Interesting thread that is beginning to evolve from the sports world, NBA specifically. Could movements, or more accurately the lack thereof, forecast trouble in darling of the mortgage industry–Quicken Loans?
According to Dan Gilbert’s email statement, reported in the Akron Beacon Journal, there is no linkage:
”There is zero connection between any current events in the mortgage markets with the strategy, tactics and payroll of the Cleveland Cavaliers,” Gilbert said in an e-mail message Monday.
But, some local bloggers are wondering otherwise. Their theory:
there has been a rumbling among Cleveland Cavalier fanatics that there might be a hidden reason why the Cavaliers have been so slow at re-signing free agents Anderson Varejao and Sasha Pavlovic or go after any other free agents.
Maybe we should look back and a little deeper at recent quicken mortgage news for more clues:
In this Detroit Free Press article, about how the mortgage squeeze will be good for Quicken, there is this statement:
Quicken has moved in recent weeks to cut costs, slow hiring and shift all its retail lending to “plain vanilla” very-low-risk loans, Gilbert said. But it has not laid off any workers and still expects to grow mortgage lending volume this year by about 10% to more than $20 billion.
Then take this statement from the longer version of the same Detroit Free Press article:
The firm currently has a backlog of about $100 million in unsold loans. “That sounds like a big number,” he said, “but it’s really not that significant to a company with a credit line of $2.5 billion.” His plan is to whittle the backlog gradually, rather than trying to dump all the loans on the market at a loss
Now do the math: $20 billion/365 days = ~$54,794,520 on a $2.5 billion credit line (assuming that you can draw 100%, which is never the case) that gives you just over 45 days of lending. And they are already behind $100 million or 2 days worth of lending.
Not to alarm anyone they seem to be making the right moves:
Quicken/Rock responded by shifting rapidly — in a week’s time — to make 100% of its loans the plain-vanilla type for sums less than $417,000 that are purchased by Fannie Mae and Freddie Mac, the congressionally chartered agencies that pool the loans for sale as mortgage-backed securities.
But can they make them fast enough?
One more thing. You have to love how fast the tip line begins to work (telldogood [at] gmail). I was tipped to look into whether or not the Quicken loan officers are getting paid or summarily fired??? And there seems to be some truth if you believe the comments here and more direct posts here.
Only time will tell. This is a real roller coaster ride for lenders and borrowers. Hang on to your hats!
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-Silence Dogood
