Forum Replies Created
-
AuthorPosts
-
MaxedOutMama
ParticipantSecured Funding is closing up its wholesale ops – they are accepting no new apps and they will fund the last loans on Jan 12th.
A lot of the lenders are pulling back on 100% stated purchases, at least.
I think these changes will have a real effect on some very inflated markets. There’s no way to qualify most borrowers using real numbers.
ParticipantOver the weekend MLN people were supposed to be meeting with Lehman reps about the possibility of a buyout.
MLN also services.
Link to Grapevine reports.
http://www.brokeruniverse.com/grapevine/thread/?thread=342085It’s also true that Fieldstone has only got shortterm funding.
ParticipantI almost hesitate to write this, but as for REO’s –
Suppose a place has a lot of REO’s, and sells them at large reductions in a particular area. Suppose they are also actively underwriting in that area. Suppose, for example, that in one area I sold 100 SFR at a median of $230,000 in the space of two or three months, and during the same two or three months I underwrote 450 SFR loans in that area at a median of $275,000. On later inspection, that might raise substantial questions.
The main problem is the refis. If you can’t support the needed refi amount with an appraisal, no loan, no fee, no business.
For any institution holding whole loans in one area, having to sell a bunch of REO at large discounts in that area undercuts their own collateralization. But for originators, it also raises some questions when the REO count gets high enough.
Automated valuation systems are already beginning to kick out more refi appraisals, and there is probably a valuation bomb in the pipeline in 8-12 areas.
For an inside look at appraisal problems:
http://forum.brokeroutpost.com/loans/forum/2/82006.htm
“This type of request is almost typical of most California brokers/lenders. They have an almost adament attitude that the appraiser MUST hit their value or they don’t get the assignment.I had another one call me up the other day. First off, I told him that his request was highly illegal for any appraiser to accept as it was written. First off, instead of just saying “ESTIMATED VALUE” it said “VALUE NEEDED”. It went on to say “IF UNABLE TO GIVE THE VALUE LISTED ABOVE PLEASE CALL THE LOAN OFFICER ASAP”. All of that was preprinted on the form. He continued in his own handwritting, “PLEASE CALL ME TO SET THE APPT. IF THE VALUE IS THERE”. When I told him I could not guarantee of hitting his number (after I clearly told him I didn’t want him to put a number on his request when he first called) he hung up on me. The company name was NATIONWIDE WHOLESALE LENDING out of Woodland Hills, CA.
This is how I would say 90% of the calls I get from California goes.”
ParticipantPowayseller, FNMA buys other originators’ loans and other originators’ MBS and ABS.
Most of these loans were probably bought for the purpose of packaging them into securities. The purchase agreements generally include provisions that require take-backs for loans that default quickly, and there is no time limit for fraud/impropriety. Fraud and impropriety is generally not picked up until first default.
One reason why one originator might buy whole loans or packaging rights on another’s loans is to get a better geographic or terms mix which will be used to reduce the overall calculated risk in the final securitizations and thus enhance the price of the entire package.
MLN also serviced, and they may have retained servicing rights but sold the loans on some of these.
ParticipantHappy New Year!!
You might be interested in Ownit’s BK filing; they say they owe 170 million and have assets of 10 million or so. It’s a big loss for Merrill, which has the biggest repurchases, not to mention losing its 20% stake:
http://www.latimes.com/business/la-fi-ownit30dec30,1,2686895.story?coll=la-headlines-business&ctrack=1&cset=true
Merrill Lynch demanded that Ownit repurchase mortgages totaling $93 million. Several other Wall Street firms are seeking smaller amounts, and Calabasas-based Countrywide Financial Corp. has $11 million in loans it wants Ownit to buy back.Merrill Lynch was Ownit’s chief backer on Wall Street, having bought a 20% stake in the company for $100 million in September 2005.
ParticipantIn order from top to bottom:
1 New Century
2 Fremont (FMT – industrial bank, big in commercial as well – but check out its 3rdQ financials and see the swing in securitization of residential mortgages. It’s quite something.)
3 Option One (owned by HR Block, up for sale)
4 WMC Mortgage (owned by GE under GE Money)
5 First Franklin (Merrill buying from Nat City for 1.3 bil)
6 Ameriquest (Argent, major lawsuits)
7 Decision One (owned by HSBC)
8 BNC Mortgage (op. subsidiary of Lehman)
9 Accredited Home Lenders (look at its quarterlies)
10 Countrywide Financial
11 Ownit Mortgage (partially owned by BofA)
12 Washington Mutual
13 Mortgage Lenders Network USA (MLN)
14 ResMAE Mortgage
15 NovaStar Mortgage
16 Chase Home Finance
17 Encore Credit
18 Wells Fargo Home Mortgage
19 Fieldstone (lost 45 million in 3rdQ)
20 Aegis Mortgage CorporationThese rankings are published by New Century but I think they are quite accurate.
ParticipantYes, that’s correct. They faxed out notices late today that they would no longer be funding residential mortgage loans. It’s not clear if loans still in their rescission period will fund.
The rumors were flying all today, because they had cancelled some closings. But even their own people didn’t get the word until late in the day.
This is the outfit that cut compensation to their Account Execs by 75% earlier in December.
On edit: This was ranked the 13th subprime lender in 2006; Ownit was 11th.
ParticipantIt is fraud, if the amount is hidden from the lender. It’s a federal crime, actually, and people are being thrown in the slammer for it right now.
No matter how desperate you are, debt or BK is better than jail time. Don’t touch these schemes. Don’t.
ParticipantThey will write ’em as long as anyone will buy ’em, and the day when no one will buy ’em at these rates is coming. The news about the early defaults is just beginning to pop up. I know this is really boring stuff, but the timing of defaults has a great deal to do with the expectations over the life of a portfolio. A few more months of numbers like these, and shock is going to hit.
Another thing, a lot of refis are being done on the basis of “automated valuation”, meaning, there is no reappraisal and the loans are based on totally inflated values.
To give an example, I was talking two weeks ago to a guy who has a house in PA. He bought it in early 2003 at $275,000. That was a good price. His original loan was below $160,000. He is one of these financial conservatives. Now his loan balance is below $90,000, and right on schedule, the company sent him a nice reminder that his house is worth $540,000, and they are willing to allow him to draw on that equity. Just write a check! Here you go! Have some fun!
What’s happening is that loans at low interest rates (his is 5.5%) are not profitable to lenders and especially servicers when they go to lower balances, so they try to get people to refi or draw up.
The funny part of this story is that the house could be sold at the absolute most for about $360,000 in today’s market, and next year will probably end at a resale value somewhere around $320,000 at most. The company is willing to let him go to around $400,000. What does that tell you?
Believe me, when you are looking at equity estimates vs mortgage debt you are looking at some pretty funny numbers right now. As the foreclosure losses begin hitting, things are going to tighten up fast.
ParticipantThat article should be read with reference to Bugs’ and SDAppraiser’s comments earlier.
Thanks to them both. I had been wondering what to do about WaMu, and I think you two saved me a bunch of money.
I wouldn’t short it, though.
October 8, 2006 at 7:46 AM in reply to: Bressi Ranch…16 new homes to be auctioned off 10/21/06 #37467ParticipantI found the auction page. I’m not sure if the furniture comes with the houses, or if they have just been “staged” by firms with a deep grudge toward the homebuilder. You can see the images here as html. The one with the black dining room with those black things on the table looks like it’s a set for some Hollywood movie entitled “The Blair Witch House Hunt”.
Lime green sitting rooms? Unbelievably vast wallpapered bathrooms in tragically poor taste? Missing bathroom doors? Ugh. I had a (very personal) strongly negative reaction to what seemed to me to be monuments to bad taste, bad values and bad family karma. In the main these houses did not look liveable to me; they reminded me of a story my mother once told about neighbors her mother used to take her to visit as a girl. She was quite vehement about the fact that the house was not for living. She said there was nowhere she felt like she could sit down, and she used to flee to the yard and play with the dog, who she felt was similarly afflicted. She said it was an unhappy house with no room for people.
I think perhaps these houses aren’t selling because they are not well designed, and the poor decorating effort reinforces the bad design. Houses built for ostentation still need to have liveable nooks in them. I would caution about placing too much weight on the eventual selling prices as a reflection on the overall housing market.
September 30, 2006 at 12:05 PM in reply to: Average adjustable loan is 50% higher than average fixed rate loan #36894ParticipantYes, they are affordability products. It also points out the fallacy of countiing loans rather than loan balances when estimating overall impact.
The worst by far are those 100% financings.
ParticipantIt will have some effect for depositories, especially depositories who do a lot of business stemming from brokers.
One paradoxical effect it will have is that some conservative depositories will use these guidances, and especially the suggested disclosure formats, as a roadmap to start offering these loans when they hadn’t before. Conforming to the suggested disclosure guidelines offers institutions a way to cut potential legal risks. They won’t do tons of them, but they will start offering them.
According to the primary guidance, state regulators of non-depository lenders had agreed to institute similar regulations for non-depository lenders. But they haven’t yet, and there was nothing holding them back, so I’m not holding my breath.
ParticipantThe same dollar figure five years from now would indicate a significant drop in real dollar value, meaning that you would have done better to rent and put the extra in a CD.
So that’s not really a bright forecast. A bright forecast would be housing at least appreciating at the rate of inflation, or the rate of return you would receive from putting your money into a CD for 5 years.
-
AuthorPosts