Tag Archives: Industry

Penetration in Developing Regions Is Key to Securities Market Growth, According to a New Report by Global Industry Analysts

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San Jose, CA (PRWEB) September 16, 2008

The securities industry is extremely competitive and cyclical in nature, resulting in extensive revenue fluctuations for the securities firms. The crucial income source for security firms is brokerage earnings, and profits of these companies move in tune with transaction volumes in major stock exchanges. Trading volumes in stock exchanges depend on many factors, including investor confidence, corporate earnings, economic scenario, capital flow, political stability and strength of the capital markets. Security companies emphasized on value added services, including agency services for mutual funds and unit trusts in an effort to withstand market fluctuations, control operational costs and spread out the income sources. Global market for securities is fostered by developing regions including Asia, Middle East, Latin America and Eastern Europe. Major financial institutions including banks are using securitization, in particular, hedge funds and specialist ABS funds, as the preferred forms of funding, thus driving up the total securitization sector.

Mortgage-Backed Securities (MBS) market is growing rapidly with rise in bond issuance on an annual basis. Major types of MBS include collateralized mortgage obligations, and agency and non-agency pass-throughs. Noteworthy factors driving growth in MBS market include rise in cash-out refinancing, issuance of non-agency residential mortgage-backed securities and change of adjustable rate mortgage to fixed rate mortgages. Future growth in the MBS market would largely be driven by the demand for housing and auto loans and issuance of commercial mortgage-backed securities supported by rise in leasing and occupancy rate, low level of unemployment, and rise in corporate profits.

Global Collateralized Debt Obligation (CDO) market experienced a rapid market expansion in line with rise in issuance of CDO securities. Both hybrid and cash flow CDOs dominate the global CDO sector, followed by synthetic funded and market value. In terms of issuance, arbitrage CDOs dominates the CDO market with nearly 90% share and balance sheet CDOs accounts for the remaining share of the market. CDO sector is supported by Structured Finance Collateral (SSF) group that includes various types of collateral such as Residential Mortgage-Backed Securities (RMBS), Collateralized Mortgage Obligations (CMOs), Asset-backed securities (ABS), Commercial Mortgage-Backed Securities (CMBS) and CDS.

Players operating in the securities market are subject to various factors undermining growth such as the upcoming substitute trading venues with greater capability; the aspirations nurtured by buy-side firms to attain higher anonymity by decreasing the trading costs, the increased activism of institutional investors. Facing pressures from private label securities, players also find themselves fiercely competing on price.

The report titled “Securities: A Global Outlook” provides a collection of statistical anecdotes, market briefs, and concise summaries of research findings. The report provides a bird’s eye view of the industry, and a rudimentary review of select securities industry services. The report also briefly recapitulates recent mergers, acquisitions, and corporate developments. The US market is quantitatively discussed with 21 information rich tables giving the reader a strong macro level understanding of the market. Stock Market Performance, Outstanding Bond Market Debt by category, Corporate Debt Outstanding by Financial Sector, and Asset Backed Securities Outstanding by Credit Type, represent few of the parameters analyzed. Also included is an indexed, easy-to-refer, fact-finder directory listing the addresses, and contact details of 450 companies worldwide.

For more details about this research report, please visit

http://www.strategyr.com/Securities_Industry_Market_Report.asp

About Global Industry Analysts, Inc.

Global Industry Analysts, Inc., (GIA) is a reputed publisher of off-the-shelf market research. Founded in 1987, the company is globally recognized as one of the world’s largest market research publishers. The company employs more than 700 people worldwide and publishes more than 880 full-scale research reports each year. Additionally, the company also offers a range of more than 60,000 smaller research products including company reports, market trend reports and industry reports encompassing all major industries worldwide.

Global Industry Analysts, Inc.

Telephone 408-528-9966

Fax 408-528-9977

Email press @ StrategyR.com

Web Site http://www.StrategyR.com

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Related Securitization Press Releases

The Lifeline Program

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ATLANTA (PRWEB) October 14, 2008

The industry’s overall growth is also garnering attention, according to Wm. Scott Page, president and CEO of The Lifeline Program. Last week, the size of the industry was reported to have doubled in 2007 to $ 12 billion in face value of life insurance policies sold.

“As financial conventions fall by the wayside, the life settlement industry looks more attractive than ever,” said Wm. Scott Page, president and CEO of The Lifeline Program. “We believe that major financial institutions will soon begin taking a harder look at this industry, and we believe our company is well-positioned. To that end, we are seeking serious financing relationships to help capitalize on the business potential.”

According to Page, life settlements are gaining momentum for the following reasons:

Non-correlated assets can generate an attractive yield. The markets have little effect on life settlement yields. One of the key aspects of a life settlement is that the investor earns a payout on the demise of the policyholder. The strength or weakness of the stock market does not impact the life settlement arena. Life settlement assets are backed by highly rated financial institutions. Life settlements are performed on policies held by carriers with A.M. Best ratings of “A” or better, so the payouts are regulated and solid. Trading platforms exist. Several “household name” institutions have developed or are developing platforms to trade life settlement policies and portfolios. Securitization is on the horizon. Though it may not be this year, securitization is definitely in the future for life settlements. Portfolio analysis comprising the past several years proves that life settlement portfolios will perform predictably and generate consistent cash flow. Third party tracking, servicing and underwriting simplify the investment. In a sign of a maturing industry, life settlements are not necessarily managed by one-stop shops anymore. The size and scope has made it profitable for third party companies to manage tracking, servicing and some underwriting, thus easing entry by financial players. “For years we have said that life settlements are a safe haven during times of market uncertainty,” said Page. “The potential for our industry has never been greater.”

The Lifeline Program, based in Atlanta, Ga., is a division of Wm. Page & Associates, Inc. Founded in 1989, the company actively partners with insurance agencies and broker dealers to establish profitable and ongoing life settlement business lines. For more information on life settlements, contact Wm. Page of The Lifeline Program at 770-724-7300 or visit http://www.thelifeline.com.







Industry Leader Announces Great Strides Helping Homeowners Reduce Foreclosures And Achieve Affordable Mortgage Payments.

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Palm Beach Gardens, Fla. (PRWEB) October 28, 2008

First Universal Lending, announced today that it has been achieving a large volume of success in it’s ongoing negotiations with lending institutions to help their clients with their loan modifications, and in particular has been conducting settlement conferences with lenders in the offices of First Universal.

First Universal Lending has built an extensive working relationship with a number of lenders and mortgage servicing facilities nationwide, and now has a number of them actually visiting their corporate office on a weekly basis to handle the large volume of clients directly.

First Universal Lending helps thousands of clients by handling the often tedious and difficult task of renegotiating their current mortgage terms with their existing lenders. This is accomplished through First Universals vast group of highly trained professionals, and state of the art software systems, all designed with the goal of achieving complete client record automation, and speed along with efficiency thus saving their clients from the hours and hours of back and forth dealings with their often unorganized and overburdened lender.

About First Universal Lending LLC

First Universal Lending LLC is a lender that has been servicing retail clients since 2002 and the wholesale and securitization enterprises dates back to 1994. With billions of dollars in transactions and a group of in excess of 200 in personnel, First Universal is a leading private company in the consumer finance industry. The firm is a member of the Better Business Bureau and after servicing in excess of 100,000 thousand clients the firm has a “B” Rating andhas a complaint rate of less than one half of one percent. The firm also has had additional strategic relationships throughout its existence with high profile lending institutions and service providers/counter parties, including Washington Mutual, Lehman Brothers, HSBC Bank, Goldman Sachs, mortgage division and the Lending Tree group of companies. The firm provides additional financial industry services through a number of other affiliated enterprises, including but not limited to, Emery Fed Inc., which is a division of Emery Federal Credit Union and Western Thrift & Loan — a depository institution that has the approval to provide loans through major financial institutions in the majority of all states in North America.

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Pedata RV Hopes The TALF Will Help The Industry

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(Vocus) March 25, 2009

With spring break upon us and summer approaching, it’s traditionally a popular time in motorhome sales. However with credit still tight, RV sales are, and will be, tough. Proponents of the TALF (Term Asset-Backed Loan Facility) which rolls out this month, say this could be what opens credit markets and attracts more dollars to the industry.

“We are entering a popular season for RV sales,” says Clint Ethington of Pedata RV Center. “Our prices are at record lows. We are getting interested buyers left and right. However credit is still an issue.”

myAutoloan.com Continues to Lead Industry with Newest Innovation – Direct to Indirect Auto Financing

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Irving, Texas (PRWEB) August 3, 2009

myAutoloan.com, an online auto finance company, is launching its newest innovative product expansion to their marketplace lending platform to include, direct-to-indirect lending. This expanded lending product enhances the company’s marketplace lending platform leveraging its patent pending Preferred Placement℠ technology. Preferred Placement℠ matches consumers to direct lenders through a sophisticated scoring process resulting in a high approval rate and funded loans.

The marketplace lending platform that now includes, ‘Direct-to-Indirect’ leverages current economic conditions, and provides an innovative hybrid model that matches consumers to indirect lenders. This process utilizes established technologies and processes but allows for the addition of indirect lenders and their dealer networks. Typically direct lending customers receive a check-in-hand and can shop with any franchised dealer they choose. The expanded platform will match indirect approved customers, as well as, matched to the approving lender’s dealer network to close the loan.

Online customers will continue to benefit from the additional lenders available to approve and fund their auto loan. Lenders benefit from the additional quality customer base that myAutoloan.com presents, translateing into additional funded loans. Dealerships will benefit from the additional finance approved customer traffic directed to their businesses, thereby selling more cars.

The demand for both direct and indirect online auto financing has jumped significantly during the first six months of 2009. Finance applications for the purchase of new and used cars, as well as refinance loans, has risen sharply due much in part to the increase demand for the auto loan financing that diminished due to lending institution restrictions or exits from the auto lending marketplace.

These channels left consumers without options, and consequently, consumers have begun to apply online in search of alternative financing. They eagerly expanded their options searching for alternative financing solutions. This resulted in a large increase of auto loan application volume.

“We are absolutely delighted to be in a position to launch this latest marketplace platform lending product, and we’re confident it will delight our customers, lenders, and their dealers,” said Gregory Thibodeau, CEO of myAutoloan.com “Challenging markets lead the way for new product opportunities, and the direct-to indirect expansion, as presented by myAutoloan.com, is innovative and in strong demand.”

We believe that this continues to signal that demand for direct to consumer lending for the purchase of new and used autos, and that auto refinance loans are much bigger than the supply of financing. We experienced the same strong demand in the first quarter as we see lenders tighten credit and leave the direct market because of a lack of available ABS securitization.”

Thibodeau also stated that, “As we monitor the month to month activity, the strength of the demand that we see from our marketplace lending platform shows that customers continue to search for a less hostile lending alternatives. This is because of the overly cautious parameters that lenders are using to evaluate financing applicants.

Loan Restructuring A Sign Of Hope In A Dismal Commercial Real Estate Industry Forecast

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Clearwater, FL (Vocus) August 9, 2010

Although the U.S. economy appears to be showing preliminary signs of recovery with the stabilization of some large financial institutions, the commercial real estate market continues to be negatively affected by the ongoing decline of home prices, the high rate of commercial loan defaults and an unmoving high unemployment rate. Treasury Secretary Timothy Geithner recently darkened this scenario by warning that unemployment could continue to rise before subsiding.

Jeramie P. Concklin, CEO of Guardian Solutions, a commercial loan restructuring firm based in Florida had this to say, The rate of growth of delinquencies in commercial mortgage-backed securities (CMBS) real estate loans did show some slight signs of moderating in July, but despite that, we are still seeing very high numbers of new distressed commercial mortgages in need of restructuring every week as evidenced by CMBS delinquencies surpassing 60 billion dollars, an increase of 3.11 billion from just the month prior.

A bright spot in this gloomy scenario is surfacing due to the efforts of independent commercial loan restructuring firms such as Guardian Solutions. According to Trepp, a leading provider of CMBS and commercial mortgage data and analytics, a recent trend has emerged that is having a positive effect on CMBS loans due to the increase in loan modifications by lenders. Loan modifications through July of this year already have surpassed those for all of 2008 and 2009 combined. Loan modifications (have) accelerated dramatically in 2010, the Trepp report said. This puts downward pressure on the delinquency number, as troubled loans get resolved and move from the delinquency category.

Based on the successful commercial loan workout results weve been getting for our clients, I can see that the biggest mistake that property owners tend to make is to do delay addressing the issue at the first sign of trouble, or even worse, to try to deal with lenders or special servicers on their own. But that being said, commercial property owners should know that they can take steps to improve their situation by seeking professional help and guidance while the situation is still salvageable; the longer they wait to act, the more difficult their situation becomes, added Concklin.

Commercial property owners who are trying to keep their properties viable are seeking help from firms like Guardian Solutions that specialize exclusively in commercial loan modification. Currently, there are only a handful of specialized firms that hire highly qualified employees, such as accountants, MBAs and real estate professionals to deal specifically with the complexities involved in a restructuring a securitized commercial property.

Guardian Solutions helps commercial real estate owners in distress every day, said Concklin. We are saving all types of commercial properties facing default. But the sooner we get into negotiations, the more options we have available to help. A restructuring plan thats put in place early on usually contains the most favorable terms and achieves the best results. With the dismal forecasts we have for the economy and for the commercial real estate market, its the wise property owners who are taking a look at their assets and preparing now for the eventual market declines.

The technical and legal aspects involved with securing a commercial loan restructure prompts many property owners to ignore their position and grudgingly accept foreclosure rather than save their investment. This can result in more than just losing the property, it can severely damage the borrowers credit and even lead to personal bankruptcy.

About Guardian Solutions

Guardian Solutions is the one of nations largest commercial loan restructuring companies and is committed to helping commercial property owners save their properties. The companys knowledgeable mitigators are experienced in a variety of disciplines to provide customized restructuring solutions. For more information, visit http://www.GuardianSolutions.org

Contact:

Jamie Sene

Vice President, Marketing

Guardian Solutions

727-442-8833

http://www.GuardianSolutions.org

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Related Securitization Press Releases

The Mortgage Industry Secret that Prevents You from Getting a Loan

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Reno, NV (PRWEB) September 15, 2010

If your credit is good and youve tried to get a home loan, you may have found yourself in the perplexing position of being told you arent qualifiedeven if you are. Whats going on here? The answer is a secret problem in the mortgage-lending business called Repurchase Demands (loan buy-backs)and they are slowly strangling the industry. Thus, fewer loan products are available for the qualified borrower, says Scot Baker, a mortgage repurchase defense expert.

The problem started with the popping housing bubble in 2007. As the financial system collapsed, so did mortgage loans that had been securitized. This caused a systematic failure at Freddie Mac, Fannie and Ginnie Mae (the sources for FHA and VA loans). Congress demanded that these institutions become solvent after two major bailouts.

Today, Fannie Mae, Freddie Mac, and the Mortgage Insurance Companies are pushing back on loans up to 5 years old to the aggregators (Wells Fargo, Citigroup, Chase, Bank of America, etc.), who in turn are forcing buy-backs on the originators (Main Street mortgage companies). In the first quarter of 2010, these agencies forced lenders to repurchase $ 3.1 billion in mortgages, up 64% from one year earlier. Additionally, Ginnie Mae pushed back $ 15.5 billion in loans in the first quarter 2010 versus $ 4.9 billion in the year ago quarter. To further complicate things, the FDIC is pushing back on loans they inherited from seized banks, most notably Indy Mac.

The effect of loan buybacks is far-reaching and one of the major obstacles to a housing recovery. Repurchase demands have led to fewer lenders, an increase in loan loss reserves, increased overhead to handle the buyback demands, fewer choices for the consumer, and a lack of loan product availability for everyone, especially the self-employed. The overall effect on lenders is to tighten guidelines, a move to more time-consuming underwriting of each file, and a reluctance to take reasonable risks.

The result: You cant get a loan, even if youre qualified.

Most of the trouble with bad loans in the past centered around stated income loans above 80% loan-to-value, loose underwriting guidelines and pricing models that enticed lenders to place borrowers in loans not in the borrowers best interest, Mr. Baker says. However, my company, Pyramid Quality Assurance, sees a large percentage of buy-back demands on loans the originating lender underwrote to the program rules and guidelines in place at the time. Facts arising after the loan originationsuch as job loss, new debt, misreading of the credit reports or closing documentsare being asserted as reasons for pushback. We help Main Street mortgage companies defend against repurchase demands.

An optimistic view is that the mortgage industry will deal with this issue for at least 2 more years. Realistically, it is likely that the high level of pushback will continue for 3 to 5 years, Baker said.

About Scot Baker

Scot D. Baker is Sr. V.P. of Business Development at Pyramid Quality Assurance, a full-service loan analytics firm specializing in Repurchase Defense and Quality Assurance. Mr. Baker has over 20 years of mortgage banking experience. He can be reached at 877.706.5791 X 214 or sbaker.pyramidqa.com.

About Pyramid Quality Assurance.

Pyramid Quality Assurance, LLC http://www.pyramidqa.com/index.html is a full service analytics firm with extensive experience in mortgage industry Quality Assurance programs and Loan Repurchase Defense. Our senior staff have successfully defended Repurchase Defense cases, saving our clients millions of dollars. The company utilizes a comprehensive analytical approach providing easily understood solutions tailored to our clients needs. PQAs process allows our clients to increase efficiencies, leading to increased profits, improved cash flow and lowered loan loss reserves. Pyramid Quality Assurance works with small to large banking and mortgage banking institutions, home builders and investors across the U.S.A.

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The Mortgage Industry Secret that Prevents You from Getting a Loan

Posted on by

Reno, NV (PRWEB) September 15, 2010

If your credit is good and youve tried to get a home loan, you may have found yourself in the perplexing position of being told you arent qualifiedeven if you are. Whats going on here? The answer is a secret problem in the mortgage-lending business called Repurchase Demands (loan buy-backs)and they are slowly strangling the industry. Thus, fewer loan products are available for the qualified borrower, says Scot Baker, a mortgage repurchase defense expert.

The problem started with the popping housing bubble in 2007. As the financial system collapsed, so did mortgage loans that had been securitized. This caused a systematic failure at Freddie Mac, Fannie and Ginnie Mae (the sources for FHA and VA loans). Congress demanded that these institutions become solvent after two major bailouts.

Today, Fannie Mae, Freddie Mac, and the Mortgage Insurance Companies are pushing back on loans up to 5 years old to the aggregators (Wells Fargo, Citigroup, Chase, Bank of America, etc.), who in turn are forcing buy-backs on the originators (Main Street mortgage companies). In the first quarter of 2010, these agencies forced lenders to repurchase $ 3.1 billion in mortgages, up 64% from one year earlier. Additionally, Ginnie Mae pushed back $ 15.5 billion in loans in the first quarter 2010 versus $ 4.9 billion in the year ago quarter. To further complicate things, the FDIC is pushing back on loans they inherited from seized banks, most notably Indy Mac.

The effect of loan buybacks is far-reaching and one of the major obstacles to a housing recovery. Repurchase demands have led to fewer lenders, an increase in loan loss reserves, increased overhead to handle the buyback demands, fewer choices for the consumer, and a lack of loan product availability for everyone, especially the self-employed. The overall effect on lenders is to tighten guidelines, a move to more time-consuming underwriting of each file, and a reluctance to take reasonable risks.

The result: You cant get a loan, even if youre qualified.

Most of the trouble with bad loans in the past centered around stated income loans above 80% loan-to-value, loose underwriting guidelines and pricing models that enticed lenders to place borrowers in loans not in the borrowers best interest, Mr. Baker says. However, my company, Pyramid Quality Assurance, sees a large percentage of buy-back demands on loans the originating lender underwrote to the program rules and guidelines in place at the time. Facts arising after the loan originationsuch as job loss, new debt, misreading of the credit reports or closing documentsare being asserted as reasons for pushback. We help Main Street mortgage companies defend against repurchase demands.

An optimistic view is that the mortgage industry will deal with this issue for at least 2 more years. Realistically, it is likely that the high level of pushback will continue for 3 to 5 years, Baker said.

About Scot Baker

Scot D. Baker is Sr. V.P. of Business Development at Pyramid Quality Assurance, a full-service loan analytics firm specializing in Repurchase Defense and Quality Assurance. Mr. Baker has over 20 years of mortgage banking experience. He can be reached at 877.706.5791 X 214 or sbaker.pyramidqa.com.

About Pyramid Quality Assurance.

Pyramid Quality Assurance, LLC http://www.pyramidqa.com/index.html is a full service analytics firm with extensive experience in mortgage industry Quality Assurance programs and Loan Repurchase Defense. Our senior staff have successfully defended Repurchase Defense cases, saving our clients millions of dollars. The company utilizes a comprehensive analytical approach providing easily understood solutions tailored to our clients needs. PQAs process allows our clients to increase efficiencies, leading to increased profits, improved cash flow and lowered loan loss reserves. Pyramid Quality Assurance works with small to large banking and mortgage banking institutions, home builders and investors across the U.S.A.

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The Mortgage Industry Secret that Prevents You from Getting a Loan

Posted on by

Reno, NV (PRWEB) September 15, 2010

If your credit is good and youve tried to get a home loan, you may have found yourself in the perplexing position of being told you arent qualifiedeven if you are. Whats going on here? The answer is a secret problem in the mortgage-lending business called Repurchase Demands (loan buy-backs)and they are slowly strangling the industry. Thus, fewer loan products are available for the qualified borrower, says Scot Baker, a mortgage repurchase defense expert.

The problem started with the popping housing bubble in 2007. As the financial system collapsed, so did mortgage loans that had been securitized. This caused a systematic failure at Freddie Mac, Fannie and Ginnie Mae (the sources for FHA and VA loans). Congress demanded that these institutions become solvent after two major bailouts.

Today, Fannie Mae, Freddie Mac, and the Mortgage Insurance Companies are pushing back on loans up to 5 years old to the aggregators (Wells Fargo, Citigroup, Chase, Bank of America, etc.), who in turn are forcing buy-backs on the originators (Main Street mortgage companies). In the first quarter of 2010, these agencies forced lenders to repurchase $ 3.1 billion in mortgages, up 64% from one year earlier. Additionally, Ginnie Mae pushed back $ 15.5 billion in loans in the first quarter 2010 versus $ 4.9 billion in the year ago quarter. To further complicate things, the FDIC is pushing back on loans they inherited from seized banks, most notably Indy Mac.

The effect of loan buybacks is far-reaching and one of the major obstacles to a housing recovery. Repurchase demands have led to fewer lenders, an increase in loan loss reserves, increased overhead to handle the buyback demands, fewer choices for the consumer, and a lack of loan product availability for everyone, especially the self-employed. The overall effect on lenders is to tighten guidelines, a move to more time-consuming underwriting of each file, and a reluctance to take reasonable risks.

The result: You cant get a loan, even if youre qualified.

Most of the trouble with bad loans in the past centered around stated income loans above 80% loan-to-value, loose underwriting guidelines and pricing models that enticed lenders to place borrowers in loans not in the borrowers best interest, Mr. Baker says. However, my company, Pyramid Quality Assurance, sees a large percentage of buy-back demands on loans the originating lender underwrote to the program rules and guidelines in place at the time. Facts arising after the loan originationsuch as job loss, new debt, misreading of the credit reports or closing documentsare being asserted as reasons for pushback. We help Main Street mortgage companies defend against repurchase demands.

An optimistic view is that the mortgage industry will deal with this issue for at least 2 more years. Realistically, it is likely that the high level of pushback will continue for 3 to 5 years, Baker said.

About Scot Baker

Scot D. Baker is Sr. V.P. of Business Development at Pyramid Quality Assurance, a full-service loan analytics firm specializing in Repurchase Defense and Quality Assurance. Mr. Baker has over 20 years of mortgage banking experience. He can be reached at 877.706.5791 X 214 or sbaker.pyramidqa.com.

About Pyramid Quality Assurance.

Pyramid Quality Assurance, LLC http://www.pyramidqa.com/index.html is a full service analytics firm with extensive experience in mortgage industry Quality Assurance programs and Loan Repurchase Defense. Our senior staff have successfully defended Repurchase Defense cases, saving our clients millions of dollars. The company utilizes a comprehensive analytical approach providing easily understood solutions tailored to our clients needs. PQAs process allows our clients to increase efficiencies, leading to increased profits, improved cash flow and lowered loan loss reserves. Pyramid Quality Assurance works with small to large banking and mortgage banking institutions, home builders and investors across the U.S.A.

###







Find More Securitization Press Releases

The Mortgage Industry Secret that Prevents You from Getting a Loan

Posted on by

Reno, NV (PRWEB) September 15, 2010

If your credit is good and youve tried to get a home loan, you may have found yourself in the perplexing position of being told you arent qualifiedeven if you are. Whats going on here? The answer is a secret problem in the mortgage-lending business called Repurchase Demands (loan buy-backs)and they are slowly strangling the industry. Thus, fewer loan products are available for the qualified borrower, says Scot Baker, a mortgage repurchase defense expert.

The problem started with the popping housing bubble in 2007. As the financial system collapsed, so did mortgage loans that had been securitized. This caused a systematic failure at Freddie Mac, Fannie and Ginnie Mae (the sources for FHA and VA loans). Congress demanded that these institutions become solvent after two major bailouts.

Today, Fannie Mae, Freddie Mac, and the Mortgage Insurance Companies are pushing back on loans up to 5 years old to the aggregators (Wells Fargo, Citigroup, Chase, Bank of America, etc.), who in turn are forcing buy-backs on the originators (Main Street mortgage companies). In the first quarter of 2010, these agencies forced lenders to repurchase $ 3.1 billion in mortgages, up 64% from one year earlier. Additionally, Ginnie Mae pushed back $ 15.5 billion in loans in the first quarter 2010 versus $ 4.9 billion in the year ago quarter. To further complicate things, the FDIC is pushing back on loans they inherited from seized banks, most notably Indy Mac.

The effect of loan buybacks is far-reaching and one of the major obstacles to a housing recovery. Repurchase demands have led to fewer lenders, an increase in loan loss reserves, increased overhead to handle the buyback demands, fewer choices for the consumer, and a lack of loan product availability for everyone, especially the self-employed. The overall effect on lenders is to tighten guidelines, a move to more time-consuming underwriting of each file, and a reluctance to take reasonable risks.

The result: You cant get a loan, even if youre qualified.

Most of the trouble with bad loans in the past centered around stated income loans above 80% loan-to-value, loose underwriting guidelines and pricing models that enticed lenders to place borrowers in loans not in the borrowers best interest, Mr. Baker says. However, my company, Pyramid Quality Assurance, sees a large percentage of buy-back demands on loans the originating lender underwrote to the program rules and guidelines in place at the time. Facts arising after the loan originationsuch as job loss, new debt, misreading of the credit reports or closing documentsare being asserted as reasons for pushback. We help Main Street mortgage companies defend against repurchase demands.

An optimistic view is that the mortgage industry will deal with this issue for at least 2 more years. Realistically, it is likely that the high level of pushback will continue for 3 to 5 years, Baker said.

About Scot Baker

Scot D. Baker is Sr. V.P. of Business Development at Pyramid Quality Assurance, a full-service loan analytics firm specializing in Repurchase Defense and Quality Assurance. Mr. Baker has over 20 years of mortgage banking experience. He can be reached at 877.706.5791 X 214 or sbaker.pyramidqa.com.

About Pyramid Quality Assurance.

Pyramid Quality Assurance, LLC http://www.pyramidqa.com/index.html is a full service analytics firm with extensive experience in mortgage industry Quality Assurance programs and Loan Repurchase Defense. Our senior staff have successfully defended Repurchase Defense cases, saving our clients millions of dollars. The company utilizes a comprehensive analytical approach providing easily understood solutions tailored to our clients needs. PQAs process allows our clients to increase efficiencies, leading to increased profits, improved cash flow and lowered loan loss reserves. Pyramid Quality Assurance works with small to large banking and mortgage banking institutions, home builders and investors across the U.S.A.

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