Richard Nacht's The Daily Mortgage

Michigan amending Identity Theft Protection Act

Michigan Senators have introduced Senate Bill 309 which, if adopted, will amend Michigan’s identity Theft Protection Act by adding a notification requirement on agencies or persons that own, license or maintain computerized data that includes personal identifying information.

The act would require any such party to provide notice of a breach of the security of the data or where the data is acquired by any unauthorized person.

Ohio makes it easier to buy a home

The Ohio Housing Finance Agency has introduced its My Ohio Mortgage program which is intended to allow more people to buy their first home, as compared to other existing state programs.

My Ohio Mortgage allows home buyers with lower credit scores and in some cases will not require a downpayment.  The program is backed by Fannie Mae.  Lenders participating in the program are entitled to a 1% origination fee.

Housing still hot

The Commerce Department is reporting that new home sales jumped 12.2% last month. The New York Times (registration required) is reporting that Fed Chairman Alan Greenspan concedes a lack of rational for why long term rates have remained low, even though the central bank has jacked rates several times.

Most economists aren’t quite as confused; it is reported that there continues to be a massive movement of foreign dollars into government bonds and mortgages, explaining why interest rates haven’t climbed.  As long as foreign money keeps the bond market steady and rates remain level the bubble is unlikely to burst.  But any variety of economic shocks or reduction in that foreign investment is likely to have a dramatic impact.  Merrill Lynch senior economist Sheryl King, noted by the Times as one analyst who believes that increased speculation and soaring prices have created a bubble, is quoted as saying, “Even if you adjust for population growth, you’re seeing numbers that are bigger than any we have seen at this point in any economic cycle.”

Mozilo earned it

Update:  Following up on my post from earlier today, Countrywide Financial Corp., has reported earnings of $668 million for the first quarter, up 27% from the first quarter of 2004.  The company’s mortgage banking operation contributed $772 million.

”Countrywide’s heightened profitability was driven primarily by an increased contribution from the mortgage banking segment, where pretax earnings were up 38% from the same quarter a year ago and 196% from last quarter,” said Angelo Mozilo, Countrywide’s chairman and chief executive officer.  In addition, Countrywide’s servicing portfolio has grown to a record $893 billion, up $211 billion from a year ago.  Pay the man his money!

Offshore outsourcing

A recent research report notes that the offshore BPO market for the US residential mortgage business is $6-$7.4 billion.  Trinity Partners, Inc., a provider of technology enabled outsourcing solutions to financial solutions notes the current BPO market in India is $150 million which includes 7,500 employees.

Pijush Sinha is quoted in the report as saying, “Increasing competition in the BPO market is forcing providers to deliver more and more value to their clients each day.  To maintain market share and thought leadership, providers must look toward delivering higher value processes for their customers.”  The report notes that the general availability of diverse skills and technology advances are driving the offshoring trend.

The report notes that with Countrywide, IndyMac, Greenpoint and CitiMortgage in the forefront of utilizing offshore solutions, many more US players will seek to capture similar competitive advantages, looking to India in particular.

Mozilo top mortgage executive earner

Forbes.com has posted an article which notes that Angelo Mozilo, chairman and chief executive officer of Countrywide Financial Corp., was the ninth-highest paid CEO among the 500 largest American public companies in 2004.  Forbes calculated Mr. Mozilo’s 2004 compensation at $96.9 million.  Other mortgage  CEOs among the top 100 in 2004 included Richard Kovacevich of Wells Fargo, who was 12th with $53.1 million in compensation; Jerry Grundhofer of US Bancorp, 21st at $38.6 million; William Foley of Fidelity National Financial, 32nd at $33.9 million; Robert Wilmers of M&T Bank, 80th at $16.4 million; and Kerry Killinger of Washington Mutual, 83rd at $15.7 million.

MBNA and Nexstar

The recent announcement by MBNA that it will acquire Nexstar was primarily a home equity loan play.  The Nexstar platform will be used to “provide private label and co-branded home equity loans through our many affinity group partners, further broadening our relationships with these groups,” said MBNA Vice Chairman Richard Struthers in the announcement regarding the deal.  Struthers pointed to the confidence its partners would have in the process as handled by Nexstar. 

Nexstar isn’t cheap but one wonders whether they might start reducing their processing fees in order to generate new loan business for MBNA.  The income from mortgage processing can’t compare to the interest income that MBNA will see from the loans running through the Nexstar system and that will be MBNA’s focus going forward.

Volume down

Non-news flash:

Chase, WaMu, Wells, Bank of America, Citigroup and National City all report volume down.

Chase’s first quarter originations were $38.5 billion down from $44.4 billion the quarter before.  BofA, Citi and Wells all report declines of less than 6%, quarter to quarter.  WaMu was down just about 5%.

New credit information site

Equifax has created “Take Control of Your Credit,” an online information site which purports to help consumers protect themselves against identity theft and provides guidance into the role that credit plays.  The site is available in English and Spanish and is located at mycrediteducation.com.

The site has worthwhile information for those who aren’t aware of the importance of managing their credit, which according to a previous post may include two-thirds of our population.

The selling of Equifax’s credit monitoring and other products is low-key.

Homes of the Billionaires

View a slideshow of Homes of the Billionaires.

Fact - according to the National Association of Home Builders the median American house size is slightly more than 2,000 square feet.  The first home in the slideshow above, belonging to Bill Gates is 30 times that.