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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (12503)	8/17/2003 10:04:53 AM
From: Les H	Read Replies (1) \| Respond to of 306849

LET ME PREFACE THIS BY SAYING THAT THIS IS WORD OF MOUTH. I heard that secondary is to blame for their closing. The story floating around here is that when us loan officers locked our rates, CCM would say they are locked but hedge by locking about 50% of them and float the rest waiting for the markets to improve. When the pricing would be better then lock and make CCM more money on our rates. Unfortunately, I heard they had a $1.3B pipeline in trouble when the rates climbed. This is not an uncommon practice by secondary from what I understand so it makes me wonder if more companies out there are barely holding on. *********If I am incorrect on this or if anyone has additional information please fill me in so I can update others in the office. Thank You by arizonalender August 15, 2003 -------------------------------------------------------------------------------- I worked for a mortgage bank a couple of years ago and the branch manager was the one who locked in loans with their investors. He consistently played the market to make more money for his branch. I´m sure he was doing fine until around the 24th of June. I´d imagine he lost his shorts since then (serves him right!). Ego seems to get involved in this sometimes. These secondary people and other higher up mucky mucks (yes, I went to college to learn these fancy terms) think they can predict the markets and try to get every cent they can (can you spell greed???). Most of them have not experienced bad markets and are totally unprepared for what is happending now. I think there may be many more lenders that may fall by the wayside before this is over. It just pisses me off reading about this kind of stuff. We, as loan officers, depend on these lenders and then we find out they do this kind of stuff and we are the ones who take the fall (us and our clients, that is). And the sad thing is that we don´t have anyway to get anything back from them. We just have to go on and do the best we can and try to salvage what we can. Even if you managed your pipeline correctly and locked everyone of your loans, you´re still screwed if you used Cap Com. sigh...... by bestloan August 15, 2003 -------------------------------------------------------------------------------- poor,poor babies. Someone took your oompa loompa and you´re all upset. Poor, poor, loan officers, the entire weight of the world lies on your shoulders and the idea that someone could upset you is so, so tragic. Of course, if you knew anything at all about this business it would be nice wouldn´t it. Secondary marketing in about 98% of all shops is a zero sum game. Anyone with about 2 1/2 weeks of senior management experience knows that the last thing you want to do is have secondary be a profit center beyond the established margins you set when you develop your secondary strategy. Every day secondary marketing in any semi-well run shop determines a delta hedge based upon loan lock activity for that day. The hedge is based upon a statistical analysis of activity in the shop and a certain assumed fall-out is taken into consideration. Obviously, when there is an uptick like we recently saw, secondary will take it on the chin to a SMALL degree, but not to the point of what happened with these guys. by Basketball August 16, 2003 more responses at brokeruniverse.com