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The Financial Times.
1/30/2007
Countrywide, B of A in Alliance Talks Again
Bank of America, Charlotte, N.C., and Countrywide Financial
Corp., Calabasas, Calif., are involved in talks about combining
forces in mortgages, according to a report by
The Financial Times.
BoA and Countrywide declined to comment. A few years back, it
was reported that Countrywide and Bank of America were
discussing an outsourcing arrangement whereby Countrywide would
originate and service loans for the bank under a "private-label"
arrangement. BoA eventually passed on the deal, said an
executive familiar with the talks.
The Financial Times
also reported Friday that the two parties might be engaged in
merger talks. One analyst who follows Countrywide said it is
more likely that the firms would strike a deal in regard to
outsourcing as opposed to a merger. Sandler O'Neill, which has
been following Countrywide's stock for years, says it is
unlikely that Bank of America will buy the nation's largest
mortgage banking firm. In a research note issued Jan. 26,
Sandler analyst Mike McMahon declared that "one way for a
commercial bank to destroy market value is to buy a big mortgage
company." However, Mr. McMahon writes that the "likely scenario"
is that Countrywide is talking to BoA about a possible
outsourcing arrangement whereby Countrywide would process (and
presumably service) residential mortgages for the bank.
Countrywide, which has a depository affiliate, has scheduled its
fourth-quarter earnings conference call for noon on Jan. 30.
Presumably, the BoA issue will come up during the call.
THE FED 1/30/2007
The Federal
Reserve will choose to remain firmly on hold in January and
maintain a policy stance of inflation vigilance at its two-day
meeting Tuesday and Wednesday, Fed watchers predict. Such a
decision makes sense to economists as fears of a recession have
eased. And there is little reason for the central bank to rouse
itself and raise interest rates as recent inflation numbers have
been good, they said.
Consensus expectations are for the
consumer confidence index to rise above April's 4 year high to
the highest level since early 2002. What is all means for
Mortgage Backeds this morning is a near flat trading morning.
FNMA 30’s trading up 1 - 2 ticks with the lower coupons showing
the largest gains.(Lower coupons, those below “par” typically
show the most volatility). Ditto on the dwarfs (15 YR FNMA MBS).
Merrill to Buy First Republic 1/30/2007
Moving from one
end of the credit spectrum to the other, Merrill Lynch, New
York, has agreed to acquire luxury home lender First Republic
Bank, San Francisco, in a deal valued at $1.8 billion. First
Republic specializes in working with high-net-worth individuals
and has expertise in luxury home lending. Merrill Lynch's most
recent acquisition was nonprime mortgage company First Franklin,
and it was also an investor in the now-defunct OwnIt Mortgage
Solutions. First Republic is the 126th-largest lender for 2005,
with total production of $2.4 billion (all through the retail
channel). As of Dec. 31, 2005, it had a servicing portfolio of
$7.8 billion. In 2005, First Republic did $71 million in
commercial loans (including multifamily, office, hotel, and
retail properties). After the deal closes, First Republic will
be operated separately as a division of Merrill Lynch Bank &
Trust Co. FSB, and its current management team of Jim Herbert,
president and chief executive, and Katherine August-deWilde,
chief operating officer, will retain their positions.
CAMB's "Consumer Protection Package"
signed by Governor
AB 790, AB 2890 and AJR 47 Become Law
From Michael Faust
CAMB Government Affairs Chair
Vice President, American Pacific Mortgage
The California Association of Mortgage Brokers (CAMB) hails
Governor Arnold Schwarzenegger and members of the California
State Legislature as CAMB-sponsored consumer protection
legislation (AB 790 and AB 2890) were signed into law this week.
These bills are a huge win for CAMB members.
AB 790 and AB 2890 provide a legal and an enforceable means for
CAMB brokers to separate themselves from the less ethical
brokers, by displaying the CAMB logo or other CAMB
certifications. CAMB brokers can earn these certifications and
then demonstrate to consumers they adhere to a code of ethics
and best practices. When consumers see the CAMB logo and CAMB
certifications they will know that they are dealing with a CAMB
broker, someone they can trust. CAMB Brokers having these
certifications will know they are protected under the laws of
California and it will allow our industry to self-regulate and
weed out the bad actors.
 The
two bills are also huge win for consumers because they now can
clearly gauge the level of qualifications of anybody seeking to
provide a real estate loan in the State of California. At a
glace they will be able to tell who adheres to a code of ethics
and best practices and who they can trust.
CAMB President Jack
Williams and I joined the Governor at a signing ceremony in Palo
Alto, California on Wednesday where he lauded CAMB for its
efforts to protect consumers in mortgage lending transactions.
AB 790 and AB 2890 join AJR 47 as the latest effort in CAMB's
ongoing consumer protection and industry professionalism
campaign. AJR 47 was recently unanimously passed by the
California State Senate and Assembly and demand that Congress
and the President act immediately to increase federally backed
conforming loan limits and provide Californians the same access
to these loans as Americans in the rest of the country.
I am proud to say that CAMB is leading the
nation when it comes to making sure loan originators hold
themselves to the highest standards of professionalism. CAMB is
grateful to Assembly members Leland Yee and Mark Ridley-Thomas
for authoring our consumer
protection bills, and we applaud Governor Schwarzenegger for
signing them into law.
 AB
790 and AB 2890 would make it a licensing violation for any
individual Department of Real Estate licensee or an employee
working under a Department of Corporations licensee to
misrepresent themselves in their business, credentials,
education, or even trade membership.
The California Association of Mortgage Brokers recommends
that all loan originators seek the highest levels of training
and preparation so they can provide the best possible service.
We want to make sure that all consumers can seek out the best
and most qualified loan consultant without fear of fraud. AB 790
and AB 2890 represent the next step in our Association’s ongoing
consumer protection campaign.
Three New
Laws Protect Consumers
By Gregory J. Wilson
Staff Writer, LA Daily News
Consumers now have more mortgage protection when it comes to
buying a home or obtaining a traditional or reverse mortgage,
courtesy of three bills signed last week by Governor Arnold
Schwarzenegger. Surprisingly, there was no opposition.
Two assembly bills, AB 790
and AB 2890, provide regulators with a big hammer and the
California Association of Mortgage Brokers with house-cleaning
ability. AB 790-introduced by Leland Yee, D-San Francisco-deals
with licensed real estate broekrs and AB 2890-introduced by Mark
Ridley-Thomas, D-Los Angeles-focuses on mortgage brokers. Both
give regulators the right to suspend the license of brokers who
mislead the public about their experience in the industry. In
the case of real-estate brokers, it's the California Department
of Real Estate, and the Department of Corporations for the
mortgage industry.
Ridley-Thomas said it was no
easy task to get the bill through the legislateur without
opposition. "Consumers deserve being treated honestly when it
comes to borrowing money and trying to raise their standard of
living. They shouldn't be ripped off or misled, and that's what
the legislation seeks to address," he said. His was supported by
the California Association of Mortgage Brokers.
"For the first time, it's
going to give the industry the opportunity to self-regulate and
start cleaning up our industry from the inside-out," said
Michael Faust, association vice president and chairman of its
government affairs committee. "From now on, the consumers is
going to be able to tell who adheres to a code of ethics and
best practices."
For example, if a mortgage
broker claims to be a member of the association but is not, he
or she can be disciplined by the state. After due process, the
broker could lose his or her license and be barred from working
for any Department of Corporations licensed company in the
state. Possible infractions in both cases also include falsely
education or specialized skills.
Alex Creel, senior vice
president of legislative affairs for the California Association
of Realtors, said his group had no problem with AB 790. "You
shouldn't represent yourself as having a certification that you
don't have," he said. The trademarked term Realtor is a case in
point. To be certifified as a Realtor requires joining a local
chapter of the state association, Creel said. There are about
500,000 licensed real-estate sales people in California and
somewhat less than half are association members. And some that
aren't likely use the term in generic fashion.
The third piece of
legislation, SB 1609, introduced by Senator Joseph Simitian,
D-Palo Alto, helps protect seniors when they enter into reverse
mortgages. "It is our responsibility to help protect those who
are most vulnerable in our society," Schwarzenegger said in a
statement. The bill prohibits a reverse mortgage lender from
accepting an application or assessing any fees until the
borrower has received independent counseling regarding the loan.
It also prohibits a lender from requiring a borrower to purchase
an annuity as a part of the reverse-mortgage transaction and
requires a reverse-mortgage contract to be translated into
Spanish, Chinese, Tagalog, Vietnamese or Korean if the contract
was primarily negotiated in one of those languages.
Typically, a reverse mortgage
allows homeowners 62 and older to receive either monthly
payments or one lump sum from the property's equity without
having to sell the property or make monthly repayments. The
reverse mortgages also don't have to be repaid for as long as
residents do not move, but they must be repaid in full,
inlcuding all interest and other charges, when the last living
borrower dies, sells the home or permanently moves away.
The borrowers continue to own
their homes and are responsible for property taxes, insurance
and repairs. "Older Californians considering reverse mortgages
as a source of retirement income will be provided greater
consumer protections as a result of SB 1609," Corporations
Commissioner Preston DeFauchard said in a statement.
Baltimore Sun article written by Ken Harney:
Mortgage group pushes for stop
to pitches made after loan applications
Originally published September 8, 2006
Picture
this: You apply for a new home loan from a local mortgage
company on a Monday afternoon. By Tuesday morning, you're
suddenly getting unsolicited phone pitches from out-of-state
lenders who seem to know a lot about your personal finances:
•
Your credit scores.
•
Your outstanding credit-card balances and other revolving
credit accounts.
• The
approximate market value of your home and how much you owe
on it.
•
Your home address and, obviously, your phone number.
Thousands of loan applicants around the country are
receiving uninvited pitches like these, sometimes just 12
hours after getting a mortgage quote. But now a major
mortgage industry group is planning a campaign to put a
damper on the practice.
"There are very serious privacy, identity-theft and
bait-and-switch issues involved here," says Roy DeLoach,
executive vice president of the 27,000-member National
Association of Mortgage Brokers.
"It's
outrageous that simply applying for a home loan should open
up a person's sensitive personal information" to prying eyes
anywhere, literally overnight, DeLoach said.
The
practice targeted by the mortgage brokers is known in the
industry as "trigger list" marketing - a warp-speed version
of the "prescreened" credit-card offers you routinely get in
your mailbox.
The
"trigger list" works like this: When your local mortgage
company checks your credit to provide you a rate quote, one
or more of the national credit bureaus take that inquiry and
essentially turn it into a marketing product.
So-called "lead generator" companies and some lenders are
eager to know the identities of people who are in the
process of shopping for a mortgage - and they pay the credit
bureaus for those hot prospects. Generally, the prospects
have to fit credit and geographic profiles that the lenders
have set in advance. For example, one customer might only
want the identities and contact information of people in the
Los Angeles area
with FICO credit scores above 700 who have applied or
inquired about a jumbo home mortgage within the past 24
hours.
Another might only want the credit and contact information
of Washington or Chicago residents who applied for a
zero-down-payment loan no more than 12 hours ago. The
fresher the information, the better, say marketers.
The
credit bureaus defend their right to sell applicants'
personal financial information, arguing that it is a zippier
form of marketing "prescreened" target prospects lists for
credit offers - something they've been doing for years.
Tim
Summers, a vice president at Experian, one of the three
dominant national credit bureaus, said in an e-mail response
that his company's "Prospect Triggers" program "provides
consumers with choice and potentially significant cost
savings by delivering relevant information at the
decision-making point instead of weeks after a mortgage
lending choice has been made."
Summers said the program meets "all requirements" under
federal credit and privacy statutes.
But
the National Association of Mortgage Brokers doesn't agree.
When credit bureaus sell overnight trigger lists to
third-party lead generators, the brokers argue, they fail to
comply with a key provision of the Fair Credit Reporting
Act: that anyone receiving consumers' personal information
must be in the position to make a "firm offer of credit" or
have previously received permission from the consumer to
obtain credit file data. Third-party lead generators obtain
no permission and are in no position to make any credit
offers, firm or otherwise.
The
brokers also contend that even lenders who obtain trigger
lists might not be in a position to make the firm offers
that the law requires. A firm offer for a mortgage is vastly
different from a firm offer for, say, a credit card. The
mortgage process is more complex, and rates and fees are
more difficult to quote on the basis of a credit score
alone.
To
make a firm loan quote, says DeLoach, "you need to know a
consumer's income, you need to have an appraisal" - you need
to know a lot more than the telephone marketers have in
hand.
The
biggest problem, however, might be the confusion that
overnight trigger marketing brings to the mortgage business.
Your local lender or broker quotes you one rate and
estimated fees. But now one or more outside lenders - whose
reputation for honesty or service you know nothing about,
and who are in possession of your personal financial data
without your permission - intervene and offer a lower rate.
Are
the rate quotes for real? Or will they morph into costly
bait-and-switch deals weeks or months from now?
You
really can't know. But what you can do is remove yourself
from all potential trigger list come-ons by opting out.
Much like
the federal Do Not Call program, you can opt out of
prescreened offers by going online to
www.optoutprescreen. com or by calling this toll-free
number: 888-567-8688.
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