Don't forget - Monday is a holiday! A U.S. federal holiday at that, Martin Luther King, Jr. Day marks his birthday (which is today, 1/15) but is observed on the third Monday of January each year. Ronald Reagan signed the holiday into law in 1983, and it was first observed in 1986, and officially observed by all states for the first time in 2000. So keep that in mind for fundings/closings, mailing a document, wiring, and setting rates when the bond market is closed.

Over in Louisiana, Assurance Financial is searching for a Servicing Manager. This person will be tasked with building a servicing department from the ground up and will need to have the servicing experience (servicing loans sold into the secondary market, investor reporting, cash management, payment processing and custodial accounts) to apply for all agency approvals. The ideal candidate should have at least five years of servicing experience with a managerial background. Assurance is an independent, non-depository retail-only mortgage firm with several locations, headquartered in Louisiana but doing business throughout the Southeast, with current production of 50% conventional, 25% FHA, 17% USDA, and 8% VA (and over 60% purchases!).  It has been open for 12 years, has no legacy issues, is well capitalized, does mandatory sales execution in the secondary markets, and is a member of the MBA. Please send your confidential resume to Kenny Hodges at Khodges@lendtheway .com.

And Colorado Corporation MegaStar Financial is hiring mortgage underwriters and Quality Control Specialists - and they can work from home. Megastar is a $1.2 billion established retail FNMA and HUD approved mortgage lender, with multi state locations ranging from California to Maine. "MegaStar has history of promoting within, we have President Club for Operations Support and we appreciate our operations professionals with a great compensation package.  We provide a paperless environment, training on new product, and our origination staff is knowledgeable and seasoned." Interested applicants should email HR@Megastarfinancial .com and/or visit its website at www.megastarfinancial .com.

There has been a surge in FHA lending in recent years, and as those lenders know, each year an FHA-approved mortgagee's principal, chief executive or in-house general counsel signs an attestation as part of the Federal Housing Administration's annual certification process that accompanies payment of the mortgagee's yearly verification fees. Some administrative assistant puts the attestation in front of the mortgagee's president or executive vice-president and sometimes without thinking, the executive casually attests that the company complies with all HUD-FHA regulations and no state or federal agency lifted its license during the past year. But is this one of those mindless signature events? No it is not.

The attestation is quite expansive and mortgagees have been finding themselves hauled before the HUD Mortgagee Review Board and its executives threatened with debarment proceedings for failing to read the fine print, and find themselves calling attorney firms like K&L Gates for help. It mentions, "The Online Annual Recertification Attestation states that the mortgagee 'complied with and agrees to comply with HUD regulations, handbooks, Mortgagee Letters, policies ... [etc.].' In order to be eligible to participate in FHA programs, neither a mortgagee, its principals, officers, managers and employees shall be subject to 'unresolved findings' as a result of a HUD or other government audit, investigation or review. Again, most lenders don't pay much attention to these words, and naturally presume that 'unresolved' means unresolved. For example, take a mortgagee that was fined by a state banking department because a few of its loan officers had failed to obtain their state approved licenses. The lender paid a few thousand dollar fine, and the matter was closed. Therefore, the matter is no longer unresolved, right? Wrong."

K&L Gates' note continues. "Toward the tail end of 2010, HUD issued Mortgagee Letter 2010-38 in which it defined the term 'unresolved findings.' The definition is hardly confined to a few words; rather it goes on for 22 lines and contains more commas and semi-colons than the national debt. The definition includes, as you would expect, unresolved lawsuits resulting from government investigations at the state and federal level as well as allegations of ongoing patterns and practices of violations or findings of discrimination. But the definition also includes open issues on any audit, investigation or review, and any imposition of fines, settlement agreements or other monetary sanctions by a state or local entity 'or any other action by a government agency.' So, if you failed to notify HUD that you paid a $2,000 fine to a state because two loan officers originated a few loans earlier in the year without first obtaining a state license, then your company's principal may have signed a false certification when he or she executed the FHA Online Annual Recertification Attestation. Moreover, while you may not consider a routine annual state audit that is presently ongoing to be an 'unresolved finding,' HUD, based on its overly broad definition of unresolved findings, would beg to differ."

K&L Gates suggests that we will find "a disproportionate number of actions were taken against lenders who signed a 'clean' annual certification, thinking there were no unresolved findings since that matter with the state banking department was resolved through a Consent Order and was even reported to the world on the National Mortgage Lenders System site; or, because the lender did not consider a routine state or federal audit an unresolved matter. The result, those mortgagees were subject to civil money penalties by HUD's Mortgagee Review Board and had their cases reported to the public in the Federal Register. To add insult to injury, HUD has issued notices of proposed debarment to the mortgagee's principals (usually, owners, presidents, EVPs and general counsels) who signed the inaccurate annual certifications."

What's a lender to do? "First, within 10 days of signing a Consent Order or other agreement with a state or federal agency (including HUD), report the matter in writing to the Director of HUD's Approval and Recertification Division. Second, if your company is the subject of ANY ongoing state or federal audit, investigation or review, DO NOT SIGN a certification that implies the company has no 'unresolved findings.' A lender should inform HUD that it is 'unable to certify' and explain why. Because so many lenders have recently had to state "unable to certify," HUD has formed a committee to review the information - and in nearly every case, the Department approves the mortgagee for participation. HUD may ask for a copy of the Consent Order or information on the status of the ongoing audit, but in the end, the company is approved. Failure to take these steps can result in civil money penalties, public notice of the company's transgressions in the Federal Register, and proposed debarment for the company's executives. Bottom line, take time to read that Online Annual Recertification Attestation before you put pen to paper."

While we're on legal issues, I received this note from Phil Stein with Bilzin Sumberg Baena Price & Axelrod LLP. "There was a very favorable development today in one of my buyback cases. The federal district court in Miami issued a final order that has great potential application to other buyback suits, whether already pending or merely threatened at this point.  The ruling is not something that other courts are required to follow, but it can potentially have significant influence on the thinking of other judges (and we will of course be doing everything we can to make sure that other judges are fully aware of it).  As one client has already noted, this is quite possibly a 'true game-changer.' In a case brought by Lehman Brothers Holdings against my client UAMC, Judge King of the Southern District of Florida today executed an order where the key elements are that 1. The facts pertinent to each of the eight loans about which Lehman was suing are so clearly different from one loan to another that they must be adjudicated as eight different suits (one of our arguments from the outset of this case had been that Lehman's claims, if not disposed of as a matter of law, would require eight separate mini-trials, but Judge King went even a step beyond that); 2. Judge King therefore has now dismissed all claims related to seven of the eight loans, granting Lehman leave to re-file them as seven separate suits, each focused on one loan only (a clear disincentive for Lehman to continue to pursue its claims).  Each re-filed case will be randomly assigned to one of the district court judges in Miami; 3. The order makes clear that this ruling stems from the fact that each loan requires separate and distinct proof as to liability, and separate and distinct proof of damage.  The best part about having that in this order is that the exact same thing is true of all other loan buyback demands; 4. Any new cases cannot be consolidated with one another; and 5. Judge King is retaining jurisdiction over just one of these eight loans."

Mr. Stein continues, "Imagine if Bank of America, or CitiMortgage, or any other big bank that is bringing or threatening buyback/indemnification claims were required by other judges to pursue each demand one loan at a time.  Many of the loans that are currently the subjects of their demands would fall by the wayside -- no one could justify pursuing a separate case as to a lower-dollar claim. There would be numerous other problems as well.   We have always felt that we had a number of very strong defenses to aggregators' claims.  We may now have a major 'procedural' weapon as well." (If you'd like to reach Phil, his e-mail is

A quick note: not a week goes by without someone asking me, "Who out there is buying 203K loans, or HomePath Renovation loans?" My goal is not to turn this daily commentary into the Scotsman Guide, but one group that makes a market in these products is Platinum Home Mortgage - contact Jim Bopp at

(On the retail and wholesale side, Carrington Mortgage Services announced its rollout plan to offer FHA Streamline 203K loans - contact Christine Stricker at for more information.)

Everyone, including the folks at Platinum, is all watching rates creep back down - and why would home loan rates creep higher with the Fed buying so much agency production? In fact, yesterday Federal Reserve Bank of San Francisco President John Williams said the Fed will probably need to keep buying assets "well into" the second half of the year to combat unemployment that will decline only gradually. "I anticipate that continued purchases of mortgage-backed securities and longer-term Treasury securities will be needed well into the second half of 2013." As every loan officer knows, the Federal Open Market Committee at its December meeting expanded its quantitative easing program to $85 billion per month, including Treasury securities.

Yesterday we had no news of substance, and rates crept lower - a lot of MBS demand and not a lot of supply from lenders. But today is a new day, and has a lot more news. We had the Producer Price Index (expected -.1% and +.2%, headline and core, but came in at -.2% on the headline number and up only 1.3% for 2012) and December's Retail Sales was +.5%, slightly stronger than expected. We also had the January NY Fed Empire index, coming in low. After this spate of news the 10-yr is down to 1.83% from Monday's 1.86% close, and agency MBS prices are also a shade better.

I have a switch in my apartment that doesn't do anything. Every once in a while I turn it on and off. One day I got a call from a guy in France who said, "Cut it out!"

I replaced the headlights on my car with strobe lights. Now it looks like I'm the only one moving.

I wrote a song, but I can't read music. Every time I hear a new song on the radio, I think "Hey, maybe I wrote that."

I went to a general store, but they wouldn't let me buy anything specific.

I turned my air conditioner the other way around, and it got cold out. The weatherman said, "I don't understand it. It was supposed to be 80 degrees out today." I said "Oops . . ."

I put contact lenses in my dog's eyes. They had little pictures of cats on them. Then I took one out and he ran around in circles.

I spilled Spot remover on my dog. Now he's gone.

My neighbor has a circular driveway. He can't get out.