Where does the penalty money that the CFPB collects go? And is it correctly disbursed? The Office of the Inspector General (OIG) has some thoughts on whether or not the flow of funds is being handled correctly.

In other news, things are movin' and shakin' in the MI business.  United Guaranty's spinoff from American International Group will result in changes to its capital structure that could shake up the competitive landscape in the private mortgage insurance market.

National MI saw Moody's report that it, "NMIC's Ba2 financial strength rating reflects the view that the company has yet to attain scale and will require growth and additional capital to reach that point. While Moody's believes that additional funding and growth can be attained, it sees significant uncertainties related to both, in part due to NMIC's late entry into a crowded mortgage insurance market."

The Arch MI earnings call is next week. The MI biz reports up through to the mortgage segment which has been profitable since it first got acquired (mostly underwriting profit) but its contribution to that segment is expected to be positive last quarter. The Private Mortgage Insurer Eligibility Requirements (PMIERs) are now in effect for loans insured with lender-paid mortgage insurance (LPMI) and originated on or after January 1st, 2016. Arch MI is filing updated LPMI rates that meet the new PMIERs requirements with state insurance agencies. Pending state approvals, its new LPMI rates will go into effect nationwide on March 1st, 2016. A subsequent reminder will be sent to you on the effective date, providing specific details and requesting that you update your systems and notify your staff.

WestStar Mortgage, effective immediately, has approved Radian, Arch and MGIC using Delegated Authority. This process will eliminate the need for any prior approval from the above MI partners. With the submission directly through Encompass, which provides instant feedback, loan decisions for Mortgage Insurance will be less cumbersome and allow for a quicker loan decision.

USBHM has changed two LPMI products, effective for new locks taken on or after 1/12: USBHM 10/1 Jumbo ARM 85.01% - 90% LTV and USBHM Non-Conforming Fixed 85.01% - 90% LTV.

And the flood and disaster bulletins, unfortunately, continue to come out.

Wells Fargo is aligning its flood policy with that of agency requirements for loans purchased on or after January 25th. In response to the severe storms, tornadoes, winds, and flooding in Texas, Wells Fargo Funding will require Sellers to follow its standard Disaster Policy for all impacted properties, effective immediately.

First Community Mortgage has posted an update to FEMA declared disaster counties.

Flagstar Bank is now offering the Fannie Mae HomeReady Program. The program incorporates a general income limit of 80% of area median income (AMI) and provides for properties located in low-income census tracts with no borrower income limits and up to 100% of AMI for properties located in high minority census tracts or designated disaster areas. Log into its website for program details.

On January 6, 2016, the Governor of California proclaimed a State of Emergency for the Porter Ranch area of Los Angeles County due to ongoing issues with the Aliso Canyon gas leak. Effective immediately and until further notice, NewLeaf Wholesale temporarily suspends lending on properties located in the 91326 zip code. NewLeaf will not proceed with new originations in the 91326 zip code until the Aliso Canyon gas leak is resolved and the Governor's Disaster Declaration is lifted. Properties in the adjacent zip codes (91311 and 91344) may be impacted as well.

Fifth Third Mortgage Correspondent will no longer assess and deduct from the amount wired a Flood Certification or Tax Service fee. This effort to simplify its fee structure will become effective with loans purchased on or after Monday, February 1st. With this change the Delegated Funding Fee will increase to $399. There is no change to the Non-Delegated Funding Fee; it remains $499.

Effective with loans closing on or after January 1, Weststar Mortgage now requires flood insurance escrows, regardless of the LTV, for loans secured by residential improved real estate or a mobile home located in a special flood hazard area for the life of the loan. All loans being sold to Weststar Mortgage must be in full compliance with the new rules. Consumers can still elect to pay the .25% fee to waive the collection of property taxes and hazard insurance in the escrow account when the loan meets required escrow waiver guidelines; however, flood is not included in this waiver and must still be escrowed by the lender to meet the new regulation requirements.

Appraisal news? Of course!

Due to the contaminated water supply in Genesee County, including Flint, Michigan, Penny Mac posted appraisal requirements due to the current health and safety hazard.

FHFA released the 2016 GSE Scorecard; it calls for a potential change to appraisals, a new high LTV refi program, a broadening of the CRT mandate, and implementation of the Single Security within three years.

The industry is still mulling over the news from nearly a month ago when CoreLogic (CLGX) announced that it has acquired full ownership of RELS. CLGX had previously owned 50.1% of RELS while Wells Fargo owned 49.9%. The purchase price is $65 million and will be funded using cash on hand. (If you're trying to value your own appraisal biz, analysts estimate that CLGX paid approximately a 3x-4x multiple on EBITDA.) RELS provides real estate asset valuation and appraisal solutions, including access to experienced professionals, electronic property appraisal ordering, tracking and fulfillment services - but the primary customer of RELS is Wells Fargo at 80-90% of revenues.

Franklin American Mortgage announced the removal of the overlay requirement for the Appraisal Valuation Acknowledgement.  Instead, lenders may use alternative documentation - written or electronic - to evidence compliance with Regulation B. To satisfy the evidence requirement, documentation should be maintained in the closed loan file to show that all appraisals or valuations used in connection with the loan application were delivered to the borrower at least three days prior to the loan closing, or that the borrower waived the three-day timing requirement.  If the borrower waives the review period, it must be evidenced they did so a minimum of three days before the loan closed.

A while back, according to Land Home Financial Wholesale, it can have your borrower's loan ready to close in 21 Days or will credit the borrower the cost of their appraisal.

Through a la mode's Community Partnerships Program, it is able to connect with even more appraisers, and help appraiser advocacy groups along the way in new and better ways.  With financially sponsoring Community Partner events (annual meetings, speaking events, etc.), all orders taken at a Community Partner event are attributed to your organization's "give back code."  That means we donate a portion of every purchase directly back to the Partner group. Click here to learn more about a la mode's Community Partnerships Program.

Effective January 11 Mountain West Financial Jumbo R Product is now requiring a Collateral Desk Analysis (CDA) along with MLS Sheets to support the appraised value on all MWF Jumbo R loans. Effective January 11, 2016, MWF Jumbo R Product will now require a Collateral Desk Analysis (CDA) along with MLS Sheets to support the appraised value on all MWF Jumbo R loans.

Platinum Data Solutions, a provider of valuation data and analytics solutions, has launched RS3, the industry's first automated appraisal compliance review tool that evaluates appraisals for compliance with USPAP (Uniform Standards of Professional Appraisal Practice) Standard 3 guidelines. Several states have adopted regulations that require appraisal management companies (AMCs) to review a percentage or portion of the appraisals they transact in compliance with USPAP's Standard 3. "RS3 helps AMCs comply with state appraisal review regulations in moments, and for a fraction of the price that they'd pay to conduct these reviews manually," said Phil Huff, Platinum Data's CEO. RS3 is built on Platinum Data's RealView appraisal quality platform. It can review an appraisal report for compliance with USPAP's Standard 3 and relay its findings in a matter of seconds. The RS3 report is designed to help users immediately identify the most important findings. It uses visual cues like color and object placement to differentiate findings such as compliance violations, inconsistencies, errors and outliers. 

Platinum Data Solutions reported that in the third quarter of 2015, 39% of appraisals contained property quality or condition ratings that conflicted with previous ratings on the same property. These-and other-appraisal inconsistencies are a primary cause of underwriting delays. They can result from a number of factors and apply to work completed by the same appraiser as well as that of another appraiser. Platinum Data analyzed its database of over 300,000 appraisals. These were evaluated by RealView, its appraisal quality technology, in Q3 2015. Conflicting property condition and quality ratings cause delays. "More than one in three appraisals contains inconsistencies in property ratings," said Phil Huff, president and CEO of Platinum Data Solutions. "Causes aren't easy to determine, so they need to be investigated. Doing this after UCDP submission opens lenders up to numerous issues. Costly delays are just one of them."

Shifting gears to the bond market and interest rates, we did have a fair amount of news Monday. Personal Income rose 0.3% in December, which was a little better than expected, although that money wasn't spent. Personal Spending was flat in December, which means the Great American Deleveraging continues to take place. Inflation remains nowhere to be found, with the PCE Deflator negative in December on a month-over-month basis and up 0.6% YOY. The core PCE was flat in December and up 1.4% YOY. The ISM Manufacturing Index fell to 52.4 from 52.7 last month, while the ISM Manufacturing Index rose slightly to 48.2 from 48. And Construction Spending rose 0.1% in December after falling 0.6% in November.

All of this caused the U.S. Treasury market to lose some ground despite a sharp decline in oil prices. What's ahead for today? Aside from vehicle sales figures (that don't typically move rates) not much although the political analysts will be ruminating on the Cruz-Clinton Iowa results. On to New Hampshire? On Monday the 10-year settled at 1.97% and this morning in the very early going it is sitting around 1.92% with agency MBS prices better by .125.

Jobs and Announcements

In retail job news, "Are you a successful Loan Officer or Branch Sales Manager looking for a new opportunity? As a well-established, privately-held company, Network Funding has the opportunities and the support structure for you to reach your goals. We are looking to expand our footprint in the upper eastern states. Our growth is focused in CT, MA, RI, PA & MD but we have opportunities all over the country." Learn more about Network at join.nflp. com or contact Executive VP Brett Snortland (832.545.4653) or VP of Sales/Branch Ops Richard Jefferson (480.370.3600) for more information.

Also in retail news, "A successful and growing company is hiring Loan Officers and Branch Managers throughout the US. All Western Mortgage is 100% retail and knows that the key to success in today's mortgage environment is the resources it provides its Sales Team. We combine excellent service and operational support with direct access to those who make the decisions. Our roll-up-the-sleeves approach to the business will help you achieve the success you are striving for. Established in 1985, we are licensed in 17 states from California to Florida and empower our Sales Team with a full menu of competitive products and state of the art marketing support. Confidential inquiries and resumes can be directed to our Recruiting Manager Charlotte Buchanan (702-947-0624).

Switching gears to wholesale, "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."

What are you going to pay these folks? Richey May & Co., an accounting firm recognized as a leader in providing audit, tax, compliance and oversight services within the industry, has launched its annual Independent Mortgage Lender Compensation Survey. This survey program offers participants the opportunity to evaluate their compensation strategies and metrics in relation to their peers for over 50 positions specific to mortgage banking companies. Reports include compensation data for all mortgage banking positions, departments and channels, and reports are customizable to your region, state, or MSA. Unlike many compensation surveys, there are no long questionnaires to fill out - send your company's data files from your payroll and loan origination systems and Richey May will extract all necessary information to conduct the analysis. To participate in the survey, contact Tyler House.