National Mortgage News: Secondary Market Bidders Offering Only 15 to 25 Cents on the Dollar for Delinquent HELOCS

http://www.nationalmortgagenews.com/columns/hearing/

What We're Hearing

By Paul Muolo

THIS JUST IN: Yet another large subprime lender is having trouble and appears to be on the verge of doing some employee house cleaning. To find out which lender see the Monday edition of National Mortgage News. Don't subscribe? Call: (800) 221-1809...

Traders and other mortgage executives tell us that secondary market bidders are offering between 15 and 25 cents on the dollar for delinquent HELOCs. We've heard the bid prices from three trusted sources. One investment banker said a large California lender wanted 65 cents for a recent pool of bad seconds. Needless to say, the sale never went through...

After last week's column we received a ton of requests for our list of defunct mortgage firms. In case you want to see yet another (accurate) update visit: http://data.nationalmortgagenews .com/freedata/?what=special...

Also, NMN has a new fraud e-newsletter. Visit: www.nationalmortgagenews.com/ fraud/newsletter/...

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What the heck is the ABX Index and what does it matter to the subprime industry? It's a thinly traded index that tracks how much it costs to insure BBB-minus rated bonds that are tied to subprime securitizations. Investors can be "long" or "short" the index. Six months ago the "spread" between BBB- bonds and LIBOR was 350 basis points. Recently it's been at 700 to 800 basis points. One lender told us at times it's been as high 1,200 basis points. For more on the ABX Index and what it means read Bonnie Sinnock's "Street Smarts" column in Monday's NMN...

On Thursday one wholesale executive in Southern California told us that his two largest non-prime competitors had just raised their rates by 45 basis points each. This, of course, means that rates are going up for consumers. One thing to keep in mind is this: with all the menu tightening going on -- and with all the emphasis on credit quality -- it's only a matter of time before subprime firms begin hiking their rates. And with many firms going bust that means less competition, which means lenders can charge, well, more. Who gets hurt? The subprime consumer. Can anything be done about this? No. Some lenders believe credit impaired borrowers have benefited from great rates the past three years. And now, the gravy train is over...

One other thing to keep in mind: the Dow fell 416 points one day last week. Stocks are not looking good. When the "dot-com" crash came in 2000 investors began pulling money out of stocks and putting it in housing. Now both stocks and housing are cracking up. Where will investors put their money? Answer: cash. As cash piles up, that will force down short-term rates, at least it should...

Countrywide Financial Corp. said in a SEC filing on Thursday that its subprime servicing portfolio is suffering from a 19% delinquency rate. Amazingly, its stock only fell a fraction on the day. The company did not return several press calls from NMN and other publications. (Rick Simon don't be shy. What gives?) According to the just released Quarterly Data Report, Countrywide is the nation's largest subprime servicer. Don't subscribe? Email: Deartra.Todd @SourceMedia.com...

It was almost a year ago when NMN broke the news about subprime lender Acoustic Home Loans going bust, inspiring bloggers everywhere to pay attention to our business. The more the merrier!...

Three years ago -- while the subprime market was red hot -- ACC Capital Holdings talked to Washington Mutual about the Seattle S&L buying Ameriquest/Argent. The mega thrift ultimately passed, said one former WaMu executive. "The asking price was then $4 billion," said the official. Last week Citigroup said it has an option to buy Argent and Ameriquest's servicing. If you read in between the lines of the press release it looks pretty clear that Citi will eventually buy the thing -- unless it uncovers some type of deal breaker. What will it pay? You can bet it won't be $4 billion...

As expected, Federal regulators soon will unveil new underwriting standards for certain hybrid mortgage products. Under the guidelines lenders will have to qualify borrowers at the fully-indexed rate -- rather than the teaser rate -- for 2/28s, and 3/27 ARMs. What does the Mortgage Bankers Association have to say about this? In a statement MBA notes: "Overly prescriptive measures run the risk of eliminating valuable financial options that help consumers and support homeownership." MBA, of course, recently merged with a non-prime trade group...

WASHINGTON NEWS: The Department of Housing and Urban Development had this reaction to a recent story appearing on NMNOnline: "We appreciate the recent coverage on the FHA modernization proposal. It has generated some questions for us and I wanted to clarify one point that could confuse readers. FHA expects that even borrowers who take out zero down payment loans will nevertheless pay a minimum cash investment and that investment will be in the form of an up front mortgage insurance premium or the closing costs payment. No one should expect to obtain an FHA insured mortgage without a minimum investment."  

SURVEY NOTICE #1: Loan brokers take note. NMN is conducting its annual survey of mortgage brokerage firms. To participate send an email to: Nequanya.Johnson @SourceMedia.com...

SURVEY NOTICE #2: Loan officers take note -- NMN's annual survey of LOs is now ready. Visit: http://data.nationalmortgagenews .com/surveys/losurvey/

DATA NEWS: According to the new 4Q edition of the Quarterly Data Report mortgage bankers funded $795 billion in loans during the quarter. Subprime production fell to $143 billion from $176 billion in 3Q. The QDR offers complete rankings on the top 100 mortgage funders and servicers with breakouts on loan channels, subprime and much more. For info on the product email: Deartra.Todd @SourceMedia.com. Ask Dee about our recently updated M&A database as well. Looking for a great contact directory on mortgage bankers, servicers, brokers and loan officers? Want access to online news reports on lenders/servicers appearing in the directory? Order the Mortgage Industry Directory which is available online as well as in print. The MID/eMID has exclusive rankings on lenders and servicers that you cannot get elsewhere. For more information email: Delores.Stokes @SourceMedia.com.