold their annual Mortgage Servicing Conference at the Omni Mandalay Hotel in Irving, Texas. For more information see the ads on our website or email Julie.Dienes@SourceMedia.com or click here http://www.nationalmortgagenews.com/conferences/ms/. For advertising opportunities send an email to Steven.Schloss@SourceMedia.com.

I’m on Twitter, discussing mortgage matters, and great long-forgotten LPs like Tom Verlaine’s long-forgotten solo disc.

LAST WORD: What did Magic Johnson‘s investor group say after they woke up from their five-day drunk? Answer: “We paid $2 billion for what?”

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