Wednesday, September 25, 2013

Mortgage Jobs and Rate Changes

http://globalhomefinance.com

I didn't make it to the gym today. That makes five years in a row.

Speaking of five years, WAMU's failure - the largest commercial bank failure in US history, took place on 9/25/08. For those of you who work for companies that have $5 or a $10 million in the bank, Washington Mutual had assets of $328 billion at the time it failed. And for all of you who like tying up your entire 401K in your company's stock, well, this was another lesson not to...

Yes, volumes are down, but hiring continues. New Penn Financial is actively seeking production opportunities. "New Penn, one of the largest and most well-capitalized independent mortgage bankers in the country, was founded in 2008 and is nationally licensed and originates agency & non-agency loan programs, providing opportunities for a wide spectrum of qualified borrowers. The company is looking to add to its distributed retail network through acquisition, merger or joint venture. If you are a high performing retail business, we should talk." For more information, visit NewPenn or email Brian Simon, COO at bsimon@newpennfinancial.com. All inquiries will be kept confidential.

In an effort to expand their growing retail branching network, Gold Star Mortgage Financial Group is seeking to fill positions for Regional Retail Account Executives capable of recruiting and developing retail branches in AL, CA, CO, CT, FL, IL, IN, MA, MD, MI, MN, NC, NJ, OH, OR, PA, TN, TX, VA, WA, WI. Based in Ann Arbor, MI and founded in 2000, Gold Star has become one of the fastest growing mortgage companies and top 50 lenders in the nation. As an Inc. 500 & Inc. 5000 company it has been recognized 4 consecutive years as a Michigan Top Work Place and more recently recognized by Mortgage Technology Magazine as one of the nation's Top Tech-Savvy Lenders. Gold Star is currently licensed to do business in 21 states. The position calls for very experienced, self-motivated individuals with deeply rooted relationships in the industry throughout the respective regions. To learn more, submit resumes and inquiries to Daniel Milstein at dmilstein@goldstarfinancial.com.

Here's a nifty periodical put out by our government, or more specifically HUD. "Lender Insight" is meant for any serious lender doing FHA or VA loans. "The goal is to offer insight to FHA lenders about what we see behind the scenes in lender approval, recertification, monitoring and compliance, and enforcement actions. Each issue will contain core information designed to help our lenders better understand the trends we are seeing. The newsletter will be distributed to readers via FHA's Single Family Housing Industry Email List. If you would like to receive the newsletter, but are not on the list, please visit http://bit.ly/FHARCPage to subscribe." Here is another link: LenderInsight.

Hey, are companies on the hook for fraud perpetuated by their employees? It sure seems that way - just ask TD Bank: SeriousDucats.

Years after residential loan originator compensation was supposedly set and regulated, it is still up in the air - especially with regard to how branch managers can be paid. I received this note from a respected attorney: "By making it illegal to incentivize salespeople based on profitability, we in mortgage industry have watched while our government legitimized the 'revolutionary' idea that the most fundamental law of supply and demand (the profit motive) is somehow a bad thing."

The question, apparently still somewhat up in the air, is whether or not branch managers can obtain profit compensation on the loans that the branch manager originates as an LO, or is there an exception if the manager originates less than 10 loans, and if so does the manager qualify for the 10 or less exception? There is a school of thought out there that believes the LO Comp rule expressly permits branch managers who originate 10 or less loans per year to be paid on profitability (just not on any of the 10 loans). For that matter, you can pay lots of people based on mortgage profits or overrides (including the C-Suite execs) because LO comp doesn't apply to any employee or manager that is not an LO (as defined by the rule). A branch manager, underwriter or secondary markets guy who only deals with other employees and doesn't interact with consumers can definitely be paid on profits, override or whatever, because they aren't subject to the rule. Producing managers, however, (with more than 10 loans per year) are definitely prohibited from getting paid on net profits, but an override would be permitted.

Other attorneys, however, believe that the definition of "origination" & "originator" has changed such that a non-producing branch manager is now an originator. Hence the 10 loan limit does not safeguard them from the rules. That being said, they are as much an originator as someone covered by the rules as a loan officer. And an originator cannot be paid on terms of multiple loans by multiple originators. That all being said, it is best to speak to your firm's attorney on their interpretation of the QM final rule amendments and what will happen in January.

Regarding the HUD information on maternity and paternity leaves, and the requirement for a paystub, the General Counsel of a well-known lender wrote and said, "I wanted to comment on the maternity leave issue you commented on in this morning's blog as there is another side to the story. I agree with you that ECOA and the FHA do not allow lenders to single out maternity or paternity leave. However, it is perfectly acceptable, and perfectly prudent as a lender, to require anyone on a temporary leave of absence from work due to disability or family leave to demonstrate their intent to return to work following the leave of absence. The key here is that this must apply to all instances of such leave and must not single out mothers on maternity leave. Employees must be properly trained to know the fair lending implications of the appropriate credit overlays and be able to effectively communicate them to a borrower. If you don't educate you can end up with complaints just due to the way your loan officers or underwriters are communicating these decisions to the borrower."

A check of the Fannie guidelines suggests that both yesterday's commentary and today's is correct. For example, west coast Pinnacle Financial's underwriting interpretation of Fannie's shows that for "Temporary Leave Income (can be included if the lender has the) Borrower's written confirmation of his or her intent to return to work, no evidence or information from the borrower's employer indicating that the borrower does not have the right to return to work after the leave period. And as long as they call it disability leave, then it would be acceptable for requiring a paystub showing they went back to work. Regardless of the date of return, the amount of the 'regular employment income' the borrower received prior to the temporary leave must be used to qualify."

On the MI side, a look at MGIC's information, on page 55 & 56, for example, also reflects this.

Let's continue playing catch-up on vendor, investor, and agency updates!

Pricing engine Optimal Blue released its "Real Time Compliance Management" product to its clients. Pretty snazzy.

Investment banker KBW announced that in the Northwest the holding company for Banner Bank the holding company for Home Federal Bank announced the signing of a definitive merger agreement pursuant to which Banner will acquire Home. The combined company will have approximately $5.2 billion in assets and will be the fourth largest Pacific Northwest headquartered bank as ranked by assets. It also will have a top 10 deposit market share position in Washington, Idaho and Oregon with an established platform for growth and continued operational improvement throughout the Pacific Northwest.

Per the recently published Mortgagee Letter 13-27, the FHA will be updating the Home Equity Conversion Mortgage program requirements to revise mortgage insurance premium and principal limit factors, restrict the amount of HECM funds allowed to be disbursed at closing and over the first 12 months following closing, require all HECM mortgagors to complete a Financial Assessment, and require that a portion of the loans proceeds is set aside or a portion of the line of credit withheld for the purposes of paying property taxes and insurance. Mortgagee Letter 13-28 follows up on this and provides additional details on the parameters for the required financial assessment that must be submitted before the FHA will approve all insured HECM transactions.

As part of the resources offered to assist lenders in their data delivery, Fannie Mae has published a defect categories list based off its post-purchase review of its acquired loans. The list can be viewed in full via the Loan Quality section of the Fannie website.

Fannie will be making several changes to the servicing reports issued via Message Manager, including modifying the Pool Deficiency report that is currently distributed. Cancelled Modifications, Highest Paydown, Loan Re-add, Loan Removal, Paid Off Pools, Pool Out-of-Tolerance, and Pool Pass-Through Rate Discrepancy reports, which are presently emailed by Fannie Mae Investor Reporting to applicable servicers, will also be added to Message Manager. The changes go into effect on October 4^th.

HomeBridge Mortgage is offering the FHA Back to Work Program.

Freddie Mac failed to refer nearly 58,000 foreclosed mortgages with about $4.6 billion in shortfalls to vendors who assess borrowers' ability to repay and are responsible to collect mortgage payments, thus foregoing a chance to recover dues from homeowners who had the ability to repay, according to an audit report from the Federal Housing Finance Agency's Office of Inspector General, or OIG, in Washington.

Ginnie Mae's MBS New Issuance Monthly Loan Level-Disclosure File for the month of August is now available on the Data Disclosure Download page.

Franklin American is no longer offering a 5/2/5 on its 5/1 Conventional ARM product; this has been replaced with a 2/2/5 structure and affects both Conforming and high balance loans. When selecting a plan in DU, underwriters should continue to use the Generic ARM Plan.

FAMC has improved its pricing on 20-year Government loans by 75bps, reducing the previous -1.00 hit to -.25.

PHH will be locking all new Conforming 5/1 ARM registrations with a 2/2/5 cap structure and officially retiring the old 2/2/6 structure beginning on October 4^th. Loans in the pipeline with the 2/2/6 caps must be sent for review and in "In Underwriting" status (Tier 6) by December 5^th, closed and in "In Post Closing" status by January 2, 2014, and purchased by January 15, 2014. Eligibility requirements will remain the same, as will the cap structures for Non-Conforming and Interest Only 5/1 ARM products.

PennyMac is now issuing invoices for trailing documents that are outstanding for more than 240 days from the date of purchase. The $100 per trailing document fee will be reversed if the documents are submitted within the 30 day grace period provided following receipt of the invoice, and as a reminder, sellers may be required to repurchase loans with any trailing docs outstanding more than 270 days from the purchase date.

Mountain West Financial has announced that it is now paying for all second appraisals required by program guidelines for all loan types on Conventional, FHA, and VA transactions. Orders should continue to be placed through WebTrac, in which originators should select the "Net 30" option under the payment dropdown tab and include second the appropriate notes in the sections for additional comments and instructions.

M&T Bank has changed the state tier adjustment for 30-year fixed Government loans on properties in Florida and Georgia from 0 to +.125, effective immediately. For financed mortgage insurance on Conventional loans, the previous -.25 hit has been reduced to 0.

Moving over into the markets, fixed-income securities had a nice rally Tuesday. Why? For one thing, New York Fed's William Dudley "Do-Right" said that the debt ceiling issue is creating a cloud of uncertainty and it could have a negative effect on the economy. "Mr. Dudley went on to say that the Fed won't rule out tapering this year, but is it driven by economic data, not by a timeframe" per MMG. The two-month old Case-Sheller numbers came out, showing that the 20-city Home Price Index for July rose by 12.4% compared to July of 2012 to the fastest annual pace since 2006. However, from June to July there was a 1.8% increase, the smallest monthly gain since March, as 15 of the 20 cities saw slower growth (although Phoenix has had 22 months of positive returns!). Obviously, the recent rise in rates has slowed down originations. But perhaps most importantly, Consumer Confidence for September came in at 79.7, the lowest reading since May.

But bond prices, and practically every other commodity, are determined by supply and demand. And with mortgage banker production down (with many companies by 50%), buying from the Fed, overseas, bond funds, and hedge funds was strong and steady. By the close Fannie, Freddie, and Ginnie securities were better by .375-.625 (whether that is fully priced in to rate sheets remains to be seen) and the 10-yr closed at 2.65%.

Here in Kansas, in the very early going, rates are basically unchanged from Tuesday's close, so we may see rate sheets catch up a little. We'll have the MBA's application index, the always volatile Durable Goods (expected up slightly), New Home Sales for August (expected up slightly), and a $35 billion 5-year Treasury note auction at noon CST.

Time has a way of moving quickly - just ask anyone with kids. But it is important knowing what time it is, as shown in this short clip: TheLifeOfAShephard.

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog is, "Reverse Mortgages: Companies Need to Know What is Changing". If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.

Rob

(Check out http://www.mortgagenewsdaily.com/channels/pipelinepress/default.aspx or www.TheBasisPoint.com/category/daily-basis. For archived commentaries or to subscribe, go to www.robchrisman.com. Copyright 2013 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Today's Rate Volatility: NEUTRAL

What happened yesterday?

Mortgage backed securities (MBS) gained +36 basis points from Monday's close which caused 30 year fixed rates to move slightly lower.

MBS improved primarily on market speculation that any Fed tapering will be far off due to the potential government shutdown.

Yesterday's economic data was slightly favorable for bonds and did help your pricing to some measure but most of the momentum was due to the shut down concerns and the economic stall that might ensue.

The Case-Shiller Home Price Index matched market projections at 12.4%. This had no impact on pricing.
The Consumer Confidence Index came in just a hair below expectations at 79.7 vs est 79.8, but August was revised upward. This was a slightly positive for pricing.
The Richmond Fed Manufacturing Index was dismal. Coming in at 0 vs estimates of 20. This was slightly positive for pricing.

We had a 2 year Treasury auction. Results: $33 billion at 0.348% with a bid-to-cover ratio of 3.09. This is showing weaker demand than the recent avg of 3.40. But this auction is too short term to impact longer-term rates.

What is on the agenda for today?

Don't miss out on the mortgage industry's premiere insight and commentary. Subscribe to RateAlert Executive today and get today's lock advice, complete market commentary and forecast for today, and watch the full Morning Coffee Update video with Bryan McNee - all available only to our Executive subscribers.

Tuesday, September 24, 2013

Implications of a conventional loan amount cut

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Today's Rate Volatility: NEUTRAL

What happened yesterday?

Mortgage backed securities (MBS) gained +28 basis points from Friday's close which caused 30 year fixed rates to move slightly lower.

There were no major economic reports or Treasury auctions for the bond market to react to.

We did have two "talking Feds" but neither said anything new nor did they surprise the markets.

The benchmark FNMA 4.0 October coupon traded in a very narrow range that was only about +28 BPS wide. But we did manage to break above our 100 day moving average mostly due to concern over a government shut down.

What is on the agenda for today?

Given the change in the MBA's logo, David Frase writes, "I love the new MBa logo! It emphasizes the loss of 'capital' experienced by our industry this season." Plenty of banks and mortgage banks don't want to lose the capital they accumulated in 2012 and the first half of 2013, and are cutting FTEs. The latest example is Citigroup, which will reportedly cut about 1,000 jobs in its mortgage business (760 in Las Vegas, 100 in Irving, TX, and a scattering elsewhere. The job cuts represent about 8 percent of Citigroup's workforce in its mortgage division, which has about 13,000 employees. When you add that to Wells' 4,800, Chase's 1,800, and BofA's 2,100 announced cuts, plus the thousands from other lenders, you're talking real numbers.

While some companies continue to shrink and lay off employees, Mortgage Solutions Financial continues to expand their market share. Based in Colorado, Mortgage Solutions Financial is a direct Fannie, Freddie, Ginnie, and FarmerMac seller/servicer, and boasts a remarkably broad product offering. MSF is hiring strong DE underwriters across the country, as well as experienced account executives for wholesale and mini-correspondent. It is also aggressively seeking strong inside sales teams and experienced TPO Area Sales Managers. On the retail side, branch opportunities are available in all 32 states in which MSF is licensed. Submit all inquiries to greg.grandchamp@msfhome.com and to learn more about the company visit MSF.

Bill C. writes, "Rob is it allowable for a branch manager to paid commission on loans produced and a % of the monthly profit?" Gee, one would think so - aren't most other industries in the world compensated based on that? But nope! Attorney Ari Karen answers, "No. Further, starting in January, no branch manager will be able to receive profit off the loans of the branch regardless of whether he/she originates."

In fact, many LOs are wondering just how much they will get paid once the new CFPB rules on points and fees in Qualified Mortgages take effect. Alternatively, many of my readers who are responsible for paying their loan officers, are wondering just what they can pay them to remain competitive and without attracting sanctions. Needless to say, nothing quite focuses the mind like a threat to income! Because of this, you may be interested in knowing that the Community Mortgage Lenders Association ("CMLA") and American Mortgage Law Group ("AMLG") will be hosting a complimentary webinar on this very topic and which is scheduled to be given this Thursday at 11:00 am PST / 2:00 pm EST. If interested in attending this complimentary webinar, you can contact attorney James Brody to learn more (jbrody@americanmlg.com) or simply register now by clicking on the following link: QM.

I am not an underwriter - it has become way too complex for me, and frankly I don't know how they keep up. But one question that seems to come up occasionally is regarding maternity leave, and this may fall more into the Fair Housing category. Are lenders violating statutes by requiring new mothers, out on Maternity Leave, to return to work before giving them their loan? After all, many lenders say they have overlays for needing a paystub showing that the mom or dad has returned to work. But there are plenty of compliance people who will tell you that underwriting overlays do NOT pertain to federal law, and Fair Housing is a law. But don't take my word for it - here is a link to HUD's Maternity Leave info. And it apparently does not matter if it's paid or unpaid maternity leave. There are plenty of cases out there where lenders were fined on this issue (for example, here is one a couple years old but still applicable), and the law applies to paternity leave as well. Don't mess with Moms!

What is a wine frig? It is a refrigeration storage unit that doesn't get that cold - kind of like the broken frig in your college dorm. I bet a lot of people didn't know that. And maybe, it seems, a lot of people don't know that they can refinance. But Fannie & Freddie's shepherd - the FHFA - is here to not only help but to use some of its advertising budget in doing so, and says that as many as 2 million borrowers with mortgages backed by Fannie Mae and Freddie Mac can refinance with HARP. "There's a perception among some that you've got to be delinquent in order to have some government-sponsored program that can help you," Edward J. DeMarco, acting director of the FHFA, said in an interview. "What we want to do is correct that misperception."

Any company based on refinancing (and that has found that purchase business is a lot harder to find than they thought) should be very interested. After all, the MBA tells us that refi biz is down 65% from May, and HARP applications, which account for 40 percent of all refinance activity, fell 54 percent in the same period. So depending on interest rates and home prices, the FHFA estimates that there are between 1 and 2 million borrowers eligible for HARP who are paying above-market interest rates and who have little or no equity in their homes. But many lenders never saddled up to the HARP trough, are quick to remind realtors and private bankers of that fact, so may be indifferent. To refinance through HARP, borrowers must be current on their loan payments and have Freddie Mac- or Fannie Mae-backed mortgages that were originated before June 1, 2009. Borrowers also can't have more than 20 percent equity in their homes. The program ends in December 2015. And no, there is no chatter about changing the 2009 date.

While we're on the agencies, I received this note. "Rob, over a month ago you wrote of the possibility of a reduction in maximum loan amounts by Fannie & Freddie, as dictated by the FHFA. We are hearing more about this, so it should not surprise anyone. But what will happen to FHA & VA loans?" That is a good question. Remember that those programs fall under HUD's jurisdiction, and I have not heard anything about HUD changing loan amounts. If F&F move their loan amounts down, let's say starting in January, the FHA super-conforming ceiling would be roughly $130,000 higher than the conventional ceiling. And just like the push or pull effect of conventional conforming gfee changes on volumes, a drop in loan limits would push more volume toward FHA products, and therefore create more Ginnie Mae jumbo-conforming pools (made up of high balance loans that might have gone conventional). Using that reasoning, this would be especially pronounced for loans with high LTVs, DTIs, and lower credit scores. Which begs the question, is this product that FHA wants, or that Ginnie wants in its pools? Banc of Manhattan, in a recent research piece, points out that, "One could expect that market spreads for super-conforming Ginnies will expand. This will worsen the pricing of FHA super-conforming loans, albeit not enough to diminish volumes (since many of these loans will have no affordable alternative). At the same time, a drop in conventional super-conforming production will tighten spreads on pools containing these products. We would not be surprised to see the concession for conventional super-conforming loans narrow to roughly ½ point by early 2014 from its current level of roughly 1 ¼ to 1 ½ points."

By the way, how much pull does NAR (not NRA!) have with Fannie & Freddie? We might find out sooner than later, since NAR has sent out a public letter suggesting that the FHFA does not have the ability to change loan limits or gfees. Battle of the Titans: NAR.

Let's play some catch up on recent lender & investor updates!

Virginia's Cardinal Financial announced that its third-quarter mortgage loan originations had declined by roughly 40% from the second quarter, and that "the marketing gain percentage for mortgages sold has decreased during the third quarter due to increasing competitive pressure related to the changing market conditions." Cardinal also said "Expense reduction and revenue enhancement measures have been and will continue to be implemented to offset the decrease in mortgage production and the decline in the marketing gain percentage," but that the bulk of the benefit of the cost declines wouldn't be realized until the fourth quarter.

Mountain West Financial has announced that closing agents no longer have to deliver ink-signed original loan documents, as it is transitioning to accept all documents in electronic format, with the exception being the original note. Ink-signed documents were accepted until September 15^th, after which point signed documents and funding conditions should be delivered electronically via the loan documents upload link. The original note should still be delivered to the Collateral Department at the Redlands, CA address.

MWF has switched its Freddie Mac and Conventional 5/1 ARM caps from a 5/2/5 structure to a 2/2/5 structure.

Affiliated Mortgage reminds lenders that, following the updated FHA MIP requirements effective for case numbers assigned on or after June 3^rd, the verbiage in the "FHA Mortgage Insurance Premium" section of the FHA Informed Consumer Choice Disclosure Notice issued to borrowers should align with that of HUD Form 92900-A ("Addendum to Uniform Residential Loan Application"). Worth noting as well is that the option to drop MIP once the LTV reaches 78% is no longer available for all applicable case files.

Per one report, US Bank is now accepting FHA Back to work program, wholesale and correspondent. Other top 10 lenders could very well announce their policies in the upcoming week as they allocate project resources on it. The requirements of the program make it such that there couldn't even be an application until 9/17, which is 30 days after the HUD announcement. The programs requires consumer training takes place no less than 30 days prior to mortgage application. Are you listening, LOs? Consumer training: HUD. #13-26, page 10 (out of the 15).

Bank of the Internet is now allowing manual underwriting for its Portfolio ARMs, available for transactions from $300,000 up to Jumbo products.

Western Bancorp, a wholesale and retail mortgage lender, today announced the launch of a new loan management system, LMS Xpress. LMS Xpress was released to the company's account executives and brokers, who now use the platform for wholesale loan origination. LMS Xpress was created to help mortgage originators improve productivity in today's highly regulated and rapidly changing mortgage market. The platform was designed for simplicity speed, and complete loan management from application to funding.

Freddie Mac will be updating the income documentation feedback message issued through LP to include loan-specific information customized to the exact income type in question and to eliminate the return of messages that do not apply to the subject loan's income types. The new messages will also include underwriting guidelines specific to the income type. These changes are scheduled to take effect on October 27^th.

Wells Fargo reminds sellers that the fees all loans represented and warranted to comply with Regulation Z of TILA must be properly disclosed to borrowers. Loans for which the APR and/or finance charge are under disclosed due to the omission of prepaid finance charges are at risk for being ineligible for purchase. For a list of fees that should be disclosed, refer to Newsflash C13-047.

Atlanta has a new metric for measuring the health of the Atlanta residential real estate market, thanks in part to Georgia's largest non-bank mortgage lender Southeast Mortgage. The "Cal-Culator report" will be distributed to media outlets prior to being published on Southeast Mortgage's Thought Leadership blog on SaportaReport.com, Atlanta's authoritative civic website. The monthly Cal-Culator number rating will be based on a variety of factors including mortgage rate trends, single-family housing starts, the inventory of Atlanta homes, consumer confidence and the Atlanta economy. Staff will be consulting numerous sources, such as the S&P Case-Shiller Home Price Indices, Atlanta's On Numbers Economic Index, the Conference Board Consumer Confidence Index and more. The Cal-Culator for August 2013 can be viewed here.

There seems to be enough going on without worrying about rates, and sure enough, there was not much happening in the markets Monday although bond prices did improve slightly. Traders continue to report that supply from mortgage bankers is slow - everyone is in the same boat, and everyone is squeezing their margins to go after business that just isn't there. (And by the way, it isn't only at the corporate level where margins are coming down - regions, branches, and LOs are all being asked to contribute.)

Today we have some minor economic news, which, given how quiet it has been, might just move the markets. At 6AM PDT we have the FHFA home price index (expected higher to 8.0 vs. 7.8 last) as well as S&P Case-Shiller HPI (12.4 vs. 12.1 prior). At 7AM PDT is September's Consumer Confidence (expected to drop), and later is a 2-yr note auction ($33 billion) at 1pm and a couple of speakers from the Federal Reserve. For numbers, the 10-yr closed Monday at 2.71% and in the early going we're down to 2.69% with agency MBS prices a shade better.

A man walks into a bank and asks for a $10,000 loan to install a bathroom in his house.

The banker says, "We at the bank are not familiar with you, where have you been doing your business?"

The man replies, "In the woods."

Monday, September 23, 2013

Mortgage Production

http://globalhomefinance.com

Today's Rate Volatility: NEUTRAL

What happened last week?

Mortgage backed securities (MBS) gained +130 basis points from last Friday's close which caused 30 year fixed rates to move to their lowest levels in the past 30 days.

Mortgage backed securities were trading in a very narrow range until Wednesday's Federal Reserve Open Market Committee Meeting (FOMC).

And they shocked bond traders by electing not to taper at that meeting. While, our own internal survey showed that only 20% of over 4,000 originators polled expected a taper announcement, over 80% of bond traders and hedging operators did expect a taper announcement.

So, the fact that they made no taper announcement was unexpected by traders and a shock to the system. As a result - MBS shot up just over +80 BPS just after the FOMC statement was released and then another +25BPS after Bernanke's press conference.

Keep in mind that the Fed does not have to wait until their next meeting in December to take action. The made it very clear that it is already part of their program - that they can change the size and nature of their asset purchase program ANY time that they want. This has traders focused in on any economic news that would give the Fed enough ammunition to adjust their monthly bond purchases this year. And this week we have some very big economic reports such as GDP, Durable Goods Orders and Consumer Confidence. All of which will be very closely watched by traders.

What is on the agenda for today?

What is on the agenda for this week?

Date	Time (ET)	Economic Release	Actual	Market Expects	Prior
24-Sep	9:00 AM	Case-Shiller 20-city Index	-	11.50%	12.10%
24-Sep	9:00 AM	FHFA Housing Price Index	-	NA	0.70%
24-Sep	10:00 AM	Consumer Confidence	-	80	81.5
25-Sep	7:00 AM	MBA Mortgage Index	-	NA	11.20%
25-Sep	8:30 AM	Durable Orders	-	0.40%	-7.40%
25-Sep	8:30 AM	Durable Goods -ex transportation	-	0.90%	-0.80%
25-Sep	10:00 AM	New Home Sales	-	416K	394K
25-Sep	10:30 AM	Crude Inventories	-	NA	-4.368M
26-Sep	8:30 AM	Initial Claims	-	325K	309K
26-Sep	8:30 AM	Continuing Claims	-	2775K	2787K
26-Sep	8:30 AM	GDP - Third Estimate	-	2.50%	2.50%
26-Sep	8:30 AM	GDP Deflator - Third Estimate	-	0.80%	0.80%
26-Sep	10:00 AM	Pending Home Sales	-	-2.30%	-1.30%
26-Sep	10:30 AM	Natural Gas Inventories	-	NA	46 bcf
27-Sep	8:30 AM	Personal Income	-	0.40%	0.10%
27-Sep	8:30 AM	Personal Spending	-	0.20%	0.10%
27-Sep	8:30 AM	PCE Prices - Core	-	0.10%	0.10%
27-Sep	9:55 AM	Michigan Sentiment - Final	-	77.3	76.8

We have a very robust week with a slew of big name economic releases such as Consumer Confidence, Durable Goods, GDP, Consumer Sentiment and more.

Mix in a bunch of speeches by various and sundry district Fed Presidents and a sprinkle of U.S. Treasury supply and you have a very interesting recipe.

Then, you bake it while the German elections and a potential U.S. Government shut loom and you could end up with an awful tasting cake.

It will be very interesting to see if MBS can test the stainless steel and Teflon 100 day moving average just above our current trading levels.

Phew! It turns out that the acronym for the Mortgage Bankers Association (of America) remains "MBA." MBa is just its logo. Here is an interesting note I received from the CFO of an MBA member. "Rob, my Capital Markets guy tells me that we shouldn't use Treasury securities to hedge our mortgage pipeline because of the basis risk. What are others in the industry doing?" Someone, somewhere, can make an argument that they can be used. But let's take a look at the market on July 5 and the market late last week. The yield on the 10-yr T-note was 2.74% then, and 2.74% last week. Fannie 3.5% 30-yr securities, however, were 99.00 then and 100.75 last week. Fannie 4% securities (usually containing 4.25-4.625 mortgages) were 102.125 then and 104.00 late last week. I am not a proponent of using T-notes to hedge a pipeline, but certainly one would have come out ahead here - but remember that whole loan mortgage prices from investors saw pretty much the same price change.

First National Bank, which knows a thing or two about hedging, is searching for mortgage loan originators (MLOs) in the Cleveland, Pittsburgh, and Baltimore areas as it continues to expand. First National Bank is an affiliate of F.N.B. Corporation, a diversified financial services company with over $12 billion in assets and services including banking, trust, consumer finance, and insurance. "F.N.B. Corporation is a dynamic, growing financial institution with competitive products, award winning service, and a commitment to the communities we serve." Community banking offices are located in several states including Pennsylvania, Maryland, Ohio, and West Virginia. The Mortgage Originator is responsible for the generating residential mortgages, which includes working with existing customers with residential mortgage needs and developing new business from external sources. This position will also need to provide the highest quality of customer service to both internal and external customers. "We offer a competitive commission structure, 401K, medical, dental, vision, stock purchase program, and much more!" Please visit FNB's career's website to complete an online application.

GFI Mortgage Bankers, with 30 years of experience in the residential mortgage industry, is looking for licensed MLO with a client base to join its growing team. GFI is actively looking in NY, NJ, and FL. to fill its existing branches. "Our highly trained mortgage professionals take a hands-on approach to every transaction, working directly with real estate brokers, developers, and attorneys for fast approvals, while conveniently providing in-house processing, underwriting and closing support. We offer a wide variety of loan products that benefit a multitude of borrowers, including Conforming, Non-Conforming Loans, Jumbo Loans, Co-op's, Condo's, Fixed Rate Loans, ARM's, Reverse Mortgages, FHA, VA, HELOCs, and we are direct lenders with an in-house Marketing team." Please send resumes to Jayne Connell, recruiter- relationship manager, at jconnell@gfimortgage.com for consideration; more information on the company can be found at GFIMortgage.

With all the bank layoffs, some mortgage loan originators are moving to mortgage banks to ply their trade. (And some LOs, those lacking common sense and intelligence, are contemplating writing a daily commentary on the mortgage biz.) Seriously, the ranks of LOs are thinning. For those of you who'd like to do a little research and see how much, visit SRRAnnualReport page 8, or go to NMLS.

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury releases a monthly report of the Obama Administration's Housing Scorecard - a comprehensive report on the nation's housing market. The latest data shows some progress across many key indicators-as home prices, purchases of new homes, and sales of existing homes continue to show annual gains-although officials "caution that the overall recovery remains fragile." The full Housing Scorecard is available online at HUDScorecard.

The Mortgage Bankers Association of the Carolinas sent this question out to its members: "Is it a RESPA violation for loan officers to give realtors gift cards as a thank you at the end of the year?" Bah humbug! MBAC states, "This may be construed as giving a thing of value to realtors that are in a position to refer settlement services to the loan officers. If the loan officers received any business from the realtors, it could be determined to be a RESPA violation because the loan officers would be giving a thing of value in connection with the referral of loan origination business, a settlement service. A 'thing of value' can take many forms on a transactional basis or cumulatively, including, 'monies, things, discounts, salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of partnership profits, franchise royalties, credits representing monies that may be paid at a future date, the opportunity to participate in a money-making program, retained or increased earnings, increased equity in a parent or subsidiary entity, special bank deposits or accounts, special or unusual banking terms, services of all types at special or free rates, sales or rentals at special prices or rates, lease or rental payments based in whole or in part on the amount of business referred, trips and payment of another person's expenses, or reduction in credit against an existing obligation.' -12 CFR 1024.12(b). Even a small amount on a gift card would still be considered a thing of value."

The above note is applicable regardless of state. But let's take a look at some somewhat recent state-level lending news - always good to see the trends out there as I head to Kansas.

Over in Texas, the Texas State Affordable Housing Corporation, a nonprofit corporation organized under the laws of the State of Texas is implementing a qualified mortgage credit certificate program within the program area to assist eligible purchasers. Black, Mann & Graham write, "The MCC Program allows first-time homebuyers an annual federal income tax credit equal to the lesser of $2,000, or the credit rate for the MCC multiplied by the amount of interest paid by the holder on a home mortgage loan during each year that they occupy the home as their principal residence." Eligible purchasers of a residence located within the programs area may apply to the TSAHC for an MCC through a participating lender at the time of purchasing an owner occupied residence and obtaining a mortgage from a participating lender.

The Missouri Department of Finance (MO-DOF) has notified NMLS of a change to its continuing education requirements. Effective January 1, 2014, individuals seeking licensure with MO-DOF will be required to complete one (1) hour of MO-DOF specific education. The new CE education requirements are as follows: 3 hours of Federal Law; 2 hours of Ethics (must include fraud, consumer protection, and fair lending issues); 2 hours lending standards for Non-Traditional mortgage products; 1 hour of MO-DOF Elective; Total = 8 hours.

North Carolina amended its anti-predatory lending laws to make them no more restrictive than federal lending regulations, having been concerned anti-predatory lending laws in North Carolina had become burdensome to instate lenders. The General Assembly revised its consideration of the points and fees, mortgage finance charges, assessed to a borrower as a condition precedent to consummating a home loan.

Illinois recently amended the Residential Mortgage License Act of 1987. These changes allow for the sponsorship of individual loan originators, however, the exempt person must still fulfill any NMLS reporting requirements, provide a blanket surety bond, supervise the activities of all sponsored mortgage loan originators, comply with all rules and orders to ensure SAFE Act compliance, and pay an annual registration fee. The amendments will become effective immediately upon becoming law.

Maryland recently amended provisions regarding continuing education requirements for renewal of a mortgage lending license. The purpose of the amendments were to clarify the regulation by making the definition of persons required to complete continuing education consistent with the licensure requirements found in the state's Financial Institutions Article. The amendments define "Covered Employees" that must meet the continuing education requirements. A covered employee is now defined as: "the person with the required experience under Financial Institutions Article, §11-506(b)(2), (3), and (4), Annotated Code of Maryland, and the manager of each branch office licensed, or required to be licensed, by the Commissioner."

California recently modified several provisions of the Financial Code relating to mortgage lenders in Assembly Bill No. 1091. The bill amends the Financial Code to (a) exempt business and industrial development corporations when making five or fewer commercial loans in a 12-month period (from one loan per 12 month period), (b) expands the definition of a Financial Code "crime" under the existing law, and (c) provides the Deputy Commissioner of Business Oversight with the authority to order any person engaged in the business as a broker or finance lender, or a mortgage loan originator, without a license, or any licensee violating any provision of the Financial Code, to desist and refrain from engaging in the business or further violate the Financial Code. As with many things in the state, the legislation becomes effective on January 1, 2014.

And turning to a bit of investor news...

Following the FHFA's announcement that it will be extending HARP to December 31, 2015, PHH is requiring all closed HARP loans to be delivered by May 31, 2016 and purchased on or before June 30, 2016 (for those who like to plan in advance).

PHH has clarified that, when LTV is referenced in its guidelines on recovery periods after derogatory credit events, the policy applies to CLTV and HCLTV as well, and the maximum LTV/CLTV/HCLTV allowed is the lesser of the LTV/CLTV/HCLTV listed within the product description. Guidance has also been added specifying the time periods for recovery after significant derogatory events, which should be followed if the borrower has experienced a pre-foreclosure, short sale, or multiple bankruptcy filings, which will not be detected by DU or LP. In cases where the credit report indicates a trade line as being included in a bankruptcy and the public records show a bankruptcy as being filed and discharged, DU will base its response from the discharge date in the public records. In such cases where the public records do not report a bankruptcy dated within seven years of the credit report date, the underwriter will need to confirm the actual filed and discharged dates.

PHH has revised its Power of Attorney guidelines for its VA product underwriting requirements, clarifying what Limited (Specific) Power of Attorney, General Power of Attorney, and all Powers of Attorney need to authorize. Guidance has also been added on the requirements for the Alive and Well certification.

There is a lot of chatter about Nationstar and its ability, or lack of, in funding loans. I have even received e-mails asking about the possibility of a repeat of Taylor Bean. It appears that this is overblown, although I don't mean to suggest I have any insider information. The latest on its financial position (the 8-K filed with the SEC) can be found on Nationstar's website which shows an additional $1 billion warehouse line with Barclays and record earnings. Sources within the company basically say, "Yes, we admit that we have had some delayed fundings based on growing pains as the company moved from $1 billion a quarter to $7 billion a quarter. But there is nothing wrong, and we are working on our internal systems to accommodate this."

Cole Taylor Mortgage has set up its disaster policy in Adams, Boulder, Larimer, and Weld Counties in Colorado per FEMA's declaration of disaster area status. All appraisals on properties in these counties that were completed before September 11, 2013 will need to be redone before a Final Approval can be issued or closing can occur. As a reminder, the appraisal must state that the property has not sustained flooding and/or windstorm damage, disclose the condition of the neighborhood conditions, and include a photo of the subject property, and the cost of the re-inspection may not be included on the updated GFE. Rate locks on loans in these four counties will be extended free of charge as needed.

The markets? There just isn't much on the schedule. There is zip today; tomorrow is Consumer Confidence, some Case-Shiller numbers, and the FHFA Housing Price Index. Wednesday is Durable Goods and New Home Sales. On Thursday, September 26th, GDP will provide an estimate update on the total production of the country, but we'll also have Jobless Claims and Pending Home Sales. We wrap up on Friday with Personal Income and Consumption/Outlays, PCE Prices, and a Michigan Sentiment number. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. Friday we closed the 10-yr T-note at 2.73%, this morning we find it at 2.74% with agency MBS prices almost unchanged.

You may have heard on the news about a southern California man put under 72-hour psychiatric observation when it was found he owned 100 guns and allegedly had (by rough estimate) 100,000 rounds of ammunition stored in his home. The house also featured a secret escape tunnel. By southern California standards someone owning 100,000 rounds would be called "mentally unstable." Just imagine if he lived elsewhere:

In Arizona he'd be called "an avid gun collector."

In Arkansas he'd be called "a novice gun collector."

In Utah he'd be called "moderately well prepared," but they'd probably reserve judgment until they made sure that he had a corresponding quantity of stored food.

In Texas and Montana he'd be called "The neighborhood 'Go-To' guy."

In Alabama he'd be called "a likely gubernatorial candidate."

In Louisiana he'd be called "an eligible bachelor."

In North Carolina, Mississippi and South Carolina he would be called "a deer hunting buddy."

And in Georgia he's just "Bubba" who's a little short on ammo.

Rob

(Check out http://www.mortgagenewsdaily.com/channels/pipelinepress/default.aspx or www.TheBasisPoint.com/category/daily-basis. For archived commentaries or to subscribe, go to www.robchrisman.com. Copyright 2013 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)