Problems can be created by differences in education, nationality, or age. For example, the ICBA reports 90% of community bankers say their average customer is between the ages of 41 and 60. The Independent Community Bankers Association aren't the only ones seeing age differences and segregation, and many banks & lenders are doing what they can to court younger borrowers by training LOs in that age group. Much of the formal training is done by big banks - it seems that most smaller lenders can only afford someone who can "hit the ground running."

This week the news broke of a new MI consortium (USMI) which includes all the major MI companies except United Guaranty. Donna DeMaio, CEO of United Guaranty, noted, "United Guaranty has declined participation in the new trade organization USMI at this time. As a part of a larger organization, we leverage AIG and United Guaranty internal resources both in DC and with state regulators.  However, we do stay in regular communication with the companies that participate in USMI as well as participate on specific projects, such as the development of an industry capital solvency model."

Why should mortgage brokers care about Tesla? Starting April 1 one can't buy a Tesla in New Jersey because they aren't sold through dealerships, they are sold directly to the consumer: DTC. What possible reason can there be for this sort of action? It does nothing to protect the consumer, and certainly shows the political muscle of the auto dealers. But hmmm...remember back to the days of travel agents being the middlemen between consumers and the airlines or cruises? Many believe that mortgage brokers and LOs are the middlemen between consumers and the actual lender or investor. It might be fodder for conversation out there about the parallels.

We all knew it was coming: another proposal regarding Fannie & Freddie. The leaders of the Senate Banking Committee outlined plans for a bipartisan proposal to wind down Freddie Mac and Fannie Mae and replace them with a new government reinsurer. A key element of the plan is the involvement of private companies in that the first 10% of mortgage losses would be assumed by non-government entities. The bipartisan measure, drafted with input from President Barack Obama's administration, would replace the U.S.-owned mortgage financiers with a government insurer behind private capital, Senate Banking Committee Chairman Tim Johnson and Senator Mike Crapo said in a statement yesterday. The bill would require most borrowers to make down payments of at least 5 percent in the new housing-finance system.

The new measure, which is not a bill yet, is based on a bill introduced last year by Senators Bob Corker, a Tennessee Republican, and Mark Warner, a Virginia Democrat, with some additions. "A new system of federally insured mortgage securities in which private insurers would be required to take initial losses before any government guarantee would be triggered." The Johnson-Crapo plan would set specific benchmarks for transitioning from Fannie Mae and Freddie Mac to the new system. They will introduce the bill "in the coming days" and begin fine-tuning it with other members of the committee in the coming weeks, and just like any other bill, any legislation would need to pass in both the House and the Senate to become law. Analysts consider major reform unlikely to take place before the next Presidential election in 2016.

What does it mean for anyone? Nothing initially - although it certainly gives us the flavor for what politicians are thinking. The Realtors were quick to respond. "NAR welcomes the proposal from Sens. Johnson and Crapo to restructure the secondary mortgage finance system. There are many aspects of the proposal that mirror NAR's long-standing Principles for Restructuring the Secondary Mortgage Market and Encouraging the Return of Private Capital. NAR applauds the efforts of Senators Johnson and Crapo to preserve the government guarantee and include provisions to ensure that middle class and first time homebuyers will continue to have access to affordable mortgages with reasonable down-payment terms." It certainly was an ugly day for the common stock of Fannie Mae and Freddie Mac. Fannie shares dropped as much as 44% Tuesday and Freddie's stock fell 39% at their lows.

Of course, considering these issues relate to Washington and the housing market, the bill most likely has a long road ahead before getting passed - if at all. Isaac Boltansky with Compass Point Research & Trading LLC put out a piece titled, "GSE Reform Agreement Announced, Action Ahead but Passage Remains Unlikely." "While we continue to believe that there is neither the legislative bandwidth nor the market capacity to undertake GSE reform in this Congress, this effort will advance the discussion in D.C. for the next Congress. At its core, this proposal echoes Corker-Warner which calls for the liquidation of the GSEs, the creation of a Federal Mortgage Insurance Corporation (FMIC) which would operate in a manner similar to the FDIC and wrap covered loans with a government guarantee, and mandate a 10% first-loss requirement for private capital.

"Despite the lack of specifics in this announcement, a number of elements stood out to us: 1. The Corker-Warner proposal's 10% first-loss requirement for private capital is maintained in the Johnson-Crapo proposal despite calls to lower the threshold; 2. The Johnson-Crapo bill would set underwriting parameters for covered mortgages similar to the CFPB's Qualified Mortgage (QM) rule but would also include a 5% down-payment requirement (3.5% for first-time buyers); 3. The Johnson-Crapo bill will "eliminate affordable housing goals" but will include a 10bps user fee for the new guarantor which would be directed to ensuring that there is "sufficient decent housing available." We note that the most significant concern for affordable housing goals is not the funding mechanism, but rather deciding which entity sets and monitors the goals; 4. The release highlights the creation of a "mutual cooperative jointly owned by small lenders" which is included to facilitate market access for smaller lenders, a priority of many on the Senate Banking Committee; 5. Despite a lack of specifics regarding the multifamily market, the release did include the following supportive language: 'Maintain a vibrant multifamily market by building upon successful risk-sharing mechanisms and products and providing access to a broad range of markets.'"

Mr. Boltansky's well done write up echoing the thoughts of many in the business. "Will GSE Reform Become Law in 2014? No. We continue to believe that Senate leadership is unlikely to push GSE reform in this session even if legislation clears the Senate Banking Committee. Senate Democrats appear content with the GSEs in the near-term given the confirmation of Mel Watt as FHFA Director, the continued profits generated by the GSEs, the steady recovery in the housing market, and the political pitfalls of tackling housing issues in an election year. Furthermore, we continue to believe that Congressman Hensarling (R-TX) is unlikely to alter the House GSE reform proposal known as the PATH Act. House GOP leadership, much like their Senate counterparts, is likely to avoid the issues of housing reform as well, given its aversion to making the rank-and-file take tough votes in an election year."

Representative Maxine Waters (D-CA) is expected to release a GSE reform proposal in the coming weeks. That will be exciting, given what is going on with flood insurance legislation.

The announcement by Fifth Third, disbanding its wholesale channel, reminds us that there have been, and will be, investor changes in their business channels. But some of the news is positive.

JMAC Lending, a wholesale-only lender based in Irvine, CA, has been serving mortgage brokers since 1997 announced today that it will continue to expand its wholesale channel by adding VA loans, 203(k) and other exciting new products in addition to its already popular products such as conforming, jumbo and FHA to provide the mortgage brokers more choices for the borrowers and also continue to commit to its popular 21-day closing program to accommodate those shorter escrow transactions.

Five Oaks, a public mortgage REIT, is approving new correspondents for its flow prime jumbo program. Those parties interested in receiving its daily rate sheet & guidelines should contact Randy Goodleaf at

SNL is offering up a seminar titled, "Understanding the Debt Capital Markets" to be held on March 19-20. If you have any questions, contact Tom Thornton at

Village Mortgage, Lenders Compliance Group, Brokers Compliance Group and the Connecticut Mortgage Association are hosting "Compliance Days" a free workshop on the new ATR/QM standards implemented at the beginning of the year for the mortgage industry on March 20th from 10-2 at Village Mortgage's headquarters at 30 Tower Lane, Avon. To sign up for this free workshop please visit Village Mortgage's website.

Yesterday Citi announced the discontinuation of its SRP Schedule and State Adjusters. "We want to make it easier to do business with Citi. With that goal in mind we are simplifying our pricing. Effective with new rate locks and Mandatory Commitments established on or after April 07, 2014 ("Effective Date"), Citi will discontinue using SRP schedules and general (all product) state pricing adjusters. For Best Effort & Single Loan Mandatory, in conjunction with the elimination of SRPs and adjusters for all products in designated states, on and after the Effective Date, base pricing will be adjusted and revised, product-specific state adjusters will be added on Citi's rate sheet. For Mandatory Commitments, for Direct and Assignment of Trade Commitments, the SRP will now be embedded in the Note Rate Adjusters. The revised product-specific state adjusters will also apply. For Block Trades, rate sheet base pricing will be adjusted and the revised product-specific state adjusters will also apply.  Prior to the implementation of these changes, Citi will provide Correspondents with a sample template for the new rate sheet layout giving you the opportunity to update your pricing models to accept and incorporate the new rate sheet and pricing format." (Editor's note: these adjustments will be included in the base price, of course, and Citi discusses how a large bulk trade settling in some future month will be priced. But a client might find price comparisons difficult when one doesn't know the make-up of the loans to be delivered.)

Turning to the markets, yesterday I wrote that I wasn't going to waste your time - not much had happened Monday. Well, not much happened yesterday either, and the 10-yr closed at 2.77% - still almost unchanged from Friday's close, although MBS prices improved a mite*. (*mite is a technical term.)

Not much happened over night, and today we've had the MBA applications index for last week (apps were down about 2%) - there is not much else to move the markets until the $21 billion 10-year note auction at noon CST. This morning the 10-yr is slightly improved at 2.75% and agency MBS prices are a shade* better. (*shade is a technical term meaning 1-2 32nds.)