The residential lending industry and the companies inside of it are always in a state of flux. I am repeatedly hearing, "We're keeping a close eye on personnel costs - if apps stay down here, we'll be evaluating our staffing." We all know what that means - and I don't see applications zooming higher in the near future. Who will make it through to Memorial Day unscathed? Yahoo recently wrote about it. The title of the article is a little misleading as not all the banks featured are cutting, and there are reminders that the originators that hustle/leave their desk will have more success than those that don't.

"I want my children to have all the things I couldn't afford. Then I want to move in with them." I would venture a guess that the majority of our comrades in lending or real estate have children of varying ages. I recently saw a cartoon of a high school boy talking to his counselor, saying, "I'd like one of those careers where you make a six-figure income while wearing a T-shirt and sweatpants." How are these youngsters coming along? Sallie Mae tells us that the average American family borrows 27% of the total cost of their child's college education, either through student loans or loans taken out by Mom and Dad. Experian research finds that when comparing the generations, it finds Gen Y (Millennials, 19-29 years old) has an average credit score of 628 vs. 653 for Gen X (30-46 years old), 700 for Baby Boomers (47-65 years old) and 735 for the Greatest Generation (66 years and older). 

Banks and lenders have been known to write off Gen Y for a host of reasons, including that they typically have less money to invest and need fewer products and services. Simply put, Gen Y isn't as profitable now as other customer segments, but that will change. Baby Boomers are a good source of business for retirement planning and revenue for banks and other lenders, but we should not find ourselves generationally "locked down" and forget about Gen Y and Gen X. There are 90 million Gen Y (Millennials) folks around, and lenders are salivating. For banks looking to provide retirement advice, a new survey from TIAA-CREF finds 43% of respondents between the ages of 18 and 34 don't feel informed about retirement planning. By contrast, only 15% of those polled between the ages of 35 and 44 feel that way. It is true that those in Gen Y still have many years before retirement, but it's all about tailoring your message to fit the audience. So while many 20-somethings may turn a deaf ear when it comes to retirement issues, you'll have a more willing audience if you discuss savings and budgeting. And LOs find themselves taking the role of counselor rather than mortgage order taker.

Studies find people in their 20s today aren't as likely be entrepreneurs as are their Baby Boomer counterparts, but the percentage who run their own businesses typically goes up with age so get involved early. Banks and lenders are trying to create strong relationships over time: you want to be on the short list of companies today's 20-somethings turn to down the road for business loans, small business services, and home loans. To attract Millennials LOs agree that mobile access is a given, especially for banking. Banks and lenders also must have online tools and resources youngsters can use to help them figure out their finances. Understand that Gen Y has grown up in the Internet world, so they are very comfortable online and find enjoyment communicating digitally. This is an on-demand and do it yourself (DIY) generation, so technology is important. The key for community bankers, however, is also to understand that technology alone isn't enough. There is no substitute for one-on-one attention, so don't forget your roots because your bank is already well positioned at its core - just add more tools.

And to wrap up, here is one interesting article about the overall mood of the Millennials.

Contrary to what you may read in the comments section on YouTube, they DO NOT sell REO homes at the Detroit airport gift shop. I checked. What may be good news for areas such as Detroit, and for the macro economy in general, is contained in the latest Housing Scorecard which is published by the Departments of Treasury and HUD. According to the December release there are nearly 6 million fewer mortgages underwater nationally; attributable mainly to rising appreciation levels, giving homeowners some equity which vanished in years prior. Jann Swanson of Mortgage News Daily writes, "Rising home prices are continuing to drive down the number of homeowners who are underwater according to the December Housing Scorecard. HUD Associate Deputy Assistant Secretary for Economic Affairs Edward J. Szymanoski said, "Since the beginning of 2012, the number of homeowners underwater has declined by 5.7 million and homeowners' equity has risen by 55 percent to $9.7 trillion." The Scorecard notes many encouraging items, however as noted in the MND article, the overall recovery remains fragile, maybe even unsustainable to some.

(Read More: Housing Scorecard: Nearly 6 Million Fewer Underwater as Prices Hit 2005 Levels)

After Maverick and Goose get yelled at for buzzing the tower, Goose turns to Maverick and asks, "You still got that number for that truck driving school, 1-800-TRUCKERS I think? I might need that." While a lot of mortgage people have felt the same way over the last six or seven years, and banks have certainly expanded and contracted their payrolls a number of times since 2008, there are still fair and balanced mortgage banks to work for.....or at least that's what Fortune Magazine believes as they list Quicken Loans #5 on their "100 Best Places to Work For" list.  What makes it so great? According to Fortune: 2,600 jobs created, on-site child care, onsite fitness center, compressed work weeks, and a telecommuting friendly environment. Who's #1 on the list? I don't know, you may have to Google that, but coming in at #100 on the list is the corporate law firm Cooley LLP, who apparently has no fully-paid sabbaticals, no onsite child care, no 100% health coverage, and no onsite fitness center. I'm sure the break room is fully stocked with creamer, though.

Speaking of Detroit, Michigan has updated their Security Freeze Act. As many know, a security freeze blocks access to your credit report by third parties without your express authorization. Under Michigan's law, a consumer reporting agency must place a freeze on a consumer's credit report within five days if the following conditions are met: the consumer reporting agency receives a request from the consumer, whereby the consumer has provided adequate proof of identification, along with the requisite fees. Within five days after placing the freeze, the consumer reporting agency is obligated to: send a written confirmation of the security freeze to the consumer, provide the consumer with a unique personal identification number or password to be used by the consumer when authorizing the release of the consumer's credit report to a specific person or for a specific period of time, and, provide the consumer with a written statement of the procedures for requesting the consumer reporting agency to remove or temporarily lift a security freeze. For more information on Michigan's consumer protection laws check out its FAQ.

Massachusetts is now requiring state-licensed brokers and lenders to demonstrate and document compliance with state law 209 CMR 53.00: Determination and Documentation of Borrower's Interest.  This consists of executing a worksheet or other document that is prepared and dated by the lender stating how the benefit to the borrower was determined.

Washington recently amended its Mortgage Originator and Escrow Agent Rules. The Mortgage Broker Practices Act and Consumer Loan Act have been updated and amended to reflect uniformity between the two regulations. Bankers Advisory writes, "the pre-licensing education requirements sections of each act have been amended to reflect a required twenty-two hours of pre-licensing education from an NMLS approved provider. The amendments further require that at least four hours of the required twenty-two hours be specifically related to Washington Law." The Escrow Agent Act has also been amended to include many technical changes and additional clarifications for the existing regulation. Both rule changes took effect January 1st, and all the information pertaining to these amendments can be found here.

The Community Home Lenders Association (CHLA) recently marked its one year anniversary. CHLA is composed of small and mid-sized non-bank community based lenders with a strong knowledge and understanding of their local community and the borrowers they serve. Happy Birthday! CHLA's main focus has been to fight for federal policies that treat community lenders fairly and equitably in areas such as FHA, the GSEs and regulatory requirements. For example, CHLA has been an active player in the GSE reform process, working to preserve a competitive cash window and lenders' ability to continue to securitize loans. CHLA has also been active in efforts to establish high standards for all mortgage loans originators, thus leveling the playing field between banks and non-banks. CHLA holds two DC - based conferences annually. Last year they attracted key federal officials such as FHA Commissioner Carol Galante and GNMA President Ted Tozer and pursued a vigorous Capitol Hill advocacy program.  CHLA Executive Director Scott Olson announced that the next DC Conference is March 3-4.

Many in the mortgage business think we are at a war of survival.  My colleague Garth Graham has a different take on this, as he recommends preparing more for battle before you start fighting to maintain your market share.   He even invokes Sun Tzu, the ancient battlefield philosopher, and advocates torture (of the numbers) until they confess.

With no news, and a storm hitting, the MBS and fixed income markets didn't do a whole heckuva lot Tuesday, except discuss how the refereeing during the 49er/Seahawks game was poor. Looking at our pal the 10-yr, its yield Friday was 2.83%, began Tuesday at 2.86%, and ended the day at 2.83% - just not much to say! In the very early going we're at 2.85%, and agency MBS prices are off a tick or two - but the issue today may be more "liquidity" - which traders came into work today during the storm?


In honor of the recent death of the last male cast member of Gilligan's Island - the Professor:


An engineer, a chemist, and an economist are marooned on a desert island after "a 3 hour cruise". They start to brainstorm a way off the island.


The engineer says, "We can lash together some branches and make a crude raft and try to make our way back to land somehow."


The chemist says, "With the right materials we could build a really smoky fire and try to signal a plane."


The economist says, "Okay let's assume we have a boat..."