Rumors are swirling that AIG has decided to pursue a partial spin-off of its mortgage insurance business, United Guaranty (UG). Stay tuned for tomorrow when AIG releases it strategic plan. Those "in the know" know that UG utilizes a "black box" model for pricing mortgage insurance policies, unlike many competitors who use published rate cards (see next paragraph). KBW reports that UG loss ratios "have been about 20% or slightly above over the last year, while the expense ratio has been about 25%. As of 3Q15, the equity allocated to AIG's mortgage insurance segment was $3.4 billion."

MGIC Investment Corp. had its earnings sliced and diced. In general MGIC's earnings beat forecasts due to lower incurred losses. The company announced it was revising its rate card but noted that returns should remain in the mid-teens: it should generate comparable returns across the spectrum of loans, so this would result in lower premiums on higher FICO loans and higher premiums on lower FICO loans. Net premiums earned of $226.2 million came in below some estimates, and NIW of $9.8 billion was down from $12.4 billion in 3Q and up from $9.5 billion in 4Q14. Insurance in Force (IIF) increased Q/Q to $174.5 billion from $172.7 billion. As of December 31, 2015, the company is compliant with the financial requirements of PMIERs.

It's hard to keep up with training and events but let's give it a shot.

The next free monthly conference call of the California Mortgage Bankers Association's Mortgage Quality and Compliance Committee is this Thursday the 28th. The topic this month is Upcoming Economic and Legal Challenges and Solutions for Lenders.

The Illinois Mortgage Bankers Association is sponsoring a TRID update seminar on January 27 in Oak Brook from 8:30 to 12:30.  The session is comprised of three panels:  correspondent investor panels on TRID requirements prior to funding; title insurance and software provider panel discussing updates and best practices; and a lender panel discussing TRID from a strategic and executive perspective.  Advance registration is required.

The Mortgage Collaborative will be holding its Winter Lender Member Conference from February 21-23 at the Ritz Carlton, Dove Mountain Resort in Tucson, AZ. The conference will have a central theme focused on the future of the mortgage industry and will feature appearances by top industry leaders, educational panels, and peer to peer networking sessions. For more information on the conference and membership, contact Rich Swerbinsky.

MBA's CREF/Multifamily Housing Convention & Expo 2016 (CREF16) is right around the corner. This convention is bringing together more than 70 of the most informed and inspirational speakers, including two influential sports figures from football and basketball; and more than 3,000 attendees representing 400 of the top companies in the industry. There is still time to register for MBA's CREF16, January 31-February 3 in Orlando.

Single-family rental loans are one of the largest untapped components of the US housing finance market and one of the fastest growing. Register now for MBA's Single-Family Rental Financial Workshop on April 7th in D.C.

Plaza has quite a February training line-up. All About MI: Radian Tools to Make Your Job Easier: Monday, February 8 at 10AM PST. Plaza's Condo Financing Options: Wednesday, February 10 at 11AM PST. How to Use the Reverse Mortgage to Purchase a Home: Tuesday, February 16 at 11AM PST. NEW! - Condos as Collateral: Reviewing Appraisal Form 1073: Wednesday, February 17 at 11AM PST. The New Reverse: Understanding the Changes, Benefits and Risks of the HECM Reverse Mortgage: Thursday, February 18 at 11AM PST.

The Department of Veterans Affairs (VA) 17th Annual Lenders Conference at the Hilton San Diego Bayfront hotel is scheduled from April 19-21, 2016. Join senior VA home loan program officials from Washington, DC and Regional Loan Centers to discuss topics related to loan limits, the eligibility process, and the Lenders Handbook.

My cat Myrtle was on the computer the other day, using Google (search words: salmon, kibble, Amazon prime). I mentioned that there are other search engines, perhaps ones that give more privacy to users. She didn't seem impressed - probably because, in cat years, she's a Millennial and for them privacy is nearly a foreign concept. She was, however, very interested when I told her that the CFPB, in an effort to publicize its online complaint system and bring in more complaints, is now soliciting complaints through internet advertising.

Barbara Mishkin with Ballard Spahr wrote that when browsing the internet one can find Google ads which appear to be placed by the CFPB. It prompted one industry vet to write to me saying, "This has to be a first: a regulator advertising for complaints. I guess that the CFPB's management is trying to pump up complaints ahead of the election to better justify their existence."

I explained to Myrtle that the CFPB has several groups, but the one that has garnered the most attention is its enforcement division for its heavy-handed tactics and seemingly endless authority. Once again Myrtle didn't react too much, but others are as the industry awaits the enforcement action. For example, October Research provided a copy of 2016 State of the Industry Special Report. Topics for discussion include: How closing agents are handling new lender expectations, What will the CFPB do about MSAs, Issues affecting title and settlement agents, Preparing for HMDA technologies changes, Continued adoption of new appraisal technologies. Download your free copy of the 2016 State of the Industry special report today!  

Speaking of eroding privacy rights and CFPB input, a couple weeks ago Elena Babinecz, a CFPB attorney, spoke as part of a panel relating to the revised HMDA rule at an American Bar Association-related event. She confirmed that the CFPB is engaged in a follow-up policymaking process to allow the public to provide input on privacy concerns relating to new data that those subject to HMDA's reporting requirements are required to collect, record and report. Remember that although the new HMDA process (and increased new data points) doesn't take affect for a couple years the industry is gearing up for it.

For example, "Covered Institutions" will be required to collect, record and report information about applicants and borrowers, including age, credit score, and debt-to-income ratios. For data collected in or after 2018, the new rule will require a Covered Institution to allow applicants to self-identify ethnicity or race using disaggregated ethnic and racial subcategories, which information will be reported accordingly. So the new rule will require Covered Institutions to collect and record sensitive information about individuals, which will be accompanied by additional data security burdens.

The CFPB has not provided details on how it intends to ensure that the sensitive information about consumers that will be reported to, and maintained by, the CFPB will be protected from unauthorized access or disclosure.  Finally, while the public will be able to obtain HMDA data using the new Internet-based tool being built by the CFPB, what portion of the reported data will be made publicly available is still under consideration by the CFPB.

And it looks like we have a date for the PHH - CFPB case: April 12th in the District of Columbia Circuit Court of Appeals. Remember that CFPB Director Richard Cordray decided to overrule an in-house judge's decision that slapped New Jersey-based lender PHH Corp. with a $6 million fine for taking illicit "kickbacks" from mortgage insurers that led to a rise in cost for borrowers. Mr. Cordray demanded PHH Corp. to pay 18 times more, or $109 million, for ill-gotten gains and continually violating the law with monthly payments from its reinsurance contract. Stay tuned...

There's a lot of chatter among capital markets folks, and those who watch the bottom lines, about a move toward swapping risk exposure for lower fees. A while back Bloomberg's Matt Scully reported that, "Mortgage bankers are offering to take on increased up-front default risk under a plan that would reduce the insurance fees they pay when their loans are bundled into Fannie Mae and Freddie Mac securities. The originators would purchase private mortgage insurance to limit their exposure to losses on the loans. Borrowers might also benefit from lower guarantee fees promised to participating mortgage providers..."

"'From our view, the upfront approach is preferred because Fannie and Freddie have so little capital and that amount of capital is declining over time,' Mike Fratantoni, chief economist of the mortgage-bankers group, said in an interview. 'The system may be better off if the risk is dispersed before it gets to the GSEs, particularly if they are aggregating risk and then distributing it later.' Mortgage bankers contend that transferring risk to private insurers would mitigate chances that the GSEs would need a bailout from the Treasury Department under dire circumstances. It also would avoid exposure to volatility in yield spreads, such as the market swings in the third quarter that contributed to losses on derivatives positions that Freddie Mac used to hedge its risk...Fannie and Freddie would essentially serve as "catastrophic" insurers."

The Wall Street Journal reports that sales of private mortgage-backed securities reached $61.6 billion in 2015, a five-year high, according to Inside Mortgage Finance data. However, most were repackaged old loans, rather than new mortgages being securitized.

Rates haven't budged much, or not as much as they could, for quite some time. Most U.S. long-term interest rates are lower than when the Fed raised short term rates. (This phenomenon where the difference between short-term and long-term rates decreases is referred to as a flattening yield curve.) This drop reflected weak inflation and the flight to the safety offered by U.S. fixed-income securities. Although they don't always move together, the recent market activity suggests investors and traders have been dumping stocks and buying bonds.

Rates were up a little Friday although the selling could have been worse given the surge in oil prices. Equities also gained ground, aided by both the oil rally and the prospect for more monetary easing from the European Central Bank at its March meeting. The better-than-expected growth of existing home sales in December, reported Friday, was largely discounted because of non-economic factors that may have contributed to a kink in the data series.

There sure is a lot of news coming out this week - not that anyone pays attention to news here in the U.S. anymore - especially housing news. We have zip today. Tomorrow is the November Case-Shiller 20-City Index with its two-month lag, the November FHFA Housing Price Index, January Consumer Confidence number, and a $26 billion 2-year Treasury auction. Wednesday is the MBA's app numbers, December New Home Sales, a $35 billion 5-year Treasury auction, and the Federal Open Market Committee rate decision (look for no change).

But wait - there's more! Thursday we'll see Initial Jobless Claims & Continuing Jobless Claims, December Durable Goods, December Pending Home Sales, and a $29 billion 7-year Treasury auction. Friday is the GDP numbers for the 4th quarter, the Employment Cost Index, January Chicago PMI, and January University of Michigan Sentiment figures. We closed the 10-year last week at 2.05% and this morning it is sitting around 2.03% and agency MBS prices are slightly better.

Jobs and Announcements

Looking to make a career change or break into the wholesale industry? Freedom Mortgage's continued growth presents a unique opportunity for non-industry professionals or those currently in operations seeking to transition to sales. Freedom Mortgage is offering an intensive mortgage training program and is looking to hire inside sales reps for their new Regional Account Executive position in their Phoenix, AZ fulfillment center. Send resumes or contact Karl Benjamin. Founded in 1990, Freedom Mortgage is a privately held, full service residential mortgage lender, licensed in all 50 states, Washington D.C., Puerto Rico and the Virgin Islands. We are one of the largest and fastest-growing privately held mortgage companies in the country. This is a great time to join Freedom."

Continuing on with the "looking toward the future" theme, Essent Guaranty, a leading mortgage insurance provider, is seeking an Account Manager in Northern California for the East Bay and surrounding areas. "This is a great opportunity for an individual with outside sales experience in the mortgage or mortgage insurance industry or an underwriter with great customer service skills and a strong desire to move into outside sales. As an Account Manager at Essent you will be responsible for helping to grow our business with our existing customers as well as expanding our customer base by introducing Essent to new lenders. If you have 5 to 7 years of related mortgage industry experience and the desire to join a highly motivated sales team, please send us your resume.  If you are looking to join a strong team and a great Company, respond via e-mail to"