Mortgage and Lending with Capital Line Funding Group

Bank of America, Wells Fargo and Citi said they will cut back on lending.  I ask you how much money does it take to encourage these banks to lend?  Ben needs to pony up more cash to keep the economy going.  This is a Classic Example of why we need private money funding mortgages.  Their rates are much more competitive, program guidelines vary according to investor group and risk tolerance plus they actively manage their portfolio.  Many are portfolio lenders although some sell their loans on the secondary market.  I think we need to do some risk assessment to discover who took the best paper; I don't think I'll be surprised.

WAMU's Near Collapse

Wamu, the largest savings and loan, just received a $7B cash infusion from a private equity group TPG  but will cut 3,000 jobs and close stand alone home loan offices as well as discontinue offering loans through brokers.  It was rumored a couple of weeks ago that the savings and loans as well thrifts were largely responsible for the sub prime debacle so this came as no surprise.  They were very aggressively advertising "free loans" and free checking.  I guess they now understand there is no free lunch.  I am quite surprised because their fees were extraordinarily high but I guess you can only give so much free stuff away in a risky market before it catches up to you.  They loved sub prime and sub prime benefited them but perhaps they should have verified assets.

It was no surprise to read about the Feds allowing JP Morgan Chase to maintain some of the assets they acquired through the Bear Stearns deal "off the books" even after receiving the $30B to mitigate any loses.  Off Balance Sheet Accounts are non performing loans or assets that are difficult to value.  Keeping them off the books does not resolve the problem of a bank slipping below the capital ratios necessary to maintain solvency, it just goes unreported until it's time to bail them out.


Do you really want one government agency maintaining control over our entire banking and market industry?  I don't, especially when it is very apparent they have a double standard.  This double standard alone could compromise the entire economy.

Since we are part of an industry that is our livelihood perhaps we should get involved by writing our congress and demanding they fix what is broken and not break what works.  This group is easily confused and loves control so they should be encouraged to seek information from industry sources.

Sorry if this sounds preachy but I am a concerned Certified Mortgage Specialist who would like to continue assisting clients in an industry that needs a free market in order to serve clients better. 


Comments (6)

Ryan Bretzel
Keller Williams Premier - Stillwater, MN
Interesting, I didn't realize those companies were thinking about cutting back.  As far as I knew Wells Fargo has been trying new things and opening more doors.
Apr 09, 2008 10:36 AM
Ernie & Barb Suto
Century 21 Preferred Realty - Pompton Lakes, NJ
We did not hear that here, only Wamu.......they are big in Jersey, the others should be capitalizing on it.  I just refinanced yesterday (did not close yet) with a private bank, they are more flexible.  The brokers are great because they have everyone's product ..... going to follow up on that info, we have enough stuff falling apart!
Apr 09, 2008 10:42 AM
Greg Knowles Santa Barbara Ca.
Fidelity National Title Group-Santa Barbara - Santa Barbara, CA
I agree with your comments about the free market system. What are your thoughts on when these investors will get back in the game? Thanks!
Apr 09, 2008 10:47 AM
Patti Geib
Capital Line Funding Group - San Diego, CA
Ryan:  Wells Fargo is actually closing more doors than opening them especially to brokers.  I think we will see that trend from other banks as well.  I see the system cutting back and keeping things in house as well.  It just doesn't bode well for the borrower.  Limited access means higher rates.  Patti -  
Apr 09, 2008 11:44 AM
Patti Geib
Capital Line Funding Group - San Diego, CA
Ernie and Barb:  You hit the nail on the head "brokers have everyone's product".  That's our job to have what is available in the marketplace.   We can't depend on a single or a few sources.  Patti
Apr 09, 2008 11:47 AM
Patti Geib
Capital Line Funding Group - San Diego, CA
Greg: Investors are coming back every day.  It's the banks who are afraid to lend.  Investors are a different breed, they understand risk and the market.  We have lenders available especially for the jumbo and super jumbo loans.  Patti 
Apr 09, 2008 11:56 AM