It's well documented that loan repurchase requests have been hammering the mortgage earnings of the nation's megalenders. Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. have been harmed to varying degrees.
But what about small and midsize lenders that fund less than $5 billion of mortgages a year? There's a growing school of thought that the "little guy" has weathered the repurchase storm just fine.
Larry Charbonneau, managing director of the advisory firm Charbonneau & Associates, said very few of the mortgage banking firms he has evaluated are suffering from the repurchase plague.
"Since January I have reviewed 41 mortgage companies from coast to coast, and not one has had buyback exposure of more than five or so loans," he said. "These are firms doing $300 million to $3 billion a year in originations."
Some lenders seemed to think Charbonneau's conclusion was on the money. Joe Adamaitis, who closes loans for Academy Mortgage of Sarasota, Fla., said his company has not experienced buyback troubles.
"We have a pretty tight operation," Adamaitis said. Academy loan officers "are taught that if we suffer buybacks, the whole company does." He said Academy does about $3 billion a year in business.
Richard Tachine, who works in the Murrieta, Calif., office of Directors Mortgage, said his company originates about $150 million a quarter in product. Directors Mortgage has had "no buyback issues," he said.
Tachine, a veteran loan officer, said he has been underwriting "A" paper mortgages "for a long time," avoiding such fads as "liar loans."
But Chuck Klein, managing partner of Mortgage Banking Solutions in Woodland, Texas, predicts that buybacks will cause trouble in the months ahead.
His consulting firm recently rolled out a service to help mortgage bankers fight repurchase requests from the government-sponsored enterprises Fannie Mae and Freddie Mac and to work out coverage battles with mortgage insurance firms.
"I've heard there's been a little bit of a slowdown in requests," Klein said, "but that's only the case with some firms. While others have seen a reprieve, buybacks accelerated for some."
"I think it's safe to say the easiest requests have come and filtered through the system," he said, but "I think now we're about to see more fights."
One client was asked to repurchase a mortgage that was funded in 2004, Klein said.
"The original [loan-to-value] on that thing was 50%, and the GSE found the homeowner couldn't validate his income," he said. "The thing is, the loan is performing. Now, that's just not fair."