Time to get liquid!

Boy oh boy is it ever time to get liquid!

Before the interest rate increases happened, those bankers with very substantial balance sheets were living on easy street. Then the bomb hit.  Suddenly, many of these stronger players lost a substantial amount of money. Valued employees were let go; new purchase teams were hired and the old reality of how things were done went out the window. Thus, a new industry was born, in a way.  In the new reality, lenders needing to add liquidity in a hurry turned their attention to financing servicing portfolios.

But how can one get an estoppel from one of the agencies or GNMA? Some firms have figured it out and are selling a product which enables a firm to “right size” and change directions regarding their product offering.

With increased valuations of servicing, especially regarding new production, the age-old method of selling servicing has turned out to be a viable alternative. I have one client which sold close to $15 Billion of servicing; then immediately closed the firm’s doors and went to the beach. New times;  new ways of thinking.

I represent mortgage banks who offer different types of warehouse lines. These range from traditional facilities to hospital lines, servicing advance lines and loans on servicing pools.  This is the new reality. Things change. Old companies close down and smaller companies grow and become rich.  It’s the American Dream, unless you don’t follow through, in which case, it’s the American nightmare.

Sigh.  My parents always told me to go to med school.  Maybe I should have listened. 🙂


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