Friday, April 29, 2016

Who's Afraid of HMDA?


(Gretchen T. sent this one with a note saying it is from her octogenarian uncle who may have heard this when he was in the military during WWII.)

A new prisoner just arrived at the prison. While he started to get acclimated, he noticed that out on the courtyard, one of the men shouted "53!" The whole group doubled over in laughter. Then, a little while later, another man shouted, "24!" Once again, the whole group laughed in hysterics.

That evening, the new prisoner asked his cell mate what was going on. The cell mate said, "Here. Take this joke book. Each joke is numbered. Since we're not allowed to gather and tell long jokes outside, we just memorize the jokes here and yell out the number."

"Oh, I get it now," said the new prisoner. So he decided to memorize one of the jokes in the joke book.

The next day on the courtyard, the new prisoner shouted out the number of the joke he memorized, "17!" But there wasn't even a peep from the crowd! No laughter at all.

He asked his cell mate who was standing next to him what the matter was.

The cell mate replied, "Some people just don't know how to tell a joke."


"They" say plenty of things about time flying as you grow older - Sunday is May already. ("Life is like a toilet paper role - the closer you get to the end the faster it goes" comes to mind.) HMDA changes are a couple years out - so why are companies worried about them now? Because time flies. In my discussions with compliance & QC folks around the nation, the HMDA concern revolves not around borrower issues - most of the data is already being collected by lenders - but around the statistical testing, increased regulatory concerns, the increase in potential extreme penalties, and the increase in FTEs required in auditing every file. See an explanation below.

National MI is hosting a "Millennials in the Workforce" webinar session led by Kristin Messerli of Cultural Outreach Solutions. Participants will learn how to navigate the workplace dynamics between Millennials and other generations in their organization, which recruitment tactics will prove most effective in sourcing talent, and how to develop a loyal workforce of Millennial employees. Click here to register for National MI's May 2nd, 1-hour, free webinar.

 If you're near Columbus Ohio this Monday or Tuesday, say hello. The Ohio Mortgage Bankers Association is holding its Annual Convention May 2-4.

 May 1-3 are the dates to mark for TMBA's 100th Annual Convention in San Antonio. This is the largest gathering of Texas real estate finance industry leaders and top performers. Click here for more information.

 May 9-11 is the Annual OMBA "Home" Conference in Catoosa at the Hard Rock Hotel. Don't forget about the Golf Tournament on the 11th! With a powerful line up of speakers, this year is sure to be a memorable one. Conference details and registration information is available here.

 If you're near Oklahoma City on Friday May 13th you may want to take advantage of some HUD 184 training featuring Deanna Lucero, HUD 184 Senior Loan Guarantee Specialist and

Michelle K. Tinnin, Native American Program Specialist. Registration 8:30 - 9:00 Seminar 9:00 - 11:30; $25 NAPMW Member and $50 Non Member. Online Credit Cards payments are accepted. Registrations can made here. For additional information email

 Silicon Valley CAMP's upcoming May events are available via YouTube video, presented by its President, Richard Wang. Registration and details for events are available on the CAMP website.

 Having trouble with BAML's warehouse monies? You're not alone. Apologies went out to lenders due to the "technical issues." "This was a bank-wide issue we were having with our wire system. The highest level of executives in our treasury team were involved to resolve this problem as quickly as possible. We did not re-issue these wires because we were unable to cancel them; once the wire gets initiated in our system, it will eventually get funded. The bank was not comfortable sending out duplicate wires for every loan that is stuck in queue as this problem was not limited to just the warehouse group and impacted multiple warehouse clients. If you do decided to use another warehouse line, please let us know so that we can coordinate getting the funds back from the closing agents as the wires were released this morning." What lender, at month end, wouldn't have used another lender in order not to negatively impact their borrowers?

 The residential lending biz was thrown a bone yesterday when the CFPB issued a letter in response to the industry, led by the MBA, seeking additional clarity on several aspects of the Know Before You Owe (KBYO) rule. The CFPB is not, at the moment, clarifying anything but instead is outlining an "expedited path" to issuing a formal Notice of Proposed Rulemaking (NPRM) to address many of the industry's outstanding questions and concerns, and incorporating many of the issues that have been addressed so far through informal oral guidance. The MBA notes that, "The CFPB has already begun drafting the rule based on the ongoing dialogue with MBA and other industry participants, and CFPB will be holding additional meetings with stakeholders prior to the targeted July NPRM."

 So the CFPB announced that it will propose changes to TRID in July to provide "greater certainty and clarity" to the mortgage industry. This does not mean that TRID is going away.  It means that they will make adjustments and provide more clarity. Though Cordray did not provide details of the changes, industry groups have asked for further guidance on a dozen significant issues, including how to cure errors, account for lender credits, and calculate cash-to-close transactions. the changes requested by the industry do not involve policy issues but rather resolving differing interpretations of the rule.

 The news prompted one broker to write me saying, "We are about 7 months into the implementation and suddenly the CFPB blinked. Why? But worse yet, why are they waiting until July to announce the proposal.  At best any changes wouldn't come until October 2016. And it the changes are real and we need software changes the time would be out to next spring. What changed? Is there a major lender or lenders in trouble because of TRID?  This isn't out of the goodness of their hearts. Are larger institutions being appeased while claiming they are asking small business for input.  Something is amiss. Congress needs to ask the GAO to do a start to finish cost assessment of the sinking of the Titanic, I mean TRID. Just consider the losses on rate locks, compliance, manpower, software and hardware and the national economic impact to the RE sector of GDP all from TRID."

 The CFPB also controls HMDA and its process. Sure we have until 2018 for collecting the expanded data required under the revised Home Mortgage Disclosure Act (HMDA). But lenders and their IT staffs are already at work on it - we have plenty of lead time, certainly more than with TRID. But experts think that the expanded version of HMDA may prove harder than TRID was/is. And with worse penalties. And not to look for any last-minute extensions that save lenders from non-compliance.

 The new version of HMDA doesn't simply add to the number of data points being collected (from 26 to 48). HELOCs will be subject to reporting. The new rule applies to any residential loan that's secured by a dwelling, and thus more loans will be covered by HMDA on the residential side, and it expands the scope for commercial loans. Commercial loans covered under the rule still have to satisfy the HMDA purpose test, which is for purchase, home improvement or refinancing, but this is still a major change in how HMDA affects commercial lending.

Lenders are well advised to understand HMDA's new requirements since data will have to be integrated from multiple sources. And lenders have learned not to rely 100% on vendors. Lenders need to know what their technology and business processes will need to do to enable accurate compliance.

 What could go wrong? Plenty: HMDA data is released publicly and it becomes fodder for fair lending cases and issues from the public, attorneys, and regulators. Even now companies are already conducting the statistical analysis that consumer advocacy groups would do on the HMDA data before lenders report it. Don't dally.

 The lack of volatility continues in the bond market although on Thursday the MBS market ended higher in price and mostly tighter on spread, despite a rallying treasury market, as heavy Fed demand was joined by real money interest. As usual, the Fed was in buying billions of dollars of various securities and coupons. At the close, the 10-year note was better by nearly .250 to yield 1.84% while current coupon agency MBS prices improved about .125.

 Today we've had more news. Anyone caring about employment costs noted the Employment Cost Index for March was +.6% (as expected). And Personal Income and Consumption/Spending, expected +.4% and +.1%, respectively, were indeed +.4% and +.1%. Coming up later are the Milwaukee and Chicago Purchasing Manager surveys as well as some University of Michigan Sentiment figures. After the initial bout of figures rates are higher with the 10-year at 1.87% and agency MBS prices worse .125.

Wednesday, April 27, 2016

Secondary Markets Impacted by Changes in HUD and Lender FHA Programs


The "Tiny Home" movement is interesting, but...84 square feet? That is enough to store my Hot Wheels, Match Box, and slot car collections. Am I thinking about this the wrong way?

We sure have had a lot of housing indices announced in the last several business days, often with apparently conflicting information. Lenders and real estate agents prefer not to see too much appreciation, given the negative impact that skyrocketing values have on first time home buyers and in outpacing wages. No one wants to see housing stock prices heading down either. Let's take a look at new home sales trends.

 So what the devil is a "new home?" "The Survey of Construction includes two parts: the Survey of Use of Permits (SUP), which estimates the amount of new construction in areas that require a building permit, and the Non-Permit Survey (NP), which estimates the amount of new construction in areas that do not require a building permit. Less than 2 percent of all new construction takes place in non-permit areas." The information is overseen by the Commerce Department but carried out by the Census Bureau and partially funded by HUD. How many have vinyl siding or were one story? You can see stats on this site.

 A while back I received this note from Tom LaMalfa correcting the all-too-widespread notion that first-timers only account for around one-third of home buyers. Tom noted that this is not true - that is NAR propaganda based on a weak survey methodology. For example, back in November, and based on hard data, FTHBs accounted for 56.7%.  All the details are contained in this link.

 This week we learned that U.S. new home sales came in weaker-than-expected. The decline came heavily in the West region which suggests that the overall housing market is still fine especially after last week's strong existing home sales reading. New home sales were slightly soft in March, following a bad miss on housing starts and building permits data reported last week. The median selling price fell to $288K, down 3.1% from February. Sales grew 18.5% in the Midwest while the West saw a decline of 23.6%. At the current sales pace, the inventory of unsold new homes stands at a 5.8 months' supply, which is closing in on the 6.0-months' supply that is typically associated with normal periods of buying and selling. (Last year at this time there was a 5.1 months' supply of unsold homes.)

 In terms of overall numbers, a while back HUD reported that seasonally adjusted annualized new home sales hit 490,000. While up, the last time new home sales were this low before the Great Recession was in 9/91. Moreover, new home sales hit their all-time low of 270,000 in 2/11. Since that staggering low, the compound annual growth rate has been a profoundly lackluster 13.3%. There's no reason to expect 2016 to show significantly improvement.

 And going back to last summer, New Home Sales were +5.7% in August at a seasonally adjusted annual rate of 552,000 - 5.7% above the revised July rate of 522,000 and is 21.6% above the August 2014 estimate of 454,000. The median sales price of new houses sold in August 2015 was $292,700; the average sales price was $353,400. The seasonally adjusted estimate of new houses for sale at the end of August was 16,000, a supply of 4.7 months at the current sales rate.

 In September New Home Sales were -11.5% versus the revised August rate of 529,000, but is 2.0% above the September 2014 estimate of 459,000.  The median sales price of new houses sold in September 2015 was $296,900; the average sales price was $364,100. The seasonally adjusted estimate of new houses for sale at the end of September was 225,000. This represents a supply of 5.8 months at the current sales rate. Sales of new single-family houses in October 2015 were at a seasonally adjusted annual rate of 495,000, 10.7% above the revised September rate of 447,000 and is 4.9% above the October 2014 estimate of 472,000.

 They were up again (4.3%) in November to an annual rate of 490,000. This is 4.3% above the revised October rate of 470,000 and is 9.1% above the November 2014 estimate of 449,000. The median sales price of new houses sold in November 2015 was $305,000; the average sales price was $374,900. The seasonally adjusted estimate of new houses for sale at the end of November was 232,000. This represents a supply of 5.7 months at the current sales rate.

 Plenty of borrowers rely on the FHA's slate of programs for financing. In recent years, given the FHA's capital issues and the continued penalties and settlements that lenders are experiencing, we can't ignore the question of the viability of the FHA program going forward. And the impact of FHA, HUD, and DOJ news on Ginnie Mae and its ability to do its job in the face of budget constraints.

 Certainly the government continues to be involved in the program. The Senate recently voted 66-31 to adopt an amendment that would include energy costs in the Federal Housing Administration's mortgage underwriting process. The amendment, offered by Georgia Republican Sen. Johnny Isakson, would reduce the amount of energy used in homes and help create energy efficiency retrofit and construction jobs. "The mortgage underwriting process, as we all know here, is about evaluating a borrower's ability to afford a mortgage, and history tells us that if we play around with it, it does not end well when we forget this," Sen. Richard Shelby (R-Ala.) said on the Senate floor in opposition of the amendment. "This amendment would weaken FHA's underwriting standards, leading to greater safety and perhaps soundness concerns for the FHA portfolio, which received a $1.7 billion bailout in 2013. It would require that appraisals be inflated to account for the value of energy efficiency upgrades as determined by HUD."

 FHA Connection has its new 203(k) Calculator that automates Maximum Mortgage Amount calculations required for both the Standard and Limited 203(k) programs. The 203(k) Calculator is accessible in both a public version on and a secure version within the FHAC system. As announced with FHA's March 14, 2016, SF Handbook update, mortgagees may begin using the 203(k) Calculator now but must use the calculator version within FHAC prior to endorsement for all 203(k) transactions with case numbers assigned on and after October 31, 2016. Mortgagees should thoroughly review the April 18, 2016, FHA Connection Release Notes for detailed information about using the calculator. 

 Previously, FHA required lenders to utilize 2% of the outstanding balance to establish the monthly student loan payment when the payment is zero or not available. Effective immediately for FHA transactions, PennyMac is aligning with FHA's update. In addition, effective immediately, for all VA transactions, PennyMac will be aligning with VA's policy clarification regarding unreimbursed business expenses (2106).  Analysis of unreimbursed business expenses will be dependent on the borrower's source of qualifying income. Click here to read announcement.

 FHA published Mortgagee Letter 2016-07Expanded Permissive Loss Mitigation for Home Equity Conversion Mortgages (HECMs) and Mortgagee's Optional Extension to Submitting a Due and Payable Request. The ML provides mortgagees with an optional extension when submitting a due and payable request where borrowers are behind on the payment of their property taxes and/or hazard insurance premium by less than $2,000.

IN addition, FHA published its quarterly Lender Insightnewsletter. Issue #11 includes information on: annual recertification's, voluntary withdrawals, quarterly loan review update, test cases and more.

 FHA also published Mortgagee Letter 2016-08, Student Loans, which provides revised guidance for mortgagees when calculating student loan obligations for use in a borrower's debt-to-income ratio calculation. FHA believes that its approach provides the appropriate balance between expanding access to credit and ensuring that the borrower is able to maintain successful, long-term homeownership.

 Pacific Union Financial, LLC has documented its policy and requirements for properties secured by FHA Site Condominiums. The FHA Site Condominium Policy is available via the Pacific Union Website and contains standard HUD requirements with zero overlays. Properties meeting the definition of a Site Condominium according to the criteria within this policy are not required to be included on the FHA Approved Condo List.  In addition, Site Condominiums as defined within the policy do not require prior approval with HUD prior to submitting to Pacific Union.

 For Standard 203(k) Rehabilitation Mortgages, the Department of Housing and Urban Development (HUD) requires the use of a HUD-approved 203(k) Consultant. Under the new HUD Handbook 4000.1, lenders are required to select FHA-approved 203(k) Consultant from the FHA 203(k) Consultant Roster in FHAC. The HUD Consultant must be selected from an approved list that has also been reviewed by Sun West prior to ordering any Consultant services or making any agreements with the Consultant or the borrower.

 M&T Bank is now offering Manufactured Housing financing through its Correspondent Lending channel. Some requirements include Title II properties only; no single-wide units or leased lots. FHA 203(b) only, with minimum 660 FICO. The unit must have been built after June 15, 1976 and must be affixed to a permanent foundation. Contact your Account Executive for all requirements including availability per state. In Mortgagee Letter 2016-08 FHA announced a change in how to calculate and document monthly Student Loans payments, regardless of payment status.  This change can be applied immediately, but is required for FHA Case Numbers ordered on or after 6-30-16 for M&T clients.

 Ditech reminded customers that FHA underwriting guidelines have been clarified or updated related to the following topics: Net Tangible Benefit, Housing Payment History for Streamline Refinances, Tax Abatements.

 Shifting to the bond markets, we did have some news Tuesday. Durable Goods Orders were up 0.8% in Mar, an increase of $1.8 billion, per the U.S. Census Bureau. This increase, up two of the last three months, followed a 3.1% February decrease. And the S&P/Case-Shiller US Home Price Index was +.4% in February.  Lastly the Consumer Confidence Index was "94.2" in April, down from 96.1 in March. "Consumers' assessment of current conditions improved, suggesting no slowing in economic growth. However, their expectations regarding the short-term have moderated, suggesting they do not foresee any pickup in momentum." The $34 billion 5-year note auction was met with average demand. The news was enough to nudge rates higher yesterday, and yields moved up to multi-month highs, in spite of some folks saying that the news was disappointing.

 This morning we've had the MBA's Mortgage Index showing that apps last week (-4%, purchases -2% and refis -5%). Coming up are the March Pending Home Sales figures - not typically a bond market mover - and then later in the day the April FOMC rate decision - don't look for any changes. Tuesday we closed the business day with the 10-year sitting at a yield of 1.93% and in the early going this morning it is at 1.90% with agency MBS prices better by about .125.

Tuesday, April 26, 2016

Changes In 4506-T Requirements And In Credit Trends


In 1986, Peter Davies was on holiday in Kenya after graduating from Louisiana State University.

On a hike through the bush, he came across a very young bull elephant standing with one leg raised in the air. The elephant seemed distressed, so Peter approached it very carefully.  He got down on one knee, inspected the elephants foot, and found a large piece of wood deeply embedded in it. As carefully and as gently as he could, Peter worked the wood out with his knife, after which the elephant gingerly put down its foot.

The elephant turned to face the man and with a rather curious look on its face, stared at him for several tense moments. Peter stood frozen, thinking of nothing else but being trampled. Eventually the elephant trumpeted loudly, turned and walked away. Peter never forgot that elephant or the events of that day.

Twenty years later, Peter was walking through the Chicago Zoo with his girlfriend. As they approached the elephant enclosure, one of the creatures turned and walked over to near where Peter and his girlfriend Misty were standing. The large bull elephant stared at Peter, lifted its front foot off the ground, then put it down. The elephant did that several times then trumpeted loudly, all the while staring at the man.

Remembering the encounter in 1986, Peter could not help wondering if this was the same elephant. Peter summoned up his courage, climbed over the railing and made his way into the enclosure. He walked right up to the elephant and stared back in wonder. The elephant trumpeted again, wrapped its trunk around one of Peter legs and slammed him against the railing, killing him instantly.

Probably wasn't the same elephant.


With news swirling of US Bank's mortgage reorganization last week, let's not forget the regulator that touches every residential lender: the CFPB. There is industry chatter that it is skipping TRID-related presentations at conferences, which hopefully is not true as we all are looking for firm guidance and rules on the topic seven months into it. And there is also the PHH/CFPB situation. But Director Richard Cordray, whose term is due up in 2018, is also watching other court cases in establishing exactly what the bureau can and can't do. For example, the CFPB was dealt a setback last week. "A federal judge struck a blow to the Consumer Financial Protection Bureau's recent foray into college accreditation, ruling that the bureau lacks the authority to investigate how accreditors approve for-profit colleges."

Ever had an agent say to you "I am already working with another loan officer"? Ever been used as the lender of last resort? The challenges of winning agents over and avoiding being relegated to the lender who gets the loans that others won't approve are one of the toughest challenges when trying to increase purchase volume. Successful agent relationships develop when you know exactly what to say and how to say it. National Mortgage Professional Magazine hosts a FREE webinar presented by Ron Vaimberg, President of Ron Vaimberg International and Executive Director of NMP University titled "How to Deliver the Ultimate Agent Presentation" this Thursday, April 28 at 2PM EDT/11AM PDT.

 The origination of construction loans can be complex to say the least. How does TRID factor in? BankWebinars is offering a 2-hour webinar, "TRID for Construction Loans". This webinar is designed to fill the void from the lack of regulatory guidance for construction loans. This webinar will explain coverage and exemption rules, provide section-by-section guidance on completing the Loan Estimate and the Closing Disclosure for common construction loan options, and answer the many questions you have regarding proper disclosure of construction loans. Click here to register for the Wednesday, April 27th webinar, the cost is $265. There is also the option to both register and receive CD recording for $395.00, click here.

 May 5th is the date to join Maryland Mortgage Bankers Association (MMBA) for its Annual Conference featuring fabled MBA Chief Economist Mike Fratantoni.

 Join Michigan Mortgage Lenders Association (MMLA) and MORBANPAC for its luncheon May 11th in East Lansing. Learn about legislative and regulatory issues. on the state and national level. You will also be helping MORBANPAC, the MMLA's Political Action Committee. Please take a moment to click on the video to watch this message from MMLA Immediate Past President and Legislative/MORBANPAC Chairman, Andy Baker. Strength in number helps the MMLA press forward on the many issues that are impacting our industry. Click here to register.

 Join Washington Association of Mortgage Professionals (WAMP) in Tacoma on Thursday, May 19th, 11-2PM, for the 2nd installment of its popular Coaching for Success series. Details and registration are available on this link.

 Taxes were due a little over a week ago, and plenty of lenders released 4506-T and other tax-related changes.


First Community Mortgage posted new 4506T form requirements.


Beginning March 25, 2016, all 4506T forms submitted to Freedom Mortgage Wholesale for processing by the IRS must be completed on the revised form dated 09-2015 and have the attestation box marked. If the wrong form is completed or the correct form without the attestation box marked it will be returned for correction and will delay the processing of the tax transcripts/W2s.

LHFS Wholesale issued a reminder regarding policy as it relates to 4506T transcripts and Extension requirements. For transactions after April 15th, 2016and an extension was filed, the following must be provided: Copy of the extension (IRS Form 4868), If money is due on the extension, include a copy of the cancelled check for the IRS tax payment. 4506T results must show "No Results Found" for 2015. If the borrower has filed their 2015 tax return and the tax transcript is unavailable, the following must be provided: A copy of their 2015 tax return. 4506T results must show "No Results Found" for 2015. Evidence the refund for 2015 has been received or a copy of the cancelled check for the IRS tax payment.


How about changes in how underwriters view credit?


According to the TransUnion Q4 2015 Industry Insights Report, as more consumers, and more nonprime consumers, are receiving auto loan and credit card access, delinquency levels for these credit products have only risen slightly and remain at relatively low levels. Both mortgages and personal loans experienced yearly drops in their delinquency levels, with mortgages dropping nearly 30% in the last year. This report states the mortgage delinquency rate declined from 3.29% in Q4 2014 to 2.37% in Q4 2015. While delinquencies dropped, mortgage debt per borrower increased from $187,139 in Q4 2014 to $189,707 in Q4 2015. The rapid decline in delinquency but increase in debt is a positive sign for the residential mortgage market, per TransUnion. TransUnion data show that at the conclusion of 2015 there were 1.26 million more subprime borrowers with credit card accounts showing a balance, and 1.21 million additional subprime consumers with auto loan accounts, compared to the end of 2014. The share of subprime accounts compared to other risk tiers also rose slightly in the last year. TransUnion's report includes auto loan, credit card as well as mortgage loan statistics.

 Zelman and Associates published its Mortgage Originator Survey indicating a continuation of a solid purchase market. Survey respondents reported a 19 percent YoY increase in purchase applications in February, compared to a 15 percent average in 2015. Applicant credit quality index reached 62.3 in February, slightly down from 62.5 the prior month. The drop in the index is largely due to a greater share in first time home-buyers and the recession-impacted consumers. Underwriting criteria also dropped to 61.8 in February from 62.4 a month earlier as lenders have reduced credit overlays, particularly on LTV and credit score restrictions. Entry-level mortgage credit availability rose to 66 from 65.7 last month and private mortgage insurance index decreased to 72.3 in February due to less availability of LPMI. Refinance applications increased 3 percent YoY compared to a 24 percent decline in January.  As TRID has been underway for five months, most of the industry has adjusted to the new guidelines, but post-closing loan sale challenges remain. For more information regarding the Mortgage Originator Survey, contact Ivy Zelman

 And lenders are reacting. For example, "To improve transparency and to help clients better understand how a borrower's credit is reviewed during the manual underwriting process, Sun West has updated its manual underwriting guidelines specifically for the review of a borrower's credit. The updated guidelines include additional information on how various risk factors associated with a borrower's credit are analyzed during a manual underwriting review."

 With all this going on in the industry, at least things are relatively quiet in the capital markets arena although it is still "up a little, down a little." Monday U.S. Treasuries, and agency MBS prices, declined slightly for no real reason. In fact, the only news, in theory, should have moved rates lower: new home sales were slightly soft in March, following a bad miss on housing starts and building permits data reported last week. The $26 billion 2-year Treasury auction was met with moderate demand.

 For news today we'll have Durable Goods - always volatile depending on things like aircraft orders, and also the S&P/Case Shiller series of numbers if you want to find out housing prices in February. And let's not forget Consumer Confidence. We closed the 10-year Monday at a yield of 1.90% and this morning, in the very early going, it has improved slightly to 1.89% - one would expect agency MBS prices to be slightly better but not enough to impact rate sheets for borrowers. That may change as the economic news comes out.

Monday, April 25, 2016

Where People In Their 20s And 30s Are Buying Homes


A pompous, pretentious and newly promoted Colonel in a foreign military is exploring his brand new office. While sitting at his desk, he contemplates his good fortune as he ponders what to do next.

Just then, through the glass door he becomes aware of a Private who is knocking.

The Colonel waves him in as he grabs his telephone and says, "Yes General. Thank you General. I appreciate your good wishes."

As he hangs up he glances with annoyance at the Private and says, "What do you want?"

The Private responds, "Nothing sir, I just came to connect your new phone."

"I call home improvement projects 'teaching my son to swear" jobs." One group of folks not swearing are people in the residential lending industry - at least those who can handle the nearly overwhelming and overlapping myriad of rules. For me April has included visits to Colorado, Kansas, North Carolina, Tennessee, Idaho, and Northern California. March and April were great months for many in terms of fundings, and the mood has been good, not great, as companies do their best to help their clients in spite of the palpable fear of making a mistake in a loan file.

In what is becoming more and more of a trend for lenders and financial institutions that don't want the regulatory burden of home lending, Embrace Home Loans, a direct lender for Fannie Mae & Freddie Mac and an issuer for Ginnie Mae, announced a partnership with Orlando, Fla.-based McCoy Federal Credit Union. As part of the partnership, McCoy FCU will now offer its more than 58,000 members home financing through Embrace's Affinity Mortgage Solution which offers residential mortgages. "As a private label, outsourced program, Affinity removes all regulatory oversight from McCoy FCU while managing the credit union's brand and cross-sell opportunities."

 And speaking of regulatory burden, the U.S. Department of Housing and Urban Development (HUD) announced a $1 million agreement between the Fair Housing Project of North Carolina Legal Aid and North Carolina-based Fidelity Bank to resolve allegations the mortgage lender engaged in unfair lending practices against minority applicants. Read the agreement.

 For anyone who has been out of the country for the last several decades, the Fair Housing Act makes it unlawful to make housing unavailable or to discriminate in the terms, conditions, or privileges of the sale of a dwelling because of race. "The Fair Housing Act also makes it unlawful for any person or entity whose business includes residential real estate-related transactions to discriminate in these transactions, or related terms or conditions, because of race. Banks and other lenders are prohibited from discriminating with respect to home mortgage loans."

 The press release read, "'Whether intentional or not, stark disparities exist in lending patterns and access to credit along racial and ethnic lines,' said HUD Assistant Secretary for Fair Housing and Equal Opportunity Gustavo Velasquez. 'HUD remains committed to not only enforcing the law, but also facilitating productive relationships between lenders and advocacy groups that help make lenders more aware of their obligations under the Fair Housing Act.'"

 Under the agreement, Fidelity will make investments and community development loans in predominantly minority census tracts where at least 40 percent of these loans will specifically promote affordable housing. For this purpose, the Bank has committed to earmarking at least $500,000 each year for two years, for a total of $1 million.

 The complaint was rooted on the belief that the bank denied or made housing and home mortgage loans unavailable because of race. HUD notes that last year 28 percent of all fair housing complaints filed with HUD and Fair Housing Assistance Program agencies (HUD partners,) cited race as the basis for the complaints.

 Switching gears somewhat, the folks who follow such things say that American consumers are actually out shopping for homes - especially their first affordable ones - they just don't have enough supply to meet demand. Lower-priced homes are being picked up quickly whereas more expensive ones are languishing on the market, making competition intense as spring home buying season approaches.

 On the refinance side of things Ben Graboski, SVP of Data & Analytics at Black Knight, wrote to me a while back saying, "It's a fact that homeowners aren't tapping their equity. And we have the data to prove it. There's $4.2 trillion in 'tappable' equity amongst US mortgage holders.

 "When Black Knight last looked at the refinanceable population just two months ago, there were 5.2 million potential candidates, and that number was on the decline," said Graboske. "That analysis was shortly after the Federal Reserve raised its target rate by 25 basis points, at which time the prevailing wisdom was that mortgage interest rates would rise in response. Global economic shocks then sent investors looking for the safety of U.S. Treasuries, driving down yields on benchmark 10-year bonds. Mortgage interest rates began to fall in defiance of prevailing wisdom, and the refinanceable population grew by 30 percent in the first six weeks of 2016.

 "As a result, an additional 1.5 million mortgage holders could now likely both qualify for and benefit from refinancing, bringing the total number of potential refinance candidates to 6.7 million. Given that refinance originations fell by 27 percent from Q1 to Q4 2015, and prepayment rates -- historically a good indicator of refinance activity -- hit their lowest level in two years in January -- this expansion of potential candidates could very well provide a welcome and unexpected lift to the market as we move forward in 2016."

 Black Knight released its latest Home Price Index report this morning, looking at February 2016 real estate transaction data. U.S. home prices showed stronger monthly gains than they have since last April, rising 0.7% from January, and were up 5.3% from last year. National home prices are now 27.5% above where they were at the bottom of the market at the start of 2012. Using Black Knight's figures, at $254K, the national level HPI is now just 5% off its June 2006 peak of $267K.

 To no one's surprise California, Colorado, and Washington showed particular strength, with multiple metros in each of these states among the month's best performing areas. Washington led all states with 1.8% appreciation from January, followed by Colorado at 1.7%; Oregon (1.3%), California (1.3%) and Hawaii (1.2%) rounded out the top 5. San Jose, CA led metro areas with 2.4% growth from January, followed by Seattle, WA at 2.1%. Not exactly laggards, San Francisco & Denver each saw 2% monthly appreciation, and the rest of the top 10 metros saw 1.4% or better. In fact, CA, CO & WA accounted for 9 of the top 10 performing metro areas.

 But it isn't all unicorns and rainbows. Black Knight's report showed that Connecticut, Rhode Island, and New Jersey were the only states to see negative price movement in February, and together accounted for 7 of the 10 worst performing metro areas.

 And there is certainly the argument to be made that younger, non-home owners are not participating in this improvement in home prices, and in fact are being negatively impacted by some markets growing increasingly unaffordable. Millennials are the largest group by population, outnumbering baby boomers. Does everyone like them? No - here's an interesting Google app, sent in by Ceci B., for those with a sense of humor.

 Did someone say "rent?" Market research firm Reis Inc. reports the national vacancy rate was 4.5% in the first 3 months of this year. Meanwhile, apartment research company Axiometrics Inc. reports average rents climbed 4.1% to $1,248 over the same period. Both data points indicate the multifamily lending sector is slowing down, so bankers should monitor this closely in coming months and quarters before issues develop in the lending book.

 Nearly 1 million homeowners regained equity in their home in 2015, while 4.3 million homes remain in negative equity, according to CoreLogic. Equity rose YoY by $682 billion in the last quarter of 2015 and 91.5 percent of all mortgaged properties had equity at the end of Q4 2015. The number of homes in negative equity did rise 2.9 percent from Q3 2015 but the value of negative equity declined 10.7 percent in 12 months. Looking at properties with a mortgage, which encompasses more than 50 million properties, 18.9 percent have less than 20 percent equity and 2.3 percent have less than 5 percent equity. The states with the largest share of homes in negative equity include Nevada, Florida, Illinois, Arizona and Rhode Island, while the states with the greatest percent of homes in positive equity are Alaska, Hawaii, Montana and Colorado.  The majority of homes with positive equity tend to be centralized at the higher end of the housing market. For example, 95 percent of homes that are valued greater than $200,000 have equity compared to 87 percent of homes that are valued less than $200,000.

 Alitsource's RentRange released the top 25 cities with the largest rental rate increases. Not surprising, nine out of the twenty-five metro areas are on the West Coast.  The rise in rental prices boasts well for real estate investors, particularly those in the South as rent prices are on the rise along with gross yield, which demonstrates income return from an investment. Whereas some of the West Coast markets experience low gross yield, as they are consistently among the lowest on the list. Some of the top cities with the greatest rental rate increase include, Cape Coral-Fort Myers, FL, New Orleans, LA, Daytona Beach, FL, San Jose-Sunnyvale-Santa Clara, CA, Little, AR and Knoxville, TN. Other notable cities on the list include Charleston, SC, Portland, OR, Denver, CO, Dallas, TX and San Diego, CA

 CoreLogic determined the top and bottom counties where Millennials are most likely to purchase a home and found that the most popular metros are those with strong and growing economies, with opportunities for income growth. According to the analysis, there is an expected shift from Millennials purchasing homes in less expensive areas that border the improving counties to more expensive housing markets in the heart of the improving counties. The top ten counties include Douglas, CO, Fairfax, VA, Boulder, CO, Forsyth, GA, Placer, VA and Hamilton, IN. The bottom counties include Lackawanna, PA, Clayton, GA, Bronx, NY, York, ME, Miami, FL and Cameron, TX. 

 Bond markets?

 We've had a dearth of scheduled economic releases during the past few weeks, but that is about to change. We have a ton (a technical term) of it this week, ranging from housing to manufacturing. We start today with New Home Sales at 10AM. Tomorrow is Durable Goods - always volatile depending on things like aircraft orders, and also the S&P/Case Shiller series of numbers if you want to find out housing prices in February as well as Consumer Confidence. Wednesday are the MBA's application numbers for last week, but also Pending Home Sales and the FOMC rate decision - don't look for any changes to overnight Fed Funds.

 The day after "hump day" we'll have Initial Jobless Claims and GDP for the 1st quarter. We wrap up the week with the Employment Cost Index (a favorite of the Fed to follow), Personal Income and Consumption, some Personal Consumption Expenditure figures, the Chicago Purchasing Manager's survey, and the University of Michigan Consumer Sentiment figures. And for anyone trying to guess where rate sheets are going to be today we closed the 10-year at a yield of 1.89% and this morning its sitting at 1.88% with agency MBS prices better a tad.