Saturday Lender Updates, Gossip and Interesting Letters from the Trenches


On the
heels of the State of the Union address, the
MBA has issued its annual State of the Mortgage Industry release, and the
assessment is generally positive. The consensus was that states hit
hardest by the housing crisis will continue to deal with the aftermath but that
2012 should see some degree of recovery. The MBA pointed to a number of recent
upticks. Upheavals in the single family market have actually helped the
multi-family market, for one. The rental market has seen some very
positive activity, as more lenders, many of them life insurance companies, have
moved into the sector. Of course, the residential market and refinancing remain
thorns in the industry’s side.  MBA President and CEO Dave Stevens attributes
the dearth of financing to market uncertainty, which has been aggravated by
both unrest in international markets and regulation in the US.  Much of
the proposed legislation needs to be more specific, especially when it comes to
underwriting and the definition of “ability to repay”-crucial to ensuring a
safe haven for lenders. The idea of a high degree of risk is still not
terribly attractive. Also criticized was the current structure of the mortgage
market – the MBA points out that the GSEs or FHA are involved in 90% of
lending, which was described as “simply unsustainable,” and that he private
sector should therefore be encouraged to re-enter the market. As for
unemployment, the MBA expects 150,000 jobs to be created per month, which would
have a positive effect on the mortgage market, though that number would of
course vary for different demographics.

A story in
American Banker by Kate Berry summed up the PHH news over the last few weeks.
Namely, “PHH will cut back on
correspondent lending
, sell non-core assets and reverse its drive for
market share in the mortgage business to alleviate investors’ liquidity
concerns,” per CEO Glen Messina. He said that PHH may cut correspondent lending
in half, directly related to PHH’s near-term focus on hoarding cash since
“loans originated with minor defects take up capacity on PHH’s balance sheet
because they typically are not eligible for warehouse financing.” The article
noted that, “Though PHH captured 4% of the mortgage market in the fourth quarter,
Messina said that going forward ‘setting a market share target’ was not
consistent with the company’s near-term focus on liquidity and cash. PHH will
no longer provide market share guidance.”

At the
other end of the spectrum, per Bloomberg, Bank
of America’s retail channel has been unable to keep up with demand
borrowers wanting to refinance, thanks in part to HARP Phase II, which is
beginning to roll out. Per the article, borrowers are being placed on a 90 day
waiting list. “Bank of America is telling some customers who call during high
volume periods of the day to make a reservation. And once they do that, it
could take anywhere from 60 to 90 days just to hear back. Even then, it’s
unclear how much longer it will take to apply for a refinance, get the loan
underwritten, and finally get it funded.” And don’t forget that it stopped
offering cash out refinances last month so if borrowers want to tap their home
equity, they’ll either have to try a HELOC or go elsewhere. Borrowers with
checking accounts or those who visit a branch stand a much better chance of an
earlier time frame.

A few
weeks ago received information that Freddie
has extended the Uniform Loan Delivery Dataset implementation date,
providing mortgage professionals with additional time to apply the first
phase.  Freddie has given substantial notice-new implementation
requirements apply to loans whose applications were received on or after 12/1/11
and are delivered to Freddie on or after 7/23/12.  The Freddie Mac selling
system, positioned to be updated on January 23rd, will now be changed on April
23rd. For details go to:

Given the
number of e-mails I have received, out in the Western U.S. it seems that Reunion Mortgage, with ties to Citi, has
ceased its wholesale business
. For example, “It seems it pulled out of
wholesale only (I didn’t realize they even had a retail presence) but it sure
seem to be doing it quietly.  It seemed that the only brokers that
received the email from them were the ones that were active with them. 
They didn’t issue a rate sheet yesterday.”

Fifth Third is expanding its policy
on borrowers taking a leave of absence from their jobs in the wake of revised
guidance from the GSEs now mandates that short-term income on the temporary
leave is eligible for all conforming and portfolio products.  Borrowers
must meet a number of requirements, which include written intent to return to
work in the same employment situation upon completion of the leave, verification
of employment and income prior to the leave, and completion of necessary
documentation. Also released by Fifth Third were its AMC turn times, which can
be viewed at

Mountain West is applying changes to
conventional price adjusters for cash out and investment properties to loans
locked on or after February 13, 2012 as well as loans that relock after that

For vendor news, Wednesday marked the launch of the free Zillow Mortgage Marketplace App for Android by real estate Web site
Zillow. Also available for the iPhone, the newly launched app offers home
shoppers on-the-go access to the loan shopping experience of Zillow Mortgage
Marketplace. The app includes features that enable shoppers to narrow their
home search to a specific price range, based on income, down payment, and
monthly debt information. Technology marches on…

On to a
few recent letters that I received. “A wise friend mentioned to me that before the government gives money to
mortgagors who are underwater there should be a test to determine if a cash-out
refi was done.
The amount the poor, unfortunate homeowners extracted from
the equity should be deducted from any principal reduction the government is
handing out. Of course, this reduction will be mitigated an amount equal to the
influence of the unscrupulous loan originator. I’m old enough that I will be
done soon, and I am very glad that I won’t have to participate in this farce
much longer.”

Emory wrote, “I would hope that members of the industry quit going along with
the mass media lies about the mortgage industry. No servicer tells a borrower to quit making their payments. This is
almost an urban legend it gets so much press. Most servicers record calls with
borrowers that call customer service lines. But assume somehow they avoided the
subpoenas to get the recording, certainly with the volume of borrowers claiming
this has happened to them there would be validated borrower recordings with
proof of this practice. I’ve heard none and you have to know NBC, ABC, CBS,
Huffington Post, etc. would plaster the airwaves with one if they had it. Sure
there may be a few off the reservation ones but I haven’t even heard a
recording of one of these. Not one document in writing either. The press should
know telling a borrower you can only process a modification for someone behind
on payments, is not the same as telling the borrower to get behind on payments.
A depressed homeowner may spin/twist that statement in that manner, but that is
personal responsibility associated with a human tragedy, not servicer liability
nor big banks/Wall Street’s fault. The press should quit writing these
allegations unless they have back-up proof. This lie, along with the lies of
“banks want to foreclose” and “just lower the principal on all underwater homes
to fix the housing crisis” are leading the uninformed distressed borrowers to
conclusions that are harming those very borrowers. It helps progressive
legislators pass laws that harm the financial services industry, which tighten
lending standards beyond reason. It is harming people that otherwise would make
their payments. It is demonizing lenders unfairly and tightens lending, which
lowers the number of borrowers that qualify, which lowers home values further.
It is a downward spiral that must stop before housing will recover.”

lastly, regarding the recent news about
Fannie Freddie bonuses
, David Lewis, the managing consultant for Con-Serve
Capital Consulting, wrote, “I guess I am among the short sighted members of the
profession.  I made my living as Chairman, President and CEO of two
different mortgage banking companies.  My span in the day-to-day business
went from June of 1984 through June of 2010. From my perspective, employees at
FNMA /FHLMC are government employees.  As such, they are responsible to
the Federal authority, and not to some Board of Directors in a “for
profit” corporation.  What else could they be, other than Civil Service
employees, entitled to all the perks and benefits of such an employee? 
They certainly deserve to be graded, as are other government employees, by the
grades and salary ranges appropriate to the responsibilities of their
respective jobs.”

Mr. Lewis
continues, “For a number of reasons, these employees and the executives they
report to, are no different than any employee/executive at HUD.  To worry
of their exodus for jobs in the private sector is to fret about the migration
of any government employee.  Short sighted or not, I, for one, could care
less whether the new broom in Washington, D.C stays for a year or a day. FNMA/FHLMC/HUD
employees raise no capital.  All the capital is provided by the Federal
government.  If any of the entities loses money in a given fiscal period,
the bills and the salaries continue to be paid with tax payer monies. FNMA/FHLMC
premises are owned by the government, not the stock holders.  So too, the
furniture, fixtures and equipment are part of the public domain.  Sales of
securitized loans are sold into a market which is “made” by the
Federal Reserve Board.  What private enterprise is involved here? 
Lacking any private enterprise, in a not-for-profit corporation, how are any
employees or executives different from any other publicly held department or
division? The people who work at HUD, FNMA and FHLMC are public employees,
period.  As such, they deserve all the benefits and perquisites of public
employment, and no other.”

Last week I noted, “For all of you with any money left, be aware of the
next expected mergers so that you can get in on the ground floor and make some
“big bucks.” Watch for these consolidations in 2012.” I missed a
few, which some readers kindly noted.
“And 2 railroads, the Norfolk Virginia Southern and the California Reading Way
are merging, offering coast-to-coast overnight shipping. Coast-to-coast
overnight shipping via rail? Norfolk-n-Way!”
And, “An unconfirmed rumor is that Dolly Parton will buy controlling interest
in Piggly Wiggly, Big Lots and Harris Teeter.  All 3 brands will operate
under the name ‘Dolly’s Big Wiggly Teeters’.”

And yesterday’s
joke had “I love you” in various languages, including one phrase from the
southern states and a few in Canada, and received these notes:

Alabama, ‘Nice Rack, Get in the Truck’ is something you mutter under your
breath when you see a big deer walking across your field.

And, “You
know, in a lot of the states you mentioned in your Valentine’s Day message, ‘Nice
rack’ is actually something already in the truck. Just saying…”

If you’re
interested, visit my twice-a-month blog at the STRATMOR Group web site located
at The current blog discusses
residential lending and mortgage programs around the world, part 2. 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.

Leave a Reply