Join us for a Webinar on July 14 at 11:00 AM PDT. Click here to register.

DebtMarket presents industry experts: Doug Henkel and Larry Chiavaro from 1st Associates to discuss recent changes and current challenges in loan servicing and how financial services organizations can improve portfolio performance in this dynamic environment. Topics include:

• Performance analysis: tools to analyze and predict performance
• Trends: industry consolidation, capacity and contract issues
• Low touch vs. high touch: do I need a servicer or a payment processor?
• Servicer options: what to look for in a servicing company
• Risk management strategies: portfolio re-balancing and servicing methods

Register today for this complimentary webinar.

1st Associates, Inc. is a loan servicer partner of DebtMarket. 1st Associates is one of the nation’s premier consumer loan servicing firms with more than 20 years of experience. The company is 100% dedicated to loan servicing and does not lend or outsource for other functions, making them a cost-effective and smart alternative.

DebtMarket’s partner program brings together some of the industry’s best financial services vendors to provide buyers and sellers with quality resources for secondary market transactions. Partners include loan servicers, loan brokers, loan origination platforms, due diligence firms, CPAs and data analytics providers.   If you are interested in learning more about the program or want to become a DebtMarket services partner, please contact  Vanessa Towning at 866-559-4339 or vanessa [Email address: vanessa #AT# debtmarket.com - replace #AT# with @ ]

This article, recently published in American Express’ Open Forum, gives tips to entrepreneurs who were just rejected by the bank. Although the subject matter is slightly different, the principle of ’selling an idea’ still applies to sellers when marketing a loan portfolio:

The plan is perfect.

You’ve been dreaming about this idea for years.  You’ve written and edited and updated your business plan more times than you can count.  You’ve got mountains of numbers and solutions and market research ready to go.

You know your idea is a great one.

And the bank says no.

What’s next?

The absolute first lesson of any rejection is that everyone falls down sometimes. Everyone who has succeeded at anything in life has also failed at something in life.  We all hear “no” sometimes – that’s part of the story.

Still, the piece that separates the winners from the losers is that the winners are willing to pick themselves back up and try again. Read more

Bottom line: Don’t let defeat get the better of you.

DebtMarket Hires Three Industry Experts
Online marketplace for whole loan portfolios hires former executives from Fannie Mae, GMAC and Capmark.

By Ivy Schmerken, Advanced Trading
February 01, 2010

DebtMarket, an online marketplace for buying and selling whole loan portfolios, announced the hiring of three additional experts. Stuart McFarland will serve as special advisor for Capital and Federal Markets and Jim Jones and Bob Feller will join as members of the Board of Directors, effective immediately.

Stuart McFarland previously served as CFO of Fannie Mae as well as CEO of GE Capital Asset Management Corporation. Stuart also served as the president and CEO of Pedestal, an Internet-based, electronic trading platform for the purchase and sale of mortgage loans in the secondary market. McFarland’s role will focus on outreach to various branches of government including Government Sponsored Enterprises (GSEs) and FDIC. Stuart will be representing DebtMarket in Washington DC, where he will open a liaison office.  Read More

Seller: IL Finance Company
Unsecured Charged off Auto Portfolio
Remaining Balance: $44,233,576
Number of Loans: 3981
Weighted Avg. Coupon: 10.00%
Avg. Initial Term: 63 months
Listing Expiration: 1/14/10

Seller: National Finance Company
Auto Loan Portfolio
Remaining Balance: $17,952,940
Number of Loans: 1337
Weighted Avg. Coupon: 21%
Avg. Initial Term: 66 months
Wtd. Avg. Remaining Term: 50 months
Listing Expiration: 1/18/10

Seller: National Finance Company
Home Improvement Loan Portfolio
Remaining Balance: $18,299,512
Number of Loans: 4790
Weighted Avg. Coupon: 20.00%
Avg. Seasoning: 59 months
Avg. Remaining Term: 49 months
Listing Expiration: 1/21/10

• How are banks going to manage their existing FFEL portfolio?
• How will the Direct Lending program affect bank’s servicing on student loans without the protections of FFELP?

Banks Don’t Belong in the Student Loan Business

They get billions in federal subsides that can provide financial aid to needy students
By ARNE DUNCAN

Since I arrived in Washington, I’ve been looking at every line item in the budget of the U.S. Department of Education with two questions in mind: Is this program helping students learn? And is it a good use of taxpayer money? In the case of the Federal Family Education Loan (FFEL) program, the answer to both questions is no.  Read More

Feel free to post your thoughts and comments.

By Paul Krugman  10/7/09

Still chasing shadows?

This article on the continued troubles in credit markets was informative. But it raised a puzzle. Call me naive, but why does Fed policy seem to assume that the only way to repair credit markets is to return to the status quo ante, circa January 2007?

Here’s how I think about what has happened these past 2+ years. I think in terms of a sort of flow chart, showing ways that savers can connect with borrowers:

Traditionally — i.e., before the 1980s — the public put its money in banks, and banks made loans to borrowers: thus the diagonal arrow from banks to borrowers represents traditional banking.

By 2007, however, much of this traditional channel had been supplanted by shadow banking: debt was securitized, and the securities sold to the public — the straight arrow across the bottom of the figure.

Then the crisis came. The public rushed for safety, which basically meant guaranteed deposits. One rough indicator is holdings of MZM — money of zero maturity — which is the sum of bank deposits and money-market deposits:

In effect, the public rushed back into the banks. But the banks weren’t willing to lend out these excess funds. Instead, they accumulated deposits at the Fed:

To prevent a complete collapse of credit, the Fed in effect recycled these deposits back into private credit via the TALF and other securities-purchase programs. So funds now flow all around the first figure, getting to the public via “Bernanke banking” (my term.)

Everyone agrees that this is a stopgap, and we want to get the Fed out of the business of private lending over time.

But here’s my question: why does it have to be a return to shadow banking? The banks don’t need to sell securitized debt to make loans — they could start lending out of all those excess reserves they currently hold. Or to put it differently, by the numbers there’s no obvious reason we shouldn’t be seeking a return to traditional banking, with banks making and holding loans, as the way to restart credit markets. Yet the assumption at the Fed seems to be that this isn’t an option — that the only way to go is back to the securitized debt market of the years just before the crisis.

Why? Are we still convinced that securitization is a far superior system to conventional banking, and if so why?

Inquiring minds want to know.

SAN FRANCISCO, Aug 14 (Reuters) – A public online exchange for subprime home and consumer loans opens for business on Friday, aiming to fill a niche by providing open, centralized bidding for investors in packages of smaller debt.

Start-up DebtMarket hopes to do for subprime home and consumer loans what online retailers have done for merchandise, by providing a national platform with open bidding.

DebtMarket, which already runs a website for trading auto loans, hopes to lure banks, funds and other investors ready to buy subprime home and consumer loans at a discount.

‘We thought if we created a big eBay ( EBAY – news – people ) for debt it could create market efficiencies,’ said Chairman Scott Walchek.

Advised by Stuart McFarland, former general manager at GE Capital Mortgage and ex-chief financial officer at Fannie Mae ( FNM – news – people ), DebtMarket took on the challenge of opaque, fragmented markets. It standardized loan information, so its software can assemble portfolios after buyers specify what they are looking for.

‘That is what we really solved,’ said Chief Executive Mike Sheridan. ‘We have standardized the data.’

Its existing auto loans platform has attracted customers Wells Fargo ( WFC – news – people ), JPMorgan’s securitization desk, and ReMark Capital, a unit of Goldman Sachs ( GS – news – people )

DebtMarket’s beta test auto exchange completed loans worth less than $5 million in the past year, of $300 million listed.

The online exchange for consumer and home loans will go up against giant DebtX, which helps the likes of the Federal Deposit Insurance Corp sell billions of dollars of distressed loans. DebtX, a nine-year-old venture-backed start-up, runs open debt auctions but not of distressed assets.

‘We believe … (an open bidding platform is) a failed business model for distressed assets and we do not it believe it maximizes the proceeds to the seller,’ DebtX CEO Kingsley Greenland said in Boston, adding they had tried it but results had been poor.

Sheridan acknowledged under 2 percent of loans on his auto platform sold but said a third attracted bids and he expects ‘as we unwrap this you will see a much higher close rate.’

Craig Focardi of TowerGroup, which does consumer loan research, said similar efforts failed years ago, but ‘technology has improved in the last decade such that the model stands a greater chance now.’

(Reporting by David Lawsky; Editing by Steve Orlofsky) Keywords: DEBTMARKET/

(E-mail david.lawsky [Email address: david.lawsky #AT# thomsonreuters.com - replace #AT# with @ ]; Phone +1 415 677 2505; Reuters Messaging david.lawsky.reuters.com [Email address: david.lawsky.reuters.com #AT# reuters.net - replace #AT# with @ ])

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