THIS JUST IN: First off, what we've been hearing regarding a change to Fannie Mae, Freddie Mac and GNMA servicing fees is all preliminary. But rest assured, government proposals (if you can call them that) soon will be revealed. And which agency might do the revealing? Well, that's a different matter. We know the answer to that question, but we can't say quite yet. But as one government source told us on Friday, "this issue is moving really fast right now." As for why some arm of Uncle Sam will want to change the servicing contract between mortgage bankers and government agencies, the reason is simple: servicers haven't exactly been doing a wonderful job on the servicing front. As many mortgage bankers have told me over the past two years: Servicing firms were built to make money, not to handle problems loans. As for the coming changes to Fannie/Freddie servicing fees, one idea being floated is paying the servicer a flat cash rate no matter the loan size, wiping out or reducing the 25 basis point minimum. There's also talk of a tiered structure where the servicer receives a certain fee for performing servicing, but readily agrees to allow a GSE to yank problem servicing and shift it over to a specialty servicer. This idea leads us to the issue of IBM. IBM is in tight with Fannie Mae and is setting itself up to be the GSE's "default servicer" of choice, or what one advisor called "one of Fannie's fabulous five." Anyway, more details will be revealed next week at a Washington servicing show being sponsored by the Mortgage Bankers Association.
Meanwhile, what's the Federal Housing Finance Agency saying about all this? Here's an amazing revelation from one of its spokespersons: "Apologies, Paul but I cannot offer any guidance" at this time...
One other note about GSE servicing fees: several years ago Countrywide Financial CEO Angelo Mozilo suggested the fee be cut to zero...
And one more item: if the servicing fee goes down will the guarantee fee go up?..
Meanwhile, the old federal gang of financial service (and auto) companies appears to be graduating to the private sector. General Motors has gone public and next up is AIG. Soon, Ally Financial/GMAC will leave the nest. But what about those other government "kids," Fannie and Freddie? I fear for them, I really do. They're not exactly attractive. They're sort of homely looking too, and a little chubby. And boy do they eat a lot. (How can Uncle afford to keep feeding them?) If only Treasury would stop demanding those quarterly dividend payments, maybe they'd turn a profit. And now with the GOP in power, I fear those mean old Republicans (and several) Democrats will drive them out to the shopping mall and leave them in a wheelchair, a sign taped to their foreheads that reads "Your problem now"...
Although some loan brokers fear that Wells Fargo eventually will exit the wholesale business, it appears the megabank is staying put. Meanwhile, plenty of folks in the industry are still talking about the bank's recent closure of its wholesale site in Concord, Calif. Here's a copy of the memo from Wells EVP Kathleen Vaughan on the closure decision: "I wanted to make you personally aware of some changes within the Wells Fargo Wholesale Lending organization. Today we made a difficult announcement to our team members that we are closing our Wholesale operations site in Concord, Calif., effective Dec. 31, 2010. To ensure no disruption of service, brokers who deliver to Concord will have their loans processed by our site in Irvine, Calif. These changes are never easy, and this decision was exceedingly difficult to make. We routinely review our staffing needs to ensure competitiveness and long-term success. This decision was made to meet the changing needs of our business, and to ensure our operations team is aligned appropriately with these needs. Our primary goal is to serve you and your borrowers while operating economically and efficiently. If you only take away one thing from this message, I want it to be our resounding commitment to you and your business. We remain steadfastly committed to Wholesale lending and will continue to work to maintain our position as the leader in Wholesale lending. We firmly believe that you play an important role in the lending industry and bring competition to the marketplace by offering choice for borrowers." There you have it. Wells is staying put...
Wells Fargo is quietly making a market share grab in the jumbo MBS space - in an indirect way. It's all in our 'horizontal vs. vertical' risk retention story in the Monday edition of National Mortgage News. Don't subscribe? Call: (800)221-1809...
TO THIS I SAY, 'HAH': A majority of 10 banking economists on an American Bankers Association panel think banks will ease their underwriting standards and make mortgage credit more available during the first-half of this year...
A MUST ATTEND SERVICING SHOW: The future of the servicing business is up for grabs as the GSEs mull over what to do with its servicing fees. Will banks dominate the sector or will it deconsolidate and move to nonbanks like IBM? To get the answer to this and other questions you may want to attend SourceMedia's fifth annual servicing show in Dallas April 5 - 7. Top servicing and subservicing executives will be there. For more information email: Julie.Dienes@SourceMedia.com or visit: http://www.nationalmortgagenews.com/conferences/ms11/
DATA POINT OF THE WEEK: The top second lien servicer is none other than...It's all in the brand new 3Q edition of the Alternative Products Quarterly Data Report, an NMN publication. To order the AP-QDR send an email to: Deartra.Todd@SourceMedia.com. Deartra can also tell you about our MortgageStats.com website. MStats features monthly commentary from me on data points affecting the industry.
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