What were Adam's first words to Eve?
They
were rumored to have been: “Stand back Eve, I’m not sure how much
bigger this
thing is going to get!” How big is the current fraud trend, or so it
seems,
going to become? Fraud continues to be everywhere in the newspapers.
Obviously the
risk of perpetrating or becoming an unknowing victim of mortgage fraud
can be
mitigated through increased consumer awareness and education, and there
are
increased efforts on the part of investors to encourage their clients
to educate
consumers about what constitutes mortgage fraud and the consequences of
mortgage fraud before they close their loan. As part of the loan
origination process, help educate consumers by clearly disclosing that
mortgage
fraud is a federal offense with serious penalties, and will be fully
investigated and prosecuted by the appropriate authorities. For
example, a
"Mortgage Fraud Warning Notice" is produced jointly by the FBI and
the Mortgage Bankers Association (MBAA). It is not required, but
compliance departments
may want to begin using it. In fact, on the MBAA’s web page they have a
FBI
Mortgage Fraud Warning page for additional detail and instruction
regarding how
this form may and may not be used, or to the FBI’s Mortgage Fraud page
for
other stories and statistics.
http://www.mortgagebankers.org/files/FBIMortgageFraudWarningFinal.pdf
In
an unrelated, but similar topic, the New York Times had an article
discussing whether or not more loans ended up in foreclosure that were
originated by experience brokers rather than inexperienced brokers. The
article
states, “But new research…suggests that more
experienced mortgage brokers might actually be more likely than novices
to make
loans that end up in foreclosure.” Nearly 23,000 mortgages
in the study were processed by
2,905 brokers from 2004 to 2008. Experienced brokers spent less time on
each
loan, were more adept at making or pushing for exceptions, etc. In
addition,
brokers farther away from a lender’s headquarters, or underwriting
area, fell
into the same “higher risk” category. As any broker knows, reputation
is
critical, and a potential borrower can check with a state’s banking
commission
to see their complaint history.
Small
to mid-size mortgage banks are dealing with an increased number of
buy-backs, or so it seems. This is especially evident in the “stated
income
agency” programs. Unfortunately correspondent investors are concerned
that many
of the companies don't have resources to buy back the loans and then
hold them through
the foreclosure process, especially as that has grown in time length
with so
many in courts. Is anyone out there still buying scratch/dent loans?
What
is the world's
biggest bond fund? Pacific Investment Management Co's Total Return
Fund, of
course. Well, PIMCO cut their mortgage debt holdings last month
and
boosted their percent of investments in cash and cash equivalents,
which of
course isn’t great news for mortgage rates. “Pimco chief Bill Gross
suggested
that investors focus on the secure income provided by dividend paying
stocks
and bonds. ‘The outlook for risk assets -- stocks, high-yield bonds,
and
commercial and residential real estate will involve just that -- risk,’
he said.”
Let’s
get back to the
economy. (There doesn't seem to be much in the way of investor news
anyway.) Yesterday we had more mixed news, with Leading Economic
Indicators for
June shooting up .7%, which is the third month in a row that they’ve
been
positive. This was stronger than expected. Seven of the
10 indicators were positive while three indicators were
negative. As for today, there is no news, aside from Bernanke’s
semi-annual
Monetary Policy Report to Congress (and wraps up tomorrow). This could
provide some
movement to the market – we’ll see. Also something to note is the
spread
between the yields on 2- and 10-year notes, which is the widest it has
been
since early June. Hopefully originators remember how to do ARM loans!
And to
help matters, we had a nice improvement Monday afternoon ahead of
today’s
testimony, and with lower locks and originations mortgage prices
rallied. This
morning we find the 10-yr around 3.64% and mortgages security prices
slightly
better.
Having
just visited Boston, I managed to come up with this one…
A
Catholic guy goes into the confessional. He notices on one side a
fully equipped bar with Guinness on tap. On the other wall is a
dazzling array
of the finest Cuban cigars. Then the priest comes in.
"Father, forgive me, for it's been a very long time since I've been to
confession, but I must first admit that the confessional box is much
more inviting
these days."
The priest replies, "Get out. You're on my side."
Rob
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