Friday, September 28, 2007

Trendwatch: Here comes the money

It was just a matter of time before they swept in for the bargains. This article from Bloomberg (via Dealmaker) lists the top firms in the race to acquire loans on the cheap from the nation's largest banks.

Wednesday, September 26, 2007

Mortgage Cadence: A new client

Mortgage Cadence, Denver, announced in a release yesterday that it had added HomeStreet Bank, Seattle, to its client list. The bank will be using the Mortgage Cadence Orchestrator loan origination platform in an attempt to double it's FHA lending volume.

The news highlights two trends that have previously been identified. First, opportunities for FHA lending are certain to spike with fewer subprime options and the blessing of the current Administration. Secondly, technology vendors will be focusing more attention on depository institutions as they are more likely to be capitalized than monoline mortgage lending companies.

Meanwhile, Mortgage Cadence is experiencing some new trends in its human resources department. The company has experienced a bit of a shake up internally over the past couple of months, most notably (to me) in their marketing communications department.

Trevor Gauthier was recently promoted to a position within parent company 3T Systems. Donja Majors and Peter Carter both left the company within the past month. Michael Hammond, formerly a top sales executive at industry PR firm Martopia (and before that Communications Director for Lavonia, Mich.-based Dynatech) is now handling marketing and PR for Mortgage Cadence.

ALTA: Launches new consumer website

The American Land Title Association has launched a new website to provide education to home buyers. According to ALTA News: "The new site was created to help consumers understand the closing process, title insurance, and how to shop for title insurance."

ALTA says HomeClosing101.com experienced "5,000 hits" in its first week.

I suspect most of those visitors were organization members, but if it is properly promoted it could provide some benefits to new homeowners who can (1) find the money to borrower for a new home and (2) have any idea they can shop around for a product that is purchased by the lender.

What they should do is figure out a way to turn the site into a lead generation vehicle for lenders. According to a survey taken during yesterday's Source Media/IBM Webcast, nearly 40% of respondents consider lead generation innovation the most critical priority at this time.

Websites have proven to be a great way to share information with important constituents. In the case of ALTA's new consumer-facing website, it's likely to be more important as a tool to show legislators that title insurance companies have the best interests of home loan borrowers at heart. Good luck with that.

Tuesday, September 18, 2007

History doth repeat itself

I remember being so angry when my college advisor informed me that a class in the history of western civilization would be required in order to finish my degree program. After buying 160 hours of college credit, I was in no mood to hear that I would be required to buy another freshman-level class in order to graduate. In typical 20-something, cut-my-nose-off-to-spite-my-face fashion, I made damn sure that I learned as little as possible in order to get my passing grade. Kids.

At the time, I had no idea how vital a knowledge of history would be to future success. I ended up paying far more to Barnes & Noble and Borders Books to get the education I needed. And I'm still a student of history. It surprises me on a daily basis to find out that more business dealmakers don't embrace it.

Like today, for instance. I just read a story in Dealmaker (which it served up from the Wall Street Journal -sub required) about how Merrill Lynch is preparing to lay off a bunch of folks at First Franklin Financial Corp., San Jose, Calif., a subprime lender the company bought for $1.3 billion about a year ago. As I read the story, I couldn't help but think that I had already read it. After a bit of thought, I remembered that I had.

The players were different. Back in 1998, the story was covered by Businessweek (and everyone else) and the institutions were The Money Store and First Union. The numbers were also slightly different (First Union paid $2 billion), but the story played out pretty much the same. See, no regard for history. Dealmakers.

In fairness, the Merrill Lynch fiasco hasn't played itself out yet and there is always a chance that something will be different this time, some little element or combination of them will conspire to change history this time around. I wouldn't bet on it. But then, maybe that's why I don't work on Wall Street.

Wednesday, September 12, 2007

The inevitable rise of credit repair

Companies that exist to help borrowers repair their credit while they're still in the lender's pipeline have been around for some time now. In the past, when it was easy to find a program for any borrower -- and the further down the credit spectrum that borrower fell the more profitable the program for the broker -- these services were a tough sale if you targeted the lending community. Not so today.

When it becomes impossible for a broker to find a program for a C-credit borrower, it is suddenly very important to find a way to make that borrower look like a B-credit risk. I'm already getting e-mail solicitations from companies that say they can do just that.

The repositories (and Fair Isaac) are more sophisticated now than they were back when I was responding to consumer complaints as operations manager of a credit bureau affiliate. But there are still tricks that can mess with a borrower's file in the short term. Eventually, any accurate but negative trade lines will reappear on the borrower's file.

Making a loan for a borrower with a credit file in dispute is risky business because it blurs the picture the lender has of the borrower's actual ability and/or willingness to repay. That's like making an ARM loan to a borrower who can make the payment today but doesn't stand a chance of doing so after the loan adjusts. Oh, wait...

I read recently that experience is helpful because it helps us recognize mistakes...when we make them again. I hope that was tongue in cheek.

Tuesday, September 11, 2007

Portellus: Exits the mortgage business

In what it's calling an "orderly wind-down" of its mortgage business, Irvine, Calif.-based Portellus will exit the space in the wake of what one insider called a "decimation" of its client base. Every technology vendor is feeling the pain as the universe of mortgage lenders dwindles as rapidly as liquidity is evaporating. To date, over 100 mortgage lenders have exited the business, according to the trade press.

Portellus was one of a number of mortgage technology firms that rose up to capitalize on the promise of SOA-based solutions for lenders. The company's Business Rules Management System (BRMS), Integration Services Hub, Web Portals and vertical market solutions all utilized SOA to deliver loosely coupled applications and flexible solutions designed to enable clients to gain competitive advantages, reduce costs, mitigate risk, increase profitability, comply with regulatory requirements and swiftly respond to marketplace dynamics.

The company will retain its BRMS to license to other vertical markets, but will sell off its other mortgage-related assets to the highest bidder. Up for sale: a web-based Loan Origination System (LOS), a Product and Pricing engine (PPE), an Automated Underwriting System (AUS), an Integration Services Hub (PIXMO), and point-of-sale (POS) portals for the Broker, Retail and Correspondent lending channels.

A large depository institution that didn't already have a home grown system and was serious about filling the void left by monoline lenders that have exited the business would be wise to consider these assets. The company is encouraging interested buyers to contact the company to participate in the asset bidding process at mortgagetechassets@portellus.com.

Monday, September 10, 2007

eMortgages: Recorders ready to rock

I remember a few years back when the industry first started getting hot to record real estate financing documents electronically. It was always the County Recorders who got blamed for gumming up the process. That excuse is quickly fading from the list of reasons lenders aren't investing in the technology.

It's really a somewhat backward process in the mortgage space. In most industries, the manufacturers will get together and push for industry standards in order to reduce switching costs between input sources and open up their universe of suppliers. Those suppliers will resist as long as they can until they are beaten and then the top few suppliers get all of the business, being the low-cost providers. At least until the manufacturers try to bring it all in house to further decrease their costs, which pushes them away from their core and they go out of business.

In this space, where it could cost a lender millions of dollars and years of integration time to switch between suppliers, mortgage technology vendors are all about standards and SOA. Electronic mortgage recording was supposed to be one of the carrots that got lenders pulling the MISMO effort.

I'm looking forward to catching up with Harry Gardner and the rest of the MBA MISMO crew at the upcoming Mortgage Bankers Association annual convention to find out what really got MISMO rolling. I don't think it was the promise of all electronic mortgage lending. I doubt Fannie Mae would have to work so hard to get lenders to sell electronically if the lending community fully appreciated the benefits of eRecording.

But whether they do or not, it's coming. In fact, Illinois is the latest state to pass a law making it possible. This news courtesy of the folks at DocX, who have an uncanny way of knowing what's up in this part of the business

Illinois to Adopt e-Recording Law

Sponsored by Illinois Senator William R. Haine on February 7, 2007 and approved and signed by Governor Rod Blagojevich, Senate Bill 319 is now effective. This bill enacts the Uniform Real Property Electronic Act (URPERA) by providing authorization to the county recorders to receive and record documents and information in electronic formats.

The law provides that the recorder may receive, index, store, archive and transmit electronic documents. The recorder may also provide access to such documents by electronic means.

Wednesday, September 05, 2007

Opportunity: NJ Firm Seeks Accounting Pros

The industry may be in turmoil, but don't confuse that with death throes. While more than 100 lenders have exited the business since the first of the year, others are growing. We've been hearing stories from around the industry. Some are attempts to displace rumors, which we have learned can be very destructive. Others seem genuine.

One sign that a company may actually be doing well is its willingness to add staff. That's what David Sadek, CEO of Teaneck, NJ-based First Financial Equities is trying to do. He tells me he's having a hard time finding accounting professionals who have experience with AMB, the accounting software from Advantage Systems, Irvine, Calif.

Those with verifiable experience with Accounting for Mortgage Bankers software should contact the company.