The financial industry has taken careful note of former House Speaker Newt Gingrich writing a $500 check on an account that had no money in it. Both parties say it is the first sign that he might be qualified to be President. (Political "wits" said the $500 check, to put him on the Utah Primary ballot, bounced "which was too bad because Utah is the one state where all of his wives could have voted for him.")

Welcome to Friday the 13th. There are three of them this year. Some folks don't like the 13th of anything, for very ancient reasons: there are 13 witches in a coven, many cities do not have a 13th Street or Avenue, many buildings don't have a 13th floor on the elevator bank, and legend has it that if 13 people sit down to dinner together, one will die within the year (rumor has it that one could refers to the Last Super, where 13 were present). My guess is that you could find similar things with other numbers, but I am not going to argue about it.

I really enjoy my April Fools edition of the commentary. This headline could have made the edition - but it's for real: "Big banks Woo Subprime Borrowers Again: Lenders again willing to extend credit to risky clients." The full story can be found here but at this point few people should be asking, "When will mainstream subprime start to come back?"

Goldman Sachs made the news yesterday when it settled with the SEC for $22 million. This was to settle regulatory charges that its analysts shared confidential research with favored clients during weekly "huddles" from 2006 to 2011 where they discussed confidential research on stocks with the firm's traders. The analysts then passed on the ideas to a select group of top clients, the regulators said. Critics are quick to point out that $22 million is a "drop in the bucket" to Goldman, especially how its earnings fared during those five years.

Boards of Directors are always open to possible lawsuits, although many are covered by Directors & Officers Insurance to some degree. The FDIC is going after Jim McMahon (ex-Bears QB) - he sat on the board of a failed bank. Someone wrote from New Jersey, "Maybe the FDIC should have required a CAT Scan of all bank board members. They can list the results on NMLS."

If you're in Washington State next week, you should check out the Washington Association of Mortgage Professionals Housing Summit. Going to a WAMP event should be on everyone's bucket list, and it's priced at only $59 in advance. You can register on the site or by calling 888 320 0028 for more information.

Yesterday's commentary mentioned a large institution "making good" on the bad debt created when its agent - AppraiserLoft - stiffed appraisers. It turns out it is MetLife stepping up to the plate.

The CFPB has become practically a daily newsmaker. Recently, of course, the CFPB said it will propose mortgage servicer rules this summer and finalize them by January that will require servicers to contact to delinquent borrowers; give borrowers an estimate of when a mortgage will reset at a higher interest rate and an estimate of the resulting monthly payment; standardize monthly payments; apply monthly payments the same day; send two warnings before demanding force-placed insurance; inform borrowers of the cost of the insurance; provide foreclosure counseling to those who need it; and provide options to borrowers to help them avoid losing their homes. What member of the public is going to argue with that? Of course, costs will be passed on to the borrowers.

I went to colege, and sometimes it even shows in my writing. Getting accepted to college is a big deal, and can be overwhelming. But the CFPB is here to help - maybe they'll even make colleges charge less for tuition in this "we're heading for a non-free-market economy." Editorializing aside, the CFPB has come out with a new prototype Financial Aid Comparison Shopper for parents of 18-yr olds: "This is just our starting point, and we need your help to ensure that the Financial Aid Comparison Shopper addresses the needs of students and their families. Your feedback will directly impact the changes we make before our full launch."

This prompted one mortgage banker from Utah to write, "Everything in the nation involves consumers and money - so does that mean the CFPB will become a massive, bloated agency? This is not a slippery slope, it is a slippery cliff. I find the CFPB the single scariest agency in existence.   I think people will realize what has been created and how much power it has somewhere around 2014 - 2016."

Right from the trenches..."Short Term Trend From A High Volume Online Mortgage Loan Officer" After Friday's worse than expected jobs report, not only did I see mortgage refinance applications increase, but borrowers floating their rates, were coming off the fence to lock in at improved pricing.  That trend continued Monday and Tuesday as my pipeline of rate floaters realized the pricing benefit and locked their rates in.  Some of these borrowers saved close to $1000 in lender fees from Friday to Tuesday.  It's amazing that homeowners are refinancing out of 4.375% 30 yr. fixed mortgage rates into lower rates with nominal fees.  Who could've predicted that?" (So wrote Yale Roth, who has a website at

"Due to inconsistencies with HVE values and restrictive loan amount calculations," Flagstar Bank told its brokers that it "will be indefinitely suspending the Freddie Mac Open Access Program, Freddie Mac Open Access II. All loans currently in the pipeline and registered under the Freddie Mac Open Access II must be locked and submitted to Underwriting on or before April 27. Loans must be funded and delivered to Flagstar no later than June 1.

Earnings for Citi come out on Monday, BofA next Thursday, but this morning we heard from Wells and Chase, #1 & #2 in originations. JPMorgan, the biggest U.S. bank by assets, said first-quarter profit fell 3% but posted first-quarter earnings excluding items of $1.31 per share, up from $1.28 a share in the year-earlier period and better than expected. Mortgage banking application volume was up 33% compared with prior year, and Chase originated over 200,000 mortgages in the first quarter and has "offered more than 1.3 million mortgage modifications since 2009 and completed more than 490,000."

"The provision for credit losses was a benefit of $96 million compared with provision expense of $1.2 billion in the prior year and $779 million in the prior quarter. The current-quarter provision reflected lower net charge-offs and a $1.0 billion reduction of the allowance for loan losses, due to lower estimated losses as mortgage delinquency trends improved. The prior-year provision for credit losses reflected higher net charge-offs; the prior-quarter provision reflected a net reduction of $230 million in the allowance for loan losses.

"Mortgage production-related revenue, excluding repurchase losses, was $1.6 billion, an increase of $722 million, or 80%, from the prior year, reflecting wider margins, driven by market conditions and mix, and higher volumes, due to a favorable refinancing environment, including the impact of the HARP. Production expense was $573 million, an increase of $149 million, or 35%, reflecting higher volumes and a strategic shift to the Retail channel, including branches, where origination costs and margins are traditionally higher. Repurchase losses were $302 million, compared with repurchase losses of $420 million in the prior year. Mortgage production reported pretax income of $744 million, an increase of $691 million from the prior year.

"Mortgage loan originations were $38.4 billion, up 6% from the prior year and relatively flat compared with the prior quarter; Retail channel originations (branch and direct to consumer) were $23.4 billion, up 11% from the prior year and relatively flat compared with the prior quarter. Mortgage loan application volumes were $59.9 billion, up 33% from the prior year and 14% from the prior quarter, primarily reflecting refinancing activity. Total third-party mortgage loans serviced was $884.2 billion, down 7% from the prior year and 2% from the prior quarter.

Chase's mortgage servicing-related revenue was $1.2 billion, a decline of 5% from the prior year, as a result of a decline in third-party loans serviced. Foreclosure-related matters, including adjustments for the global settlement with federal and state agencies, resulted in approximately $200 million of additional servicing expense. The prior-year servicing expense included approximately $650 million related to foreclosure-related matters. MSR risk management income was $191 million, compared with a loss of $1.2 billion in the prior year. The prior year MSR risk management loss included a $1.1 billion decrease in the fair value of the MSR asset for the estimated impact of increased servicing costs. Mortgage servicing reported a pretax loss of $160 million, compared with a pretax loss of $1.9 billion in the prior year."

Wells Fargo's results also beat expectations with higher first-quarter profits helped by strong mortgage banking results and set aside less money for bad loans. Wells (the #4 bank in the U.S. but the #1 residential lender with market share hovering around 1/3) originated $129 billion of mortgages in the first quarter, up from $120 billion in the fourth quarter and $84 billion a year earlier. Mortgage banking non-interest income totaled $2.87 billion, up 42% from a year earlier. The bank reported a profit of $4.25 billion in the first quarter, up from a year-earlier profit of $3.76 billion. Credit-loss provisions totaled $2 billion, down from $2.21 billion a year earlier and $2.04 billion in the fourth quarter. Net charge-offs, or loans lenders don't think are collectible, fell to 1.25% of average loans, compared with 1.73% a year earlier and 1.36% in the fourth quarter.

Looking at interest rates, nobody would have guessed that you could mix a series of Treasury auctions with more bad economic numbers "only to get a market that moved less than the Santorum Bus Tour." But look at these rates: Freddie reports that the 15-year average hit a record low (3.11%) and 30-yr average rates are down to 3.875% - who can complain? Our 10-yr t-note went back below 2% briefly this week as yields on Spanish and Italian bonds increased. MBS prices are doing well, with news being made as the HARP bonds are entering the market in the form of 30-year greater than 125% LTV bonds settling in June (2 pools from Citi and Wells for almost $500 million). It is rumored that the usual suspects were interested in buying them: money managers, REITS, and primary dealers. Experts believe that there will be between $1-2 billion in MBS production per month. 

Trading-wise, our 10-year notes were marked out at 2.05% Thursday. This morning the Consumer Price Index came in just as expected, +.3% with a core rate (ex-food & energy +.2%). Later we'll have a Consumer Sentiment number for April 13, 2012. We find the 10-yr slightly improved to 2.02% and MBS prices better by about .125.

Some things make one guffaw as soon as they see the photo. But the new Realtor term is also excellent: