Are you a bank officer or director who can watch YouTube at work? Well, who needs to bother reading those endless updates when the FDIC has something for you:  "The Technical Assistance Video Program is a series of educational videos designed to provide useful information to bank directors, officers and employees on areas of supervisory focus and regulatory changes." Try to stay away from the honey badger videos and watch this. (In the next 24 hours I will be fortunate enough to travel from KC, Missouri, through California, and up to Leavenworth, Washington to visit with some folks - thank goodness for YouTube and the internet.)

Not to be outdone, the CFPB published its "Small Entity Compliance Guide for the Ability-to-Repay and Qualified Mortgage Rule." "Our goal with this guide is to provide a comprehensive rule summary in a plain language and FAQ format, which makes the content more accessible and consumable for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff." Find the guide here.

Yesterday the MBA reported what lock desks already knew: mortgage apps were up last week 4.5%, with purchases down 1.3% and refi's up 6.3%. The average loan size on refi's increased by $7k to $207k, and conventional refi's were up 10% while gov't refi's (FHA & VA) were down 10%. But looking at the broad trend, the 90-day moving average declined once again week over week, and continues to trend lower.

It is almost time to wrap this subject up, especially since the market has come back to where it was prior to the employment number last Friday. But regarding rate lock extension and renegotiations, one secondary marketing vet in Utah wrote, "Just want to add my two cents to the lock renegotiation discussion below.  Nobody wants to lose a loan once it has been originated, processed, and locked.  At this stage there is plenty of time and effort spent on the loan not to enjoy the rewards of closing it.  Understanding that a loan officer will receive the same compensation, whether or not a loan's lock is renegotiated, it may be that the Loan Officer will fight to get their borrower a better deal when rates decline after the loan is locked.  Or perhaps the loan is a branch manager's friend or relative who is looking for the best price he can get.  Whatever the reason for a renegotiated lock, what is key in my mind is that whatever shortfall results from a renegotiation be accounted for appropriately.  Each lender should know their company costs of renegotiations down to the loan officer level.  While this is much more work, it enables the lender to know the true cost of the business that is being done.  You may have an LO that does good volume, but makes you little money as their locks all get renegotiated.  If the Secondary Department takes all the renegotiation costs, as a matter of doing business, then you can never have an accurate accounting of your hedge costs/effectiveness of your hedging operation."

Another in California wrote, "It's our job in secondary marketing to hedge a pipeline in all rate environments. Our hedging policy and out renegotiation policy these are strategies that work in concert to protect both: the LO's reputation, and the company's bottom line. Sure some LOs abuse the system. I have found that generally speaking if they know the fundamental reason we have the policy in place, they take care of you.  Bottom line? I want the LO to renegotiate with me. Who wants to try and sell the 1 loan that didn't close into an illiquid coupon? When you do find an investor to stuff it into, who wants to deal with the EPO?"

Lastly, Mark W. from Washington wrote, "Most LOs don't notice an impact to renegotiation costs as their comp is guaranteed anyway. LOs simply have to request the price concession from someone with the authority to grant the reduction in revenue to the bank, broker or branch. In mortgage banking scenarios, it often becomes the branch manager's comp that is adjusted due to any reduction in margin, and thus that manager must approve or deny the renegotiation cost by weighing that cost against the potential loss of business."

So you wanna invest in Detroit real estate? There are sure some great bargains, but it not for the fainthearted. Bloomberg did a recent article on it: "Stately Detroit Homes Rot as Appraisals Stall Sales" and here is the link. "Flawed appraisals and a dearth of normal, non-foreclosure sales to serve as comparisons have put mortgages out of reach for most potential buyers, even in the best neighborhoods like Grandmont Rosedale that are the focus of officials' efforts to revive Detroit. In a city of about 700,000, there were just 578 mortgages for purchases last year, according to RealtyTrac, an Irvine, California-based data provider...The city now has 8 people per acre, down from 21 per acre in 1950, and 65,000 vacant homes, many slated for eventual demolition. With the city teetering on the brink of bankruptcy after running up a budget deficit of almost $327 million last year and facing $14 billion of long-term obligations, the state appointed Kevyn Orr, a bankruptcy lawyer who helped save carmaker Chrysler Group LLC, as the city's emergency manager." Of the 578 mortgages for purchases last year in Detroit, with an average sales price of $53,285 and an average loan amount of $49,176, according to RealtyTrac. In Pittsburgh, which has roughly the same population, there were 5,513 mortgages, with an average sales price of $182,614 and an average loan amount of $157,240, RealtyTrac said.

"Are you hearing that there is some connection between assumable loans, future sellers of properties, and home equity loans?" There sure is! You can put any spin on it that you want. Up until the mid or late 1980's, FHA loans were assumable - not any more. Fast forward to some time in the coming years, when very few loans are assumable. If you're a home owner, thinking about selling, or refinancing because Junior is heading off to school or you want a new RV, you're going to think pretty long and hard about doing either if you have a nice 3.50% 30-yr loan with 27 years left to go. So either you don't sell, and what does that do to new home buyers? Or if you refinance, and want to keep that nice 1st, you could easily consider a home equity loan. They're coming baaaaacccckkkk...

Have you heard of Deephaven Mortgage in Charlotte North Carolina? Me neither, but kind of. I first heard of it about a month ago. Matt Nichols is the managing partner, after having been an employee of and a managing director at Goldman Sachs for 12 years. Matt Nichols, a former managing director at Goldman Sachs, has launched a new nonprime residential lending company and is on the verge of funding his first loan - and may have already. Nichols was involved in one of Goldman's subprime divisions before the market crash. "A Deephaven loan matrix provided to Inside Mortgage Finance shows that the nonbank originator is willing to fund residential loans with FICO scores as low as 560 even if the borrower has what the lender calls 'derogatory' credit. The firm will fund loans with LTVs as high as 75 percent. The loan sheet that IMF viewed has a posted interest rate of 9.99 percent but the mortgage cap is $500,000.

Let's say publicly-traded company XYZ's CEO posts to his personal twitter page one Friday commenting on how many widgets the company produced this week. Question: is this intended to be private or public information? Well, we may have to ask Netflix's CEO Reed Hastings, because the SEC recently issued guidance on the use of social media outlets such as Facebook and Twitter by public companies to disseminate material non-public information, due in large part to Mr. Hastings. It appears that last July Reed posted on his Facebook page that monthly viewing exceeded 1 billion hours for the first time in Netflix's history. The problem, it appears, is the company did not furnish this information to the SEC, and may have been in violation of SEC Reg FD. Ballard Spahr writes, "....Netflix did not file or furnish the information contained in Mr. Hastings' July Facebook post with the SEC, nor did it issue a press release or otherwise publicly announce the milestone. At the time of his post, Mr. Hastings' Facebook page had more than 200,000 subscribers, including equity research analysts, shareholders, reporters, and bloggers." Wall St. analysts obtain information from Facebook? I'm no attorney (sorry again, Mom), but Regulation FD defines social media outlets as informal information channels, and thus, important. So in other words, if XYZ's CEO Twitter followers were his Aunt Jenny and a few shareholders, he would ultimately have to disclose to the SEC how many widgets they in fact produced. Reed Hastings? Well, the SEC chose not to pursue an enforcement action against Netflix or released this news on the SEC Facebook page: their Facebook page.

In training and events news:

The Silicon Valley chapter of the California Association of Mortgage Professionals will be hosting its 2013 technology and marketing mini fair on April 12th in Campbell, CA.  Event highlights include a CFPB panel that will discuss key originator concerns and LO comp and a talk on strategic blogging.  To find out more and to register, contact Mandy Ho at

As part of its HFi InDepth program, Fannie Mae will be offering training sessions on the Quality Assurance System on April 24th, May 6th and 20th, and June 5th.  The webinar gives an overview of the system and reviews the various menus, functionality, and administration.  To register, go here.

Fannie will also be offering webinars on using its new Technology Manager program, which will replace the Profile Access Manager.  Recommended for current PAM admins in particular, sessions will take place on May 8th and June 12th.  See here for more info and registration deals.

Registration is now available for the Mortgage Bankers Association of Florida's 60th annual convention, which will be held in St. Pete Beach, FL from June 19th-21st.  The program features seminars on a wide range of topics that include sales development strategies, regulatory issues, the GSEs, capital markets, and compliance; a lender roundtable; several preeminent speakers; and the annual business meeting.  To find out more, see the official brochure; to register, go here.  Sponsorship opportunities are still available as well.

Sometimes, to throw the cats and dogs in the house off kilter, I feed them early. They don't quite know what to do about it, and view it as manna from heaven. A similar thing happened with the early release of the Federal Open Market Committee meeting minutes. There were no glaring issues, but the release Tuesday afternoon forced the release early Wednesday ("hey, if they got it early, why can't we?"). And although we're all enjoying low rates, there are two very large issues. First, the Fed has been buying Treasuries at very low rates and when it decides to reduce its holdings it may well take significant losses through selling these bonds at a loss. And remember that money supply does not function independently from fiscal policy. The Fed has been purchasing about half of the Treasury Departments deficit recently which enables the cost of servicing the $16.8 trillion debt to stay low. But when rates eventually rise, the cost to the Treasury (i.e. the taxpayer) will spike up dramatically and folks will ask "What happened." We can all expect the politicians to blame the Fed.

But that is in the future - probably 2014 or 2015. For now, rates are systematically retracing recent gains. That means profit taking and position squaring. Yields on the 10-yr T-note have given back the entire employment report rally: the 10-year Treasury note yield was back above 1.80% percent after declining to 1.69% last Friday. MBS prices, however, were helped (relative to Treasury prices) somewhat by remarks in the FOMC minutes that indicated the possibility of adjusting its pace of buying first in Treasuries before MBS, and holding purchases to maturity. But volumes picked up, and current coupon MBS prices were worse about .250.

In addition to the FOMC minutes, the White House released its 2014 fiscal year budget proposal. Of particular interest was that the FHA could require $943 million in a taxpayer bailout to cover losses on legacy loans. The FHA isn't expected to decide until the end of FY2013 on whether it will need the cash infusion. If it does, it would be its first in the nearly 80-years of its existence.

Today we'll have weekly jobless claims reported at 8:30AM EST, projected to drop 20k to 385k. Also out at that same hour is Import Prices (Mar) which is expected at -0.5 percent from +1.1 percent in February. In the early going the 10-yr is at 1.81%, almost unchanged from Wednesday afternoon.


In honor of Augusta, the increase in lender's regulations, and the current administration, there are some proposed "New Golf Rules."

The President has recently created the position of Golf Czar. This new official will promulgate major rules changes in the game of golf, which will become effective at 6:00 a.m. Washington DC time on the morning following the first full moon after The Masters 2013.  The following is only a preview as the USGA/R&A rule book is being superseded for U.S. play (expect a minimum of 2716 pages, not counting appendices, indexes, and illustrations).

Here are a few of the changes:

1.  Golfers with handicaps:

- Below 10 will have their green fees increased by 35%.

- Between 11 and 18 will see no increase in green fees.

- Above 18 will get a $20 check each time they play.

2.  The term "gimmie" will be changed to "entitlement" and will be used as follows:

- Handicaps below 10, no entitlements.

- Handicaps from 11 to 17, entitlements for putter length putts.

- Handicaps above 18, if your ball is on the green, no need to putt, just pick it up.

These entitlements are intended to bring about fairness and, most importantly, equality in scoring.

3. In addition, a golfer will be limited to a maximum of one birdie or six pars in any given 18-hole round.  Any excess pars/birdies must be given to those fellow players who have not yet scored a birdie or par. Only after all players have received a birdie or par from the player actually making the birdie or par, can that player begin to count his pars and birdies again.

4. The current USGA handicap system will be used, but "net score" will be available only for scoring those players with handicaps of 18 and above. To "re-distribute" the success of winning, in all competitions every player above an 18 handicap will post only "net score" whereas players whose handicap is 18 or less must post "gross score".