The demand for capital never goes away - it is matter of supply and demand setting the rate and price for certain types of loans. Putting political naming niceties aside, subprime is back in the news.

Subprime is one thing, issuing non-agency securities another. Does it ever feel like over the last few years, in the high school dance that is mortgage banking, the only ones to show up have been the principle, the marching band, and your 4th period English teacher? Is it time to think about spiking the punch? Reuters reported recently that private labeled RMBS is starting to creep back into the mortgage market with JPMorgan making their first post-2007 deal of $570mm, with 60% originations made in-house by their bank. Florida lender EverBank made their initial issue as well, with just over $308mm in 30&15 year notes. REIT Redwood Trust sold their fourth deal of the year, with Credit Suisse and Wells Fargo expected to make offerings sometime as well. Before we get too ahead of ourselves and break out the party hats, it's important to take note of the size of the marketplace. Out of the $1.8T origination pool for 2012, only 10% was non-agency paper; so until a) underwriting is standardized, b) pricing spreads can be secured, and c) risk can be flows, and hence real value, will continue to be subjective; keeping the non-conforming market to a minimum, and certainly nowhere near 2007 levels.

Working from home is a goal of many, and that has become a sales pitch for companies seeking operations staff. MegaStar Financial is adding Mortgage Underwriters with 2 years direct experience, and Jr. Underwriters with 2+ years related, underwriting or processing experience - and they can work from home. MegaStar is a $1.2 billion established retail FNMA and HUD approved mortgage lender, with multi state locations ranging from California to Maine. MegaStar has a President's Club for Operations Support and we "appreciate our operations professionals with a great compensation package, provide a paperless environment, and training on the product." Candidates should expect to visit and work in its Denver headquarters one week every quarter. These positions are permanent, full-time, work from home or the office. Interested applicants should email; visit its website at

One time zone to the east, Associated Bank, N.A. located in Green Bay, WI is searching for a Secondary Marketing Manager who will be responsible for executing the strategy and managing the risk associated with pricing, hedging and trading for all residential loans originated by Retail, Wholesale, and Correspondent Channels.  Associated Bank originated over $4.5 billion in 2012, and is the subsidiary of Associated Banc-Corp, a top 50 publicly traded US bank holding company.  For more information or to send confidential inquiries and resumes, contact Amy Jo Derenne at or take a look at Associated's website at

Slowly but surely, the CFPB's reach over the industry is taking shape. The CFPB's proposed clarifications and changes of the ability to repay/QM and mortgage servicing rules were released earlier this month. In the official release, and by their own words, the CFPB attempts to clarify provisions and changes to: qualified loans eligible for sale to Fannie Mae or Freddie Mac, standards to Appendix Q, and the mortgage servicing rules in Regulation X. Ballard Spahr astutely write in their most recent article, "The CFPB notes that it received questions that it does not plan to address because it believes that the questions are already answered by the final rules.......despite the CFPB's belief that the rule is clear in this area, the industry would prefer to see greater clarity in the rule on what may and may not be raised in court or other forums with regard to both the safe harbor and re-buttable presumption for qualified mortgages." It appears to me that government "clarification" and private sector "clarification" are two different things at the moment.

The CFPB's proposal for change to the standards in Appendix Q (determining consumer's debt and income contained in the qualified mortgage provisions) would rely on the belief that the appendix is based on flexible underwriting standards that were not designed as a rigid debt-to-income rule, and simplify and clarify certain income determination obligations.

The CFPB also proposes to clarify that the mortgage servicing rules in Regulation X under RESPA, do not create field preemption with regard to state servicing laws. Additionally, the CFPB clarifies the nature of the small servicer exemption and proposes technical revisions to the exemption. The proposed changes would clarify which mortgage loans to consider in determining whether a servicer qualifies as "small". Loans serviced on a charitable basis will not be included. The changes would also provide several additional examples to illustrate application of the exemption to relationships between servicer and affiliate and between master servicer and subservicer, among others.

The CFPB is certainly open to receiving comments - it seems like nothing is "final" anymore, which certainly keeps the lending industry on its toes - and comments on both the ability to repay and changes to servicing rules will be published in the Federal Register ( within 30 days, and the official CFPB release can be found here.

Being choosey about which company you're on the board of directors has assumed increased importance over the years. As the industry knows, the CFPB is rapidly ramping up its enforcement efforts and is coming after banks, mortgage banks, credit card issuers, and financial service firms. Many companies and individuals that are facing investigations or subsequent enforcement actions by the CFPB will be forced to incur substantial sums to defend, settle and repay claims. In many cases, companies and individuals may have insurance coverage in the event of a judgment against them. Enter the D&O policy (or Directors and Officers liability insurance). The availability of coverage is specific to the contract language in any insurance policy and the specific nature of the CFPB matter at issue, however at its core, B&O is a liability insurance payable to the directors and officers of a company, or to the organization itself, as indemnification (reimbursement) for losses or advancement of defense costs in the event an insured suffers such a loss as a result of a legal action brought for alleged wrongful acts in their capacity as directors and officers. A very informative, and granular, view of the issue is presented by K&L Gates here.

The FDIC itself says, "As receiver for a failed financial institution, the FDIC may sue professionals who played a role in the failure of the institution in order to maximize recoveries. These individuals can include officers and directors, attorneys, accountants, appraisers, brokers, or others. Professional liability claims also include direct claims against insurance carriers such as fidelity bond carriers and title insurance companies. The FDIC follows the policies adopted by the FDIC Board in 1992, Statement Concerning the Responsibilities of Bank Directors and Officers, which can be found here, and require Board approval before actions are brought against directors and officers. Professional liability suits are only pursued if they are both meritorious and cost-effective. Before seeking recoveries from professionals, the FDIC conducts a thorough investigation into the causes of the failure. Most investigations are completed within 18 months from the time the institution is closed. Prior to filing the claim, staff will attempt to settle with the responsible parties. If a settlement cannot be reached, however, a complaint will be filed, typically in federal court."

And anyone consulting for a bank is not free from worry or from being sued: more.

Sometimes I am asked, "Can I work for a lender as a loan officer and as a realtor for another company at the same time?" or, "Can a loan officer of a sponsored third party originator also be a real estate agent?" Fortunately there are some talented folks, and government agencies, that know the answers to these. Barbara Werth (Mortgage Training Today - barb@mttoday@co) wrote to HUD and writes, "I went to the reference listed in the second section, 4060.1 Chapter 2, page 6. I don't think you can do both (as a sponsored TPO - not an Eagle lender - or 'broker', carrying a real estate license and mortgage originator license even if a state supposedly allows it)."

HUD wrote to Ms. Werth, "FAQ: Can I work for a lender as a loan officer and as a realtor for another company at the same time? No, FHA does not permit "dual employment" on a full or part time basis in any mortgage lending, real estate, or related field. The restriction applies to all employees who are employed by a FHA approved lender that work on FHA loans. This also applies to a lender's "wholesale account representatives" that originate loans through sponsored third party originators (brokers). This includes working as a real estate agent or broker for another company. A loan officer may hold a vocational or professional license in real estate but may not engage in realtor activities or make use of the license while employed by a FHA approved lender."

HUD also wrote, "The following information is regarding if a mortgage broker can work as a real estate agent. FAQ: Can a loan officer of a sponsored third party originator also be a real estate agent? Yes, if the sponsored third party originator is not a FHA approved lender or an employee of a FHA approved lender. However, the loan originators of non-FHA approved entities must comply with applicable federal, state, and local requirements governing their FHA loan activities. If the sponsored third party originator is a FHA approved lender, it is subject to the staffing and employment requirements in Handbook 4060.1, Chapter 2. FHA does not prohibit loan originators of FHA approved lenders from maintaining a real estate broker or sales agent license, as long as the FHA approved lender has controls in place to ensure the individual does not make use of their license."

If you're confused by this, feel free to write to Barbara (above) or to HUD at Or heck, give them a shout at 1-800-CALL-FHA (1-800-225-5342) from 8am to 8pm EST or "visit our online knowledge base at, 24 hours/7 days a week."

Where do you think rates are going? Lower because of a slow U.S. economy, or higher due to less economic strife in Europe? Lower because of continued Fed purchases keeping rates artificially low or higher due to the housing and jobs markets picking up more steam here in the U.S.? This week should be the week for you! Today we'll have the Personal Income and Consumption duo, tomorrow is the Chicago Purchasing Manager's survey along with Consumer Confidence (gleaned from a survey of 5,000 households, but not mine), and Thursday are some trade figures - hardly a market mover.

There will be a Fed meeting on Wednesday - don't look for anything exciting but some will be analyzing the announcement word for word in painstaking detail. This will be followed by an ECB (European Central Bank) meeting on Thursday and, as opposed to no news from ours, theirs may announce a rate cut or a new stimulus program. And we finish the week with the usual first-Friday-of-the-month employment data. I am heading to San Diego for the day, and it is too early to know what interest rates are up to here in the states.

Three contractors are bidding to fix a broken fence at the White House.
One is from Chicago, another is from Tennessee, and the third is from Montana. All three go with a White House official to examine the fence.
The Montana contractor takes out a tape measure and does some measuring, then works some figures with a pencil. "Well," he says, "I figure the job will run about $900. That's $400 for materials, $400 for my crew and $100 profit for me."
The Tennessee contractor also does some measuring and figuring, and then says, "I can do this job for $700. That's $300 for materials, $300 for my crew and $100 profit for me."
The Chicago contractor doesn't measure or figure, but leans over to the White House official and whispers, "$2,700."
The official, incredulous, says, "You didn't even measure like the other guys. How did you come up with such a high figure?" The Chicago contractor whispers back, "$1000 for me, $1000 for you, and we hire the guy from Tennessee to fix the fence."