Tom Finnegan contacted me yesterday saying, "Rob, yesterday you published a list of reasons why loans are not currently being purchased. One of the statements noted that, 'The HUD-1 or Alternative Settlement Statement cannot replace the CD to the seller.' You published the acronym for 'Alternative Settlement Statement' which might be filtered out of some e-mails systems. Has anyone come up with a different abbreviation?" Not that I know of. And maybe e-mail filters will have to change.

Don't forget that nearly a year ago state regulators proposed new capital standards for non-bank mortgage servicers through the Conference of State Bank Supervisors (CSBS). The capital requirement would be applied at the corporate entity level, which is different from the proposed FHFA capital rules, which applicable at the seller servicer level.

In banking news the Forbes ranking of top banks was recently released. Congratulations to Citizens Business Bank, an occasional contributor and advertiser in this commentary, which made the top 100 - especially when given the roughly 5,400 commercial banks still on the roster. We've been seeing the big bank earnings - more on those tomorrow to check on mortgage trends!

SNL Financial reports the banking industry reduced total branches by 1,614 in 2015, ending with 92,997. Not only that, but bank holding companies are sliding due to M&A - fortunately few banks were closed in 2015 (especially when compared to prior years). Just in the last week or so we learned that in the Buckeye State the Ohio Valley Bank Co. ($793mm) will acquire The Milton Banking Co. ($135mm) for about $20mm in cash (20%) and stock (80%). In the home of the Vikings Bridgewater Bank ($836mm) will acquire First National Bank of the Lakes ($76mm) for an undisclosed sum. Out in California Beneficial State Bank ($420mm) will acquire Pan American Bank ($165mm). In the home of JR Ewing the First Commercial Bank ($157mm) will acquire Jourdanton State Bank ($170mm). Old National Bank ($11.9B, IN) will acquire AnchorBank, fsb ($2.2B, WI) for about $461mm in cash and stock.

Joe P writes, "Hey Rob, I've been working in mortgage since graduating college a few years ago. The recent Federal Reserve announcement that they would raise interest rates has me wondering if banks will become more profitable going forward. Also, how does the mortgage market react to such events (I don't know what to expect considering I was in grammar school the last time the Fed raised Fed Funds)?" Wait what? Grammar school? That can't be right.....last time the Fed bumped the Funds was '06....4 years for college, 4 years for high school, it's 2016, carry the one. Oh God, time does fly. Well, considering the majority of mortgage originators get their funding from warehouse banks, and warehouse banks lend money out at Fed Funds + a spread (say, Fed Funds + 25bps; or LIBOR) the cost of funding loans for originators has gone up. With respect to profitability, Bloomberg recently posted an article in which they argue it's too soon to believe bank profitability is assured of rising in the coming quarters. As someone who has seen their fair share of interest rate changes, the mortgage industry always soldiers on with respect to where the Federal Reserve wishes to see short term interest rates. At the end of the day mortgage originators are price-takers, competing in a highly dynamic environment, subject to governmental regulation eating into profitability, coupled with rising operating costs.

As operating costs continue to rise, U.S. Bank will increase its commitment fees for Purchase Funded loans that are registered and or locked on or after Monday, February 8.

Effective with loans locked on or after January 11th, NYCB Mortgage Banking has improved its Jumbo fixed 30 year High LTV price adjustments. This program is available at > 90% LTV, 760 credit score and no MI Requirements. The Jumbo Fixed 30 Year product is available for Purchases and Rate/Term refinances on primary residences up to $1.5 million with a 90% LTV, 760 credit score and no MI Requirements.

Citibank Correspondent is offering Community Reinvestment Act (CRA) Premiums on eligible Loans. The premiums offered will be effective with locks on/after January 4th. In addition, updated State Geographic Adjuster values are effective for Government Loans with new rate locks and Mandatory Commitments established on or after January 8.  Geographic Adjuster values for Conventional loans are not being updated.

Wells Fargo's correspondent clients were told that, "It is critically important to the mortgage industry as a whole to be aware of potential money laundering and other illegal activities that could be associated with the loans originated. Sellers are required to review for patterns of unusual payments and/or deposits that can be indicative of structuring to avoid compliance with laws and regulatory reporting requirements of the United States or foreign countries. Unusual patterns can include, but are not limited to, large cash deposits, large and numerous gifts, and any other unexplained activity not typical for the borrower.  In addition to patterns of unusual payments and/or deposits, this observation also applies to gift funds, regardless of when they were provided to the borrower. Any indication of possible structuring and unsourced assets will also result in an increased level of review from Wells Fargo Funding."

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) issued examination guidance in order to make the use of electronic examination tools clear. Regulators expect mortgage lenders to provide information that completely and accurately reflects the status of their loan portfolios. In recent examinations, the Multi-State Mortgage Committee (MMC) found that some companies could not provide comprehensive and accurate data in an acceptable format. Going forward, the MMC will consider companies that do not provide complete and accurate information as non-compliant.

Kroll Bond Rating Agency (KBRA) releases a report that focuses on the U.S. online consumer marketplace lending sector. (You'll need a sign on.) Online marketplace lending is a small but rapidly growing segment of the U.S. lending market.  Marketplace Lenders (MPLs) create an internet-based "marketplace" that offers a variety of loan products outside of the traditional bank lending system. Recently, MPLs have been funding a larger amount of originations outside of the traditional peer-to-peer structure and through more diverse funding sources, including via privately placed pass-through notes, whole loan sales to institutional investors on a competitive and flow basis, and private equity. The infusion of institutional investor capital has been a major reason for the growth of the marketplace lending sector, with new entrants and incumbent lenders now competing heavily for volume.

Turning our collective gaze to the capital markets, Goldman Sachs said it will cut up to 10% of its fixed income team, as new regulations kick in and profitability declines. This follows an earlier move by Morgan Stanley who is cutting 25% of its fixed income team.

For scheduled economic news we have the January NAHB Housing Market Index today. Wednesday is the MBA Mortgage Index for the week ending 1/16 (will we be seeing the refi boom continue?), December CPI and Core CPI, and the December Housing Starts and Building Permits duo.  Thursday holds Initial Jobless Claims for the week ending 1/16 and January's Philadelphia Fed figures. We wrap up Friday with December Existing Home Sales and December Leading Indicators.

Anyone figuring on rate sheets, well, we closed the 10-yr Friday at 2.03%. In the early going we're at 2.08% with agency MBS prices worse .125-.250.

Jobs and Announcements

Academy Mortgage-one of the top independent purchase lenders in the country as ranked in the 2014 CoreLogic Marketrac Report-is looking to hire a high-level Servicing Manager to oversee functions related to the company's multi-billion dollar servicing portfolio. Ideal candidates should have 8-10 years' experience in servicing, including 2-3 recent years of Fannie Mae, Freddie Mac, or Ginnie Mae loan servicing experience, and demonstrated strong leadership and process abilities. Experience managing a large team is a plus, as this individual will be responsible for the development of an employee-centric culture that emphasizes quality, continuous improvement, high levels of service, and employee retention and development. Academy is headquartered in Sandy, Utah, and has more than 200 branches and 2,300 employees across the country. Individuals interested in growing their servicing career with Academy should contact Rusty Hansen, Executive Vice President of Technology, Servicing, and Analytics.

In retail news, "Are you originating mortgages but too many are falling through? Assurance Financial, Baton Rouge, Louisiana, has a single-minded focus on helping its loan officers close loans on time, every time. It's now expanding throughout the Southeast and Southwest and looking to hire branch managers and MLOs in Colorado, Arizona, New Mexico, Louisiana, Texas, Mississippi, Alabama, Tennessee, Florida, Georgia, Arkansas, North Carolina and South Carolina." For more information, contact Paul Peters at 225-239-7948 or visit www.LendTheWay. com.

While we're on recruiting, "If you and your company are growing production through recruiting and don't have a shared platform internally to support, organize and unify the efforts in a collaborative way, it is time to learn about Model Match. Model Match is a progressive software platform built for the mortgage industry, laser-focused on helping with the process of recruiting of 'passive' recruits in production. The platform is designed to make it easier for mortgage companies, banks and other financial services organizations build, hire and retain production through recruiting. With a web and mobile platform, we leverage proven Best Practices, Processes and Methodologies developed over fifteen years by industry insiders and a team of business and technology professionals. Model Match WILL help you understand WHO the strongest fits are, and WHICH ONES will have greater performance and longer retention. Our solution makes Sourcing, Attracting, Hiring, Onboarding and Retaining production talent simple and eliminates all the guess work. Set up a time to meet with a live Product Expert to see exactly how Model Match can help with your recruiting efforts - click on the link or call 949-344-2780.

Servicing continues to make news. "Marking our 20th anniversary in 2016, Phoenix Capital is the Mortgage Servicing Rights (MSR) advisor of choice. With an unmatched depth of knowledge and experience, including over $130 billion of MSRs traded last year, Phoenix Capital continues to possess the highest closing ratio and market share in the industry by negotiating optimal price & terms execution and providing unparalleled support throughout the transaction for our clients - as further evidenced by Phoenix's selection to represent the majority of active MSR buyers who completed a strategic sale in 2015. Phoenix Capital is also the MSR valuation and analytics partner for more than 200 companies, ranging from independent mortgage banks to top five national banks to large private investment firms. Leverage this intimate knowledge by speaking with Phoenix Capital to discuss your MSR sales strategy or to be your comprehensive MSR analytic and valuation partner in 2016. Please contact your Phoenix Capital Representative or Rod Schluter (303-539-7237) and experience the 'Phoenix difference'."

Phoenix is certainly a well-known servicing broker, and in general deals are being shopped. Let's get caught up on some random servicing trades out there. Let's start out with IMA's $3.022 Billion FNMA/GNMA bulk servicing offering. The package is 17,898 files strong with a 4.069% WAC, $169k average loan size, 683 WaFICO, 97% owner occupied, 52% purchase, and 48% R/T. Bids on this package are due January 21st.  MountainView Servicing Group has two packages out for scrutiny; the first is a $1.66 Billion FNMA/FHLMC non-recourse servicing portfolio. Quality features of this portfolio include: 99 percent fixed rate and 100 percent 1st lien product, 759 WaFICO and 60 percent WaLTV, WAC of 3.61 percent (3.93 percent on the 30yr fixed rate product), low delinquencies, top states: California (87.7 percent), Texas (1.6 percent), Washington (1.3 percent), and Colorado (1.0 percent), and an average loan size of $320,416. Written bids are due today at 5pm eastern; the second is a $473 million FHLMC/FNMA/GNMA servicing portfolio. Quality features of this portfolio include: 99.1% fixed rate and 100% 1st lien product, WaFICO of 735, WaLTV of 78%, WAC of 4.17 percent (4.24 percent on the 30yr fixed rate product), low delinquencies, top states: California (25.3 percent), Arizona (22.8 percent), Washington (16.9 percent), and Texas (8.6 percent), with an average loan size of $240,595. Written bids are due on Thursday, January 21st at 5pm eastern.