Low profitability was on everyone's mind last week at the Mortgage Bankers Association's convention here.
One courteous conventioneer started asking everyone in a hotel elevator what floor they were going to, because he was closest to the buttons.
Someone joked that he should have a stool, and the impromptu elevator operator cracked, "In this industry, you need to find new career paths."
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Angelo R. Mozilo, chairman and chief executive of Countrywide Home Loans, said at a private reception that he expects more consolidation in the industry this year, and he hinted that even Countrywide, which has prided itself on not making large acquisitions, could become a buyer if the price is right.
But he added that the amounts now being paid for mortgage companies are very high and that this had prevented Countrywide from making any purchases.
Countrywide is expanding its push into subprime lending, but Mr. Mozilo warned that the more profitable "B" and "C" area is not a panacea for the mortgage industry's razor-thin margins. He said more and more players are getting into the business now even though it is a somewhat limited market.
"Then we'll have to go into X, Y and Z loans," he quipped.
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The Weyerhaeuser Mortgage soap opera keeps getting stranger. Two weeks ago, the company issued a press release saying it was doing business as usual despite its parent's search for a buyer.
Weyerhaeuser's chief accounting officer, Timothy Breedlove, was a speaker at a FAS 122 panel discussion. During the discussion, slides were used and speakers from Countrywide Credit and HomeSide Lending had their logos on the slides. When it was Mr. Breedlove's turn, he apologized for not having his company's logo on a slide; given the current situation, he said, he hadn't known what logo he would need.
Weyerhaeuser Mortgage's chief executive, Donald E. Lange, added that he wasn't too sure what would happen to the unit. It's in the hands of Goldman, Sachs & Co., he said. Weyerhaeuser Co., the parent, hired Goldman in September to explore options for the mortgage subsidiary.
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Technology was a buzzword at the conference, but it didn't seem the industry has come any closer to establishing a much-sought-after single- entry system for originations and underwriting.
The Federal National Mortgage Association announced that lenders would now be able to underwrite subprime and home equity loans through its Desktop Underwriter System.
But Leland C. Brendsel, chairman of the Federal Home Loan Mortgage Corp., or Freddie Mac, said its Loan Prospector system was on the way to becoming the platform for the industry. The VA program has joined the FHA program in using Loan Prospector to underwrite loans, he noted.
Freddie Mac already offers underwriting of "B" and "C" loans through Loan Prospector.
The two government-sponsored entities aren't the only major players in automated underwriting, either. PMI Mortgage Insurance Co. announced that Chase Manhattan Mortgage Corp., the nation's third-largest servicer and originator of mortgages, would use its PMIAura automated underwriting and mortgage scoring system to analyze all its residential mortgage loans.
