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Mar. 25, 2011: Detroit's population did what? Comments on current events from the trenches; misc. industry player news
Rob Chrisman
Overheard
at work: "AT&T to wed T-Mobile. Following the ceremony,
there will be no reception."
Hopefully there is
reception in rural areas – like Detroit. The Census Bureau has
also been releasing the 2010 population counts for various
states, including Michigan. Columbus and Indianapolis’s
populations rose. Nearby Chicago's population declined by almost
7% and Cleveland's dropped by about 17%. But Detroit
lost a quarter of its population over the last ten years.
25%! Detroit now has the same population that it had in 1910,
before the auto industry boom. "Now's not the time
to look in the rear view mirror," said Robert Ficano, the
Executive for Wayne County, home of Detroit. I
think that I will frame that quote.
In addition, the U.S.
Census Bureau reports that state government tax collections
decreased about $14 billion to $705 billion in fiscal year 2010,
following a drop of $66 billion in 2009. According to the
survey, corporate net income tax revenue was $38 billion, down
6.6%, while tax revenue on individual income was $236 billion,
down 4.4%. General sales tax revenue was $224 billion, down
1.8%. For more information about this survey, visit http://www.census.gov/govs/statetax/.
Anyone needing
presentation material on “the shadow inventory”
may want to use NAR’s, which has a colorful state map:
http://economistsoutlook.blogs.realtor.org/2011/03/21/state-by-state-estimate-of-shadow-inventory/.
According to a story
in the Financial Times, "The five biggest US
mortgage servicers were told this week at a private
meeting with regulators to consider paying
delinquent borrowers up to $21,000 each as part of a broader
settlement of the foreclosure crisis...The industry-wide “cash
for keys” program would involve the biggest servicers paying
borrowers as an incentive to leave their homes." "Banks would
pay borrowers who are more than 90 days behind on mortgage
payments up to $1,000 to seek independent financial advice and
up to $20,000 in cash as a “fresh start” payment towards living
costs in a new home. They would have to vacate their properties
quickly and leave them in good condition." Sheila Bair, FDIC
chairman, raised the idea but people involved said it was not an
official government proposal and was rejected strongly by some
of the banks.
I continue to receive
notes about current events. "Parts of the
industry seem to disregard the fact that if legislation
continues to cause broker numbers to dwindle, mortgage
wholesalers will no longer find it feasible to operate, and the
entire channel could disappear. Local community attorneys will
also be affected as the ‘Big 4’ will be controlling all parts of
every transaction."
Another note: "Why is there so much press against the 30-yr
mortgage? The 30-yr mortgage did not cause the
credit crisis. This is yet another example of regulators
not being able to find one single cause of the credit crisis,
and swinging at different parts of our industry like they are
some kind of piñata, and they have the blindfolds. If the banks
want to better match their assets and liabilities by emphasizing
ARM loans, that is fine, or if a borrower wants a loan to match
their expected ownership period I understand, but saying that a
30 year term for a mortgage is bad is plain wrong."
David Dunham with The Center For Mortgage Professionals wrote, “I
ran across this note on mortgage brokers in Australia in
Wikipedia. Now while the dynamics of the market are different
than here in the US, one cannot dismiss the elegance of a
compensation schedule that rewards the originator for servicing
duration. The longer the loan sticks, the more you can make.
And, the lower initial comp keeps the scalpers at bay – more
focus will be on client control and retention and originating
more transactions instead of trying to get maximum yield on the
initial transaction. ‘Approximately 35% of all loans secured by
a mortgage in Australia are introduced by mortgage
brokers…Australian mortgage brokers do not usually charge a fee
for their services as they are paid by the lenders for
introducing loans. They are paid an up-front commission that is
on average 0.66% of the loan amount and an ongoing trail
commission that is on average 0.18% of the loan amount per annum
paid monthly. These commissions can vary significantly between
different lenders and loan products. Although mortgage brokers
are paid commissions by the lenders this does not alter the
final rate or fees paid by the customer as it may in other
countries. Mortgage brokers do not have the ability to charge
the customer a higher or lower rate and in return obtain a
higher or lower commission.’”
Wednesday's
commentary noted, "Regardless of the fee income from the reverse
mortgage origination business, no one wants to run the risk of
the Gray Panthers or AARP picketing their office during the
Channel 5 news. Bank of America, Wells Fargo, and now Financial
Freedom have ended that channel." That was slightly misleading,
in that Wells Fargo eliminated the reverse mortgage
offering in its wholesale channel, but not in Wells' retail
channel. Per Wells Fargo, "the Retail Reverse Channel is
alive and well with no plans to eliminate...Only a small
percentage of our Reverse volume came through Wholesale."
Earlier this week I discussed 203K and HomePath programs. Some
agents know about them, others don’t, but RenovationReady
(http://www.renovationready.com)
may help. I can’t personally endorse the product, but per the
marketing piece, “RenovationReady is the single source for real
estate agents, lenders, and home buyers to streamline the home
renovation lending process. It provides free property
pre-inspections to identify the scope of required repairs to
meet lending standards and adds the property to our exclusive
property search engine. Using pre-inspection renovation data, we
provide specialized loan processing and transaction coordination
procedures to close the loan within 45-days. On behalf of our
lender-client, RenovationReady provides post-closing loan
administration, draw disbursements, progress inspections, and
fund control. These proprietary services guarantee the
renovation project is on-track, statutory lien procedures are
managed, and risks are minimized.”
The FBI and the MBA entered into an agreement to combat
mortgage fraud, and will make available a Mortgage Fraud
Warning Notice as a “proactive means of educating consumers and
mortgage-lending professionals of the penalties and consequences
of this criminal activity.” http://www.loansafe.org/fbi-issues-mortgage-fraud-notice-in-conjunction-with-mortgage-bankers-association.
GMAC’s correspondent
clients adjusted its 5/1 Government ARMs with 2/2/6 Caps by
+.250 a few days ago. In addition, starting with yesterday’s
rate sheet GMAC, with perhaps a nod toward the way gasoline
prices are noted, began offering a series of 3.99% and 4.99%
note rates.
Davis + Henderson announced that it
has entered into an agreement to acquire Mortgagebot
LLC (Wisconsin) for a purchase price of $232 million of cash.
Mortgagebot, founded in 1997, provides web-based mortgage
point-of-sale solutions for nearly 1,000 consumer direct, loan
officer and branch and call centers for banks and credit unions
that originate mortgages. http://www.marketwire.com/press-release/Davis-Henderson-Agrees-Acquire-Mortgagebot-LLC-Americas-Leading-Web-Based-Mortgage-Technology-TSX-DH-1417421.htm.
Parkside Lending, a west coast wholesaler,
released compensation presentation materials to its brokers.
Parkside is holding a webinar today at 10AM PST, along with a
few next week, covering the pricing engine, the compensation
administrative tools, and rate sheets. Brokers can sign up by
emailing nancyjo@parksidelending.com.
.
In kind of a slow day, yesterday MBS prices worse/down by about
.250. Looking at the big picture, in speaking to various groups,
I am sometimes asked about the direction of rates. Dick Lepre (http://www.loanmine.com/)
writes, "Low Treasury yields are discouraging the addressing of
the massive amount of public debt. Our nation is taking on debt
at an unsustainable rate. The MegaMillions Jackpot last weekend
was $201,000,000. Is that a lot of money? That is the amount of
debt the Treasury Department will add every 70 minutes of every
day this year. This week the House voted to cut spending $6
billion. That is 1.5 days’ worth of deficit...Congress
recognizes that the country's debt path is unsustainable. While
the economics of the matter is straightforward - cut spending,
raise taxes, or both - the politics is not. And if voters cannot
insist, or are not going to insist, on fiscal sustainability,
and if Congress is not going to control public finances on its
own accord, then one must conclude that the fiscal process is
lacking a necessary ingredient.
This morning’s 4th
quarter GDP number was revised to +3.1% versus +2.8% previously
reported. Later on we’ll receive a University of Michigan survey
number, not exactly a market-moving volatile number especially
given overseas events. But until then the 10-yr is
sitting around 3.40% and MBS prices are not doing much.
Have you ever
wondered who first uttered the phrase, "You gotta be kiddin'
me?" (Parental discretion advised.)
Well, it just so happens to have originated through the Father
of Our country, way back when George Washington crossed the
Delaware River with his troops.
There were 33 in Washington's boat. It was extremely dark and
storming furiously and the water was tossing them about.
Finally, Washington grabbed Corporal Peters and stationed him at
the front of the boat with a lantern. He ordered him to keep
swinging it, so they could see where they were heading.
Corporal Peters, through driving rain and cold, continued
swinging the lantern back and forth, back and forth.
Then a big gust of wind and a wave hit and threw Corporal Peters
and his lantern into the Delaware. Washington and his troops
searched for nearly an hour trying to find Corporal Peters, but
to no avail. All of them felt terrible, as the Corporal had been
one of their favorites.
Washington and his troops landed on the other side, wet and
totally exhausted. He rallied the troops and told them that
they must go on.
Another hour later, one of his men said, "General, I see lights
ahead."
They trudged toward the lights and came upon a huge house. What
they didn't know was that this was a house of ill repute, hidden
in the forest to serve all who came.
General Washington pounded on the door, his men crowding around
him.
The door swung open, and much to his surprise stood a beautiful
woman. A huge smile came across her face, to see so many men
standing there.
Washington was the first to speak, "Madam, I am General George
Washington and these are my men. We are tired, wet, exhausted,
and desperately need warmth and comfort."
Again, the Madam looked at all the men standing there, and with
a broad smile on her face, said, "Well, General, you have come
to the right place. We can surely give you warmth and comfort.
How many men do you have?"
Washington replied, "Well, Madam, there are 32 of us without
Peters."
The Madam said, "You gotta be kiddin' me."
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