THE BASIS POINT

Mood At Mortgage Bankers Association Secondary Marketing Conference

Just attended the MBA’s Secondary Marketing conference. The mood was decidedly upbeat. It seemed well attended with the usual array of investors such as Fannie, Freddie, Wells, Bank of America, Chase, CitiMortgage, PHH, SunTrust, and so forth, along with the usual cadre of vendors. There was definitely a hint that:

(a) firms are still grappling with compensation issues, tweaking the parameters established over a month ago with rumors of companies trying to cheat the system,

(b) lower expected volumes are gradually becoming a reality, and

(c) there is continued angst over the Dodd Frank mortgage regulations which will increase the compliance headaches and not necessarily help the borrower.

Speaking of lower loan volumes, Ally Bank reported earnings of $146 million in the first quarter compared with $162 million a year earlier when it was known as GMAC Financial Services. Mortgage-wise, the company said it lost $39 million, before taxes, in its portfolio of mortgages made before the financial crisis, compared with an $85 million gain in the same quarter last year. As Ally/GMAC’s book of “legacy mortgages” gets older, more loans are defaulting and more are maturing, leading to higher credit costs and lower interest income. They said: “Total mortgage loan production from the Origination and Servicing segment in the first quarter of 2011 was $12.2 billion consisting primarily of prime conforming loans, compared to $23.8 billion in the fourth quarter of 2010 and $13.3 billion in the first quarter of 2010. Production decreased on a sequential basis due to the refinance market moderating during the quarter.”