Special Update: G-Fee Increases – Update 12.29.11

2017-12-20T17:34:14+00:00 December 29th, 2011|Categories: BlogTalkRadio Podcasts, Special Update|Tags: , , , , , , , , , , |

                                                                                                                                                                                               FHFA has answered a couple of the questions we raised on Tuesday regarding the Congressionally mandated increase in Fannie Mae and Freddie Mac guarantee fees (G-fees).  Effective April 1st all G-fees charged by Fannie and Freddie will be increased by 10 basis points.   In addition, FHFA said that during the first part of 2012 they will determine whether the new law will require additional increases in the G-fees.   Since G-fees are paid from the interest on a loan, this increase will cause mortgage rates on loans going into Fannie and Freddie mortgage-backed securities after April 1st to rise by a similar amount.

Blog Talk Radio Show Summary January 24, 2011: Increasing Net Worth Requirements

2017-12-20T17:34:15+00:00 January 31st, 2011|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , |

You are an investor and you have money to invest.  Do you invest it in the mortgage industry?  Those of us who have been here and who have been beat up over the last few years would probably think twice about doing so.  We might think about all the rule changes and all the regulations and all the buy backs.  We might convince ourselves this is not the right place to invest our money.  But there is a lot of money out there that thinks the mortgage industry is a good place to be invested.  Let's consider some of the positives that they see.  Margins are high, competition is shrinking, good service is rewarded, loan quality has never been better, and collateral values will unlikely fall further.  Increasing net worth requirements over the coming months will drive even more competitors from the industry.  Those who are left in the industry will be worthy competitors, but they will be honest competitors.  As many independent mortgage bankers realize the need to raise new capital they will begin to talk to the investment and will consider giving away substantial percentages of their company to raise the capital.  Before they do so, they might [...]

Blog Talk Radio Show Summary January 7, 2011: Keep Your Flow Servicing

2017-12-20T17:34:15+00:00 January 11th, 2011|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , |

Michael Lau, EVP of Phoenix Capital, a specialist in evaluating and brokering mortgage servicing rights, joined the LykkenonLending blog-talk-radio show this week to provide his opinions on the status of the mortgage servicing market.  According to Michael, the market for servicer-to-servicer bulk transfers is just about non-existent.  The only portfolios changing hands are done to move servicing of delinquent or distressed loans to special servicers.  Fortunately, the market for servicing on newly originated loans is still active.  There are a number of servicers buying this servicing, but they are paying very little for it.  Michael sees the price paid for flow serving as being between two and four times the service fee.  I remember being paid six to seven times the servicing fee on 2003 and 2004 originations.  How can servicing on loans that may never pay off (4% note rates) be worth only two to four times?  Servicing on today’s loans is worth more.  Now is a good time to consider keeping servicing on new production, if you can.  Hold on to it for three or four years and then sell it.  You need to have cash reserves, experienced people, and quality systems to be a servicer.  If you [...]

Blog Talk Radio Show Summary November 15, 2010: What has Gone Wrong?

2017-12-20T17:34:15+00:00 November 18th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , , , |

Mortgage rates have moved higher (mortgage security prices have moved lower) and strangely enough QE2 deserves much of the blame.  The Fed intended for the opposite to happen.  As they purchase their $600 billion in long-term Treasury securities, the Fed expected the added demand would drive prices higher and rates lower, not only for Treasury securities, but for mortgage backed securities as well.  Things have not happened as planned.  The Fed began their Treasury purchases on Friday and  MBS prices fell 27/32nds.  The Fed continued their Treasury purchases today and MBS prices are down another 16/32nds.  So what has gone wrong? Some of the issue is that MBS prices rose considerably in the weeks preceding the Fed’s announcement that they were going to buy $600 billion of Treasury securities.  The much anticipated announcement had already accomplished much of the expected end result before it even started.  After the announcement, sentiment toward the benefits from the plan shifted.  Investors worldwide began to doubt the Fed’s ability to control rising inflation when it begins.  Foreign investors recalculated their required returns after seeing the value of the dollar fall to recent lows.  Political power in the US shifted from the Democrats to the [...]

Blog Talk Radio Show Summary October 25, 2010: How Much Quantitative Easing (QE II)

2017-12-20T17:34:15+00:00 October 27th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , |

  Have you noticed an extra bit of volatility in MBS prices lately?  Do you know the cause?  Last week we saw mid-day price changes four out of the five days.  Three were favorable, fortunately, and one was unfavorable.  We saw unfavorable price changes Monday afternoon, this week.  There are always several factors weighing in on investors as they decide what they will pay for mortgage-backed securities.   The primary factor right now seems to be the Fed’s plan for more quantitative easing (QE II).  QE II will have the Fed buying Treasury securities, adding liquidity to the market to stimulate lending, to promote economic growth, to reduce the value of the dollar,  to make exported goods cheaper to foreign buyers and to make imported goods cost more, to create higher inflation.  New demand for Treasury securities should improve demand for MBS as well, driving up prices.  Too much QE II could add too much liquidity and reduce the value of the dollar too far, increasing inflation too much and driving up the yield required on MBS, reducing prices. No longer is there a question of whether the Fed will buy more Treasury securities, but the question is how much and [...]

Blog Talk Radio Show Summary September 27, 2010: Loan Officer Compensation

2017-12-20T17:34:15+00:00 September 28th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , |

The new rules which beginning April 1, 2011 will govern how loan originators (LO or LOs) are to be paid have been the topic of much discussion lately.  There seems to be as many opinions as there are people and there are as many unanswered questions as there are answers.  To try to help bring clarity to the situation and to try to address what is known, Tony Musgrave, mortgage industry veteran and practicing lawyer, joined the show today.  Tony’s general advice on this issue is to accept that change is coming and to begin to prepare for it.  He said that when considering the new rules, first consider where they came from.  The new rules are a result of political and public perception that the old compensation rules incented LOs to take advantage of borrowers and to put them in loan products and at loan rates which were advantageous for the originator, but not necessarily for the borrower.  Tony’s advice is to interpret the new rules with this perception as the basis for your new policies. What is known is that a loan originator cannot be paid an amount that differs based on the terms of the loans he [...]

Blog Talk Radio Show Summary September 13, 2010: Business Strategies through the New Year

2017-12-20T19:52:06+00:00 September 28th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , , , |

Having a strategy and a plan to implement that strategy is always important.  For the mortgage industry, it is  even more important now as the consequences from regulatory changes are likely to change the origination landscape significantly.  Implementing the regulatory changes will take considerable effort in retooling systems, training staff, and monitoring for compliance.  All this will come with a price tag.  Some companies will choose to get out before the changes are to be implemented.  Others will choose to join firms that have the resources to implement the changes.  Some firms will implement policies and controls based on the strictest, most conservative interpretation of the new regulations, and others will take a more common sense approach.  All this is said to support the argument that over the next year or so we will see considerable movement within the industry.  Firms with capital, systems and support in place will be well-positioned to benefit from the movement. So if your strategy is to profitably grow your origination business in a compliant manner, you should have a tremendous opportunity in the coming months.  Your plan should include building capital to pay for the cost of change and to support larger volumes, employing systems [...]

Blog Talk Radio Show Summary August 30, 2010: The Changing Face of Real Estate

2017-12-20T17:34:15+00:00 September 9th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , |

This week’s guest on Lykken on Lending was John Tuccillo, noted economist and former Chief Economist for the National Association of Realtors.  John provided his opinions on the state of the economy and housing.  According to John, the chance of not having a double dip recession is greater than the chance of having one, but the difference in the likelihood has diminished over the last couple of months.  John expects economic growth to remain slow though 2011, growing at an annual rate of 1.5% to 2.5%.   Regarding housing, John looks to job creation as the driver to improve the housing market.  Without it, nothing the government or the Fed does will create sustained improvement.  This year’s home buyers tax credit was certainly helpful to stimulate activity at a time when we needed the activity, but we are seeing that it merely brought forward activity which most likely would have occurred naturally.  The housing market will come back, but will come back on a regional basis.  John said the real estate market should be viewed on a regional basis, not a national basis.  Some markets like San Francisco, which rose to unaffordable levels, will likely take a good bit longer to [...]

BlogTalkRadio Podcast – June 21, 2010

2017-12-20T17:34:16+00:00 June 23rd, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , , , , , |

Wouldn’t it be nice if Congress would extend the “close-by deadline for those trying to get the Homebuyer Tax Credit?  Sure it would. Wouldn’t it be even nicer if they did it now, June 21st,  before we all break our backs trying to get the thousands of  transactions closed by June 30th?  Any anxiety out there right now? Glen Corso, Executive Director of The Community Mortgage Banking Project and an industry advocate, brought to the BlogTalkRadio show today an up to the minute status report on HR 4213, the bill being considered by the Senate which, if passed, will extend the “close-by deadline to qualify to receive the Homebuyer Tax Credit from June 30th to September 30th.  According to Glen, there is very little controversy on whether or not to extend the deadline. Most are in favor of it.  The rest of the bill, though, includes significant controversy and because of it, might not pass any time soon.  As a result, this is not a time to relax.  Push to close all the purchase loans that you can before the existing June 30th deadline. Glen also provided a shocking update from the House and Senate Conference Committee working on the [...]

BlogTalkRadio Podcast – June 14, 2010

2017-12-20T17:34:16+00:00 June 17th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , , , , , , , |

This week on BlogTalkRadio/Lykken-on-Lending: What drives mortgage rates?  Inflation and uncertainty.  Inflation is not present right now and according to the majority of the Federal Open Market Committee members it is not expected to be much of a concern for the near future.  Uncertainty, though, is alive and well.  Continuation of the recent economic improvement in the US is considered anything but certain.  Global economic growth has been a question mark.  The ability of several European nations to satisfy their debt obligations is uncertain.  This uncertainty has resulted in tremendous volatility in the stock market, which has caused tremendous volatility in mortgage-backed securities prices. Daily, global headlines suggest to  investors its time to shift assets to more or less risky investments.  That is what happened last week.  After reaching the highest level of the year, mortgage-backed security prices were beat down on Thursday based on headlines from Australia, China, and Europe, all which suggested improving economic conditions.  Investors sold low risk bonds and bought higher risk stocks.  The Dow gained 270 points.  MBS prices lost 25/32nds.   This pattern has been in place now since April when the European debt crisis raised its ugly head.  Look for volatility in mortgage-backed security [...]

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