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One banking expert says the settlement with regulators on foreclosures is a good move.
For the bank's Chris Whalen is the executive vice president of Carrington investment services joins me -- Innophos this exclusive why is this a good thing for the banks well the.
-- processes -- going on for some time -- people were benefiting from this through the consultants there were going through this loan files.
The real benefit for consumers and always settlements this 11 we saw.
While buck -- robo signing.
-- -- we've changed the way the business works all of the bank sold the servicers including firms like mine have a exclusive duty of care to borrowers there.
-- -- -- the borrower on the phone or delinquent have to go through all we options before even think about foreclosure so that's really the key benefit.
Do you think the banks I think of Wells Fargo in particular -- West Coast name what are the biggest West Coast.
Funders of home loan right do they pull back though on this or does this make them more apt to lend knowing.
That the majority of the lawsuits are now behind them.
Which really got out.
Well it's none of the above its regulation Basel III that's what's forcing the banks of this business firms like -- non banks are gonna inherit the -- and mortgages that's the sad part to -- the regulators wanna help homeowners -- wanna make credit available but their actions are doing exactly the opposite and frankly firms like -- beneficiaries of and we're quite happy about that.
But the -- -- -- -- before the real change in this business environment is the way we're going to do business.
In the future I don't know how you determine bad acts from -- room alone file.
-- -- I was let's add before we get wealthy on this through the consultants tens of thousands of them bubble.
But not fast -- getting pushed back to 2019 are I would think part parts of it -- I would think that at least in the near term as we have seen the housing recovery which is Ben wooten.
Very strong in 2012.
Pulte Homes the top performing as a paper it.
I would think that this would that.
That be the push back on Basel III would be a positive.
Well in -- -- -- mean they were gonna talk about liquidity today -- Basel the real problem with also -- -- announces mortgage lending.
If you put Dodd-Frank the robo signing settlement in Basel III altogether.
It discourages banks from lending on real estate.
It makes a 100% risk -- on and got 20% down mortgage.
No bank is gonna do that.
When non banks are gonna be a -- -- as far as country that's right and remember him for the borrowers in this country can't qualify for an FHA loan.
90% of the loans -- were made last year.
For minority FHA most of them were for refinancing so you'll -- -- the salt shaker with you wouldn't start talking about the recovery in housing -- -- off the bottom out but were maybe 20%.
Fall back from where we war.
What -- get based on the numbers that we have for 2012.
Of this -- the same time financials best performing sector of 2012 it.
What do we think now but the pace like 2013 obviously doesn't potentially is a headwind as you say.
Well Wall Street was underweight financial so it's not surprising that they came back.
Names like BankAmerica insidious culture and last year they affable -- yet to us a call for all banks -- -- even prefer us -- will -- sixteen points for not supposed to move that much so investors are starved for income.
And I think the Fed's interest rate policies from the major driver behind financials.
Revenue earnings are going to be so also -- -- this -- are good example.
Mortgage Bankers Association.
-- look at their numbers we -- 1000000000007.
In new production lesser mostly refinancings.
Were looking to do a trillion for this here.
And that's because we've refinance everybody who can qualify.
Book value means -- do you going to a name like say JPMorgan or even a vehicle and it's a book value used sell -- home.
Due -- for the numbers to come on an earnings make the move that I mean -- how to that if you were I think the political.
Investors you can take the view the bank America's chief -- with city.
But you have to really take a bit of a gamble but they're done done done -- all mortgage legacy issues.
-- settlement with Fannie made today is part of it but BankAmerica still custom settle the real investor claims on country want.
Then they're going to be a very different position.
But remember all these banks two years from now when you're looking at -- -- the lasting or bird the first thing you're gonna talk about what Bank of America is Paul Merrill Lynch.
Not the mortgage business in the mortgage business has been the driver but we we had a chart -- of JPMorgan Chase a moment ago when you look at JPMorgan Chase it is the mortgage business chase home mortgage one of the profitable to the threat of that had a lot of -- subsidized by the federal government.
Harp and help.
So a lot of this is gonna go away this year we're gonna have a more normalized market knew and remembered normal for housing is wrong with the population growth rate.
When -- -- a housing market that's up 1015% a year you know there's lot of froth in the market you're going to be cautious.
Do you think that as we go to review that the financial health of the banks were gonna obviously get snapshots from earnings that are gonna -- -- -- next week but at the same time.
You -- the FDI state it has a very watchful eye on the bank a signal of the health of the -- protect themselves.
Holding the FTS seized -- putting more than -- run out of money.
Banks are over reserve defending thing you know we -- from a period of recklessness.
In the mortgage sector mortgage backed securities lot of fraud and regulators can megas that we need more capital.
No we need to fix the securitization business convince investors of somebody is enforcing the rules and -- we can get things back to a more normal look environment I think.
Really good point about watching the pendulum slaying.
All the way over the preference for the wrong side for investors and for a look at where older than employment capital that's why we go through the -- so well -- -- industry paid for everything except Citigroup that's the only major bank Chris -- thank you very much variation what's coming -- thank you.