Who Owns My Loan?, Mortgage Companies Come And Go, Citi Says They’re Profitable

Bernie Madoff and his wife are saying they have $69 million that is theirs and is not part of the money he swindled. They say it’s money he saved by switching to GEICO.

Find Out Who Owns Your Loan
With all of the talk about loan modifications, many borrowers (and their loan officers) are wondering, “Who has my loan?” Assuming that one has a borrower with a conforming conventional loan, how do you determine who “owns” it? Go to The Basis Point Loan Mod Links for all your answers.

Brokers Must Honor Their Locks With Lenders
Flagstar sent out a nice memo reminding their wholesale clients of the importance of minimizing fallout, and the difference between “best efforts” and “mandatory”:

Unfortunately, over the last few months the wholesale channel has experienced an unacceptable level of lock fallout. To help our customers improve their overall performance, we’ve taken numerous steps to help them reduce lock fallout. Our efforts, which have included offering pricing incentives, supplying online tools to help customers monitor their own performance, and stressing the importance of customers honoring their pledge of “best efforts”, have helped reduce our overall lock fallout….In this market many customers have lost sight of what the term “best-efforts delivery” means when securing a rate lock. Our broker and correspondent agreements state that even for “best efforts” locks, the “delivery of Mortgage Loans closed by Seller that are locked-in with Flagstar is mandatory.” This means that if a loan closes that is locked best efforts, it must close with Flagstar. While a certain level of borrower-driven fallout is expected, heightened levels of fallout are not only unhealthy for Flagstar, but for our industry as a whole. As part of our broker and correspondent agreements, Flagstar reserves the right to charge a pair off fee on any loans locked best efforts that ultimately close with another investor. We have been closely monitoring all of our customers (brokers and correspondents) with unacceptable levels of lock fallout and will begin charging pair-off fees on any loan that we find closed with another lender after it was locked best efforts with Flagstar. Loans that were locked with Flagstar but for any number of reasons have become undeliverable to Flagstar (denied in underwriting, unexpected AUS results, UW condition that could not be met, etc.) will be exempt from a pair-off fee.

Mortgage Companies Coming and Going
Companies continue to come and go. Central States Mortgage shut down yesterday – they are/were headquartered in Wauwatosa, WI, and one of the largest mortgage banks in Wisconsin, shut down yesterday, suspending all operations. They hit their peak in 2004 with $1.4 billion of originations, and funded $523 million last year. On the flip side, Manhattan Bancorp out of Southern California announced that it is investing in a new capital markets business with Bodi Advisors. It “will be a capital markets and advisory firm, focused on the trading, for the accounts of customers, of residential mortgage-backed securities and mortgage loans. The business will also have the ability to expand into the origination, brokerage and sale of residential mortgage loans.” (The Bank of Manhattan, which has been operating for 18 months, is a full service bank focused on banking to entrepreneurs, family-owned and closely-held middle market businesses, real estate investors and professional service firms.)

Market Roundup
Aside from that, the mortgage-news markets are pretty quiet this morning. Prices are lower, and rates higher (10-yr up to 2.94% and mortgage prices worse by about .125), this morning ahead of the $34 billion 3-yr Treasury note auction today. (Tomorrow we have $17 billion in 10-yr’s to sell, and on Thursday $11 billion of 30-yr’s.) So typically, with no scheduled economic news, bonds will trade off of supply news, like that, or stock market news, which today could be positive. Our stock market was pretty quiet yesterday, but overnight several markets overseas improved, and this morning we find some news out of CitiGroup that they are experiencing their best quarter since they last posted a profit in 2007. So bank stocks could do well.

Daily Humor
An old cowboy named Dick, was overseeing his herd in a remote mountainous pasture in Colorado, when suddenly a brand-new BMW advanced out of a dust cloud towards him. The driver, a man in a Brioni suit, Gucci shoes, Ray Ban sunglasses and YSL tie, leans out the window and asks the old cowboy, “If I tell you exactly how many cows and calves you have in your herd, Will you give me a calf?”
Dick looks at the man, obviously from out of town, then looks at his peacefully grazing herd and calmly answers, “Sure, Why not?”
The fellow parks his car, whips out his Dell notebook computer, connects it to his Cingular RAZR V3 cell phone, and surfs to a NASA page on the Internet, where he calls up a GPS satellite to get an exact fix on his location which he then feeds to another NASA satellite that scans the area in an ultra-high-resolution photo. He then opens the digital photo in Adobe Photoshop and exports it to an image processing facility in Hamburg, Germany. Within seconds, he receives an email on his Palm Pilot that the image has been processed and the data stored. He then accesses an MS-SQL database through an ODBC connected Excel spreadsheet with email on his Blackberry and, after a few minutes, receives a response.
Finally, he prints out a full-color, 150-page report on his hi-tech, miniaturized HP LaserJet printer and finally turns to the cowboy and says, “You have exactly 1,586 cows and calves.”
“That’s right. Well, I guess you can take one of my calves,” says the old cowboy. He watches the man select one of the animals and looks on amused as he stuffs it into the trunk of his car.
Then Dick says to the guy, “Hey, if I can tell you exactly what your business is, will you give me back my calf?”
The man thinks about it for a second and then says, “Okay, why not?”
“You’re a Congressman for the U.S. Government”, says Dick.
“Wow! That’s correct,” says the guy, “but how did you guess that?”
“No guessing required.” answered the old cowboy. “You showed up here even though nobody called you; you want to get paid for an answer I already knew, to a question I never asked. You tried to show me how much smarter you are than I am, and yet, you don’t know a thing about cows…this is a herd of sheep. Now give me back my dog.”