Discover More About The Banking World And Whats Happening So Far This Week!
Out here in California, some in the business have been following the case of 28-yr old Garret Gililland III. Originally from the Sacramento area, he was just captured in Spain and brought back to California to face charges of a $100 million mortgage fraud ring. In yet another example of what seems to make the headlines for mortgage brokers, Gililland fled in June 2008 with at least $250,000 in cash. (And let me tell you, getting that much cash from conventional sources is not easy.) He, his wife and their 3-year-old daughter went to Colombia, and then to a Spanish village on the Mediterranean coast. His wife remains in Spain and is fighting extradition. Exciting stuff – watch for the TV docu-drama next year.
What are real-live brokers and loan agents saying about the current lending environment? “Things are both good and very challenging. Our conforming conventional and FHA and VA lending business have never been so good, but for local builders construction and land is still an extremely challenging environment. We’re working through it.”
“Things are really going well for us. I am concerned like we all are about rising interest rates and how that will affect us but for now I cannot complain as we are having a great year.”
And lastly, “We are hanging in there.”
You’re either “in” the new club, or “out” of the new club. In a story from the Wall Street Journal’s top mortgage reporter, Lenders One coop is trying to form the “Community Mortgage Lenders of America”. It will be made up of local mortgage banks and other lenders that aren’t owned by large banking companies, but apparently this role is already being served by another new group, the Community Mortgage Banking Project. Both groups say that the MBAA is all well and good, but includes the large investors whose interests may not align with the smaller mortgage banks. Don’t ask me where the line is drawn.
Freddie and Fannie have their own club, with the two of them as members. And everyone else had better play by their rules in the current environment, or else… Freddie Mac, who came out with some changes in early July (Bulletin 2009-18) is “tweaking” those changes. Freddie’s changes will now be effective for all mortgages with application dates on or after 11/1, and Freddie Mac settlement dates on or after 2/1 instead of with application dates on or after 10/1, and Freddie Mac settlement dates on or after 1/1.
How would you like it if everyone knew your pay? The compensation of Freddie’s new CFO was made public last week. Freddie Mac said Ross Kari would be paid a base salary no less than $675,000 plus an added annual $1.66 million in installments and an annual target incentive of $1.16 million. He receives a $1.95 million cash sign-on bonus, “in recognition of the forfeited annual incentive opportunity and unvested equity at his current employer.” FHFA approved the compensation, but it sure to raise some eyebrows since it is more than a Senator or Congressman makes…
Let’s move onto something interesting, like mortgage rates. 30-yr rates are back near 5%, depending on if the borrowers wants to pony up some discount points. But most economists feel that rates are not going to go much lower, or, if they do, it will be because the economy is in bad shape. So be careful what you wish for. In last week’s announcement the Fed made it clear that they would likely keep rates low until the economy starts to pick up some steam. And for now, credit, housing, and unemployment are still major issues – but they won’t always be. Not to sound grim here, but many borrowers who can refinance already have, the autumn and winter are not traditionally strong times for real estate transactions, and some companies are talking about lay-offs again. So until we see some loosening in credit and underwriting guidelines, or a pick-up in home equity…
This week we will see quite a bit of economic news that may end up moving rates. We start with today – where there is no news. The yield on the 10-yr is down to 3.33%, and mortgage prices are a shade better. Tomorrow, however, we have Consumer Confidence and the S&P/Case-Shiller Price Index. On Wednesday we have the Chicago Purchasing Manager’s Index, and on Thursday Jobless Claims, Pending Home Sales, the ISM number, and the Treasury’s announcement of next week’s auctions. On Friday we will have the Unemployment Data, always sure to grab headlines. Estimates are running around a loss to Nonfarm Payroll of about 200k, with the Unemployment Rate going from 9.7% to 9.9%. And for good measure this week we’ll also see Personal Income & Consumption, Final GDP, Construction Spending, and Factory Orders.
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