Here is a job listing just in time for all those great folks
at Chase: http://news.yahoo.com/s/afp/20090113/od_afp/lifestyleaustraliatourismoffbeat_20090113032028
Chase’s exit from wholesale left brokers searching the
rate sheets in their fax machines, wondering which major banks are left buying
loans in that channel. It also caused those remaining wholesale investors to
once again re-examine their business lines. I imagine that no
one wants to be the last one standing in buying TPO loans from brokers. Looking
at the largest banks here in the US, one sees Citi, Chase, BofA/CW,
Wells/Wachovia, HSBC, US Bancorp, Bank of New York, SunTrust, Citizen’s,
National City, etc. There are no rumors
about who is going to start up a wholesale division, but rather who will be
next to close one.
After their consolidation a few months ago, and focus on
roughly 1,000 wholesale broker accounts, Citi appears to remain committed to
the channel. In fact, their correspondent reps are covering many broker accounts.
One Wells wholesale rep sent this out to his/her clients: “Wells
Fargo Sr. Mgt. reports: we are committed to the Wholesale business, to
prepare for a busy year, to focus on quality Brokers and to thank you for
your business!” Many brokers are hoping that this statement doesn’t
fall into the category like someone dating a guy who tells them, “I only
have eyes for you, honey” or coming out of an operation and having the
doctor say, “Well, I think that we got it all.”
You know a company is busy when they (in this case, GMAC)
send out a statement reading, “GMAC Bank Correspondent Funding (GMACB)
approved Non-Delegated Clients please note, due to a recent increase in the
demand for GMACB Underwriting resources, the recommended minimum lock period
for all Non-Delegated loans that have not been previously submitted and
approved by GMACB is 60 days.”
How are companies dealing with the backlog? Successful
mortgage companies are pushing originators to choose the shortest lock period
possible. Others have begun collecting up-front fees for application, credit
report and appraisal with the thinking being “once a customer writes a
check, even for a nominal amount, they are motivated to stay put”. And
successful companies are doing what they can to stay on top of cancellations
– loans that won’t close clog up pipelines and raise hedging costs.
How are banks doing out there? For big banks, things are not
good. B of A is having difficulty absorbing Merrill Lynch, and
may soon ask the US Government for more money to aid the process. JP
Morgan’s earnings for the 4th quarter dropped 76%,
although it was apparently better than anticipated. And Citi is breaking
itself up. Barclays published their view on bank earnings. Focusing on asset
quality, securities write-downs, goodwill impairments, and capitalization,
Barclays expects financial performance to be weak due to deteriorating loan
quality, continued losses on risky securities, and goodwill impairments.
“Economic conditions will cause problems in loan portfolios to migrate
from residential-related products to credit cards and commercial real estate,
leading to materially higher nonperforming assets and exposing the inadequacy
of loan loss reserves, in our opinion.” Barclays does go on to say that
banks should be ok as long as government intervention continues, especially for
Bank of America, JP Morgan, and Wells Fargo, “three banks that have
exceptional systemic importance, in our opinion. We remain cautious on
regional banks given the continued deterioration in asset quality.”
Speaking of deterioration, our housing market is pretty
grim. This morning's RealtyTrac report on foreclosures shows an 81% increase
for '08, with the December level at 303k -- up 41% year-over-year.
RealtyTrac's CEO notes that foreclosure prevention programs offered by banks
and some legal delays "have not had any real success in slowing down this
foreclosure tsunami." And folks wonder why Treasury rates go down while
mortgage rates don’t…
This morning we have already seen the Labor
Department’s Producer Price Index fall for a 5th straight
month, -1.9% in December after dropping 2.2% the previous month. Core producer
prices, for people who don’t heat their homes or eat, increased by 0.2
percent in December. Core producer prices were up 4.3 percent over the last 12
months. Gasoline, which accounts for about 7.4 percent of PPI, fell more than
25%. Jobless Claims shot up by 54,000 to 524k from 470k the week before. The
four-week moving average for continuing claims, at 4.498 million, was the
highest in 26 years. We still have some news ahead of us later this morning,
but for right now the 10-yr is wallowing around 2.22% and mortgages are,
once again, roughly unchanged.
A Doctor was addressing a large audience:
"The material we put into our stomachs is enough to have killed most of us
sitting here, years ago. Red meat is awful. Soft drinks corrode your stomach
lining. Chinese food is loaded with MSG. High fat diets can be disastrous, and
none of us realizes the long- term harm caused by the germs in our drinking
water. But there is one thing that is the most dangerous of all and we all
have, or will, eat it. Can anyone here tell me what food it is that causes the
most grief and suffering for years after eating it?"
After several seconds of quiet, a 75-year-old man in the
front row raised his hand, and softly said, "Wedding Cake."
