Here in the borough of Manhattan, the MBA's National Secondary conference continues. It is indeed well attended, and as I mentioned yesterday the conversation topics mimic those of the entire industry. There's the CFPB ("They won't audit someone my size, will they?" and "They sure have a lot of rulemaking to do between now and January!"), QM ("There won't be a secondary market for non-QM loans, so we're waiting to see what they say"), new products ("New products? Heck no - our best products are our people and our process!"), compliance ("Do you know how many audits we go through every year? And they aren't cheap!"), investors ("Wall Street firms buying jumbo? Redwood Trust or PennyMac?" AHMSI and Banc of Manhattan?), Fannie & Freddie & Ginnie ("What's the latest on approval times?"), and servicing ("I'd rather own it than give it away! But how am I going to finance it?").

Across the continent, Golden Empire Mortgage (GEM) has immediate openings for two Corporate Underwriters in its LA/Orange county Operations Center in California. The candidate must have minimum of 5 years of experience in mortgage loan underwriting (government and conventional preferred, but will consider conventional only) along with strong written and verbal communication skills.  GEM is celebrating its 25th year as a retail correspondent lender with branches in CA, OR & WA: If you know of anyone, they should submit a resume to Stephanie Wade at swade@gemcorp .com.

One person who will not be contacting GEM for this job is Brian Hale, who is now the CEO and member of the board of directors of Stearns Lending. Stearns, also in California, is a privately held nationwide lending institution encompassing Correspondent, Wholesale and Retail business channels. Mr. Hale most recently served as President, National Production Executive of MetLife Home Loans, but has been with Bank of America, Countrywide, Wells Fargo Home Loans, and Fleet Mortgage - quite the resume.

Tomorrow I will discuss the possibility of HARP 3.0, but today's HARP chatter comes from the Federal Reserve's Senior Loan Officer Opinion Survey (affectionately known as SLOOS). This report, combined with Freddie's recent Q1 financials, suggest refinancing activity is progressing but possibly at a slower pace than investors expected. Freddie states what the industry knows: HARP is not mandatory, and implementation schedules have varied among the lenders, investors, MI firms, and warehouse banks, so accurately gauging volumes is tough. The SLOOS report included a series of questions on HARP 2.0 in which nearly 70% of the respondents said their bank was "not actively soliciting applications, but is satisfying most demand as it comes in" (22.6%) or their bank "has very little participation in HARP" (47.2%). Mortgage News Daily reports that, "Regarding factors that affected a bank's willingness or ability to offer refinancing through HARP 2.0, nearly 60% cited as 'somewhat important' to 'the most important' factor: (1) difficulty in obtaining re-subordination of a second lien; (2) difficulty in transferring existing PMI coverage; and (3) put-back risk."

Last week I mentioned Fannie & Freddie's dividend paid every quarter to taxpayers, and received a few comments. "With respect to your comments about dividends paid by Freddie Mac, you omit to mention that the interest rate that Freddie and Fannie are paying on their loans from Treasury is 10% versus 5% that banks and the auto industry are required to repay.   The rate was set punitively high so that the GSE's would never be able to earn their way out of conservatorship."

And Steve K. wrote, "So Freddie is borrowing money from the US Treasury in order to pay back a dividend obligation to.....the US Treasury. Wow...I am inspired! I am going to call my mortgage lender today to see if I can borrower roughly the same interest amount due on my mortgage payment this month, so I can make my payment to them. Genius!"

And regarding HARP and MI, John R. with Homes Mortgage in Minnesota writes, "Now that we can refinance people with MI on HARP 2.0, we wanted to find out not only if the monthly payment stayed the same on the new loan but if the date the MI dropped off (78% of value) stayed the same as well.  After calling 5 AEs and 3 MI companies no one could give us an accurate answer.  One AE actually told us 'Why does that matter?  Isn't the client happy to just get a lower rate/payments?' Really?!?! Finally on Friday we found out from two of our lenders it sounds like the drop off on the new MI will be based on the NEW value.  What this does is make someone paying MI for another 5-8 years on their current loan stretch it out to 15, 20 or even longer if the LTV is up at 150%!  Since none of the AEs we called knew this answer, is anyone out there telling their clients this?  When taking in the total costs of the additional MI, many of these refinances will no longer make any sense yet people are selling payment, not total savings (remind you are subprime/pay option days?)."

He continued: "If a ton of these are done with LTV's over 125%, this may be the next pay option/subprime bubble burst and land us on the nightly news with clients stating 'They never told me my MI was being stretched out another 15 years!'  Might be something to confirm with another lenders and MI companies and pass along.  Also, many people are putting in as low as a value as possible for DU to get the URAR waiver.  This will only prolong the length of time their client has to pay the MI when putting in a higher value may get them the waiver and shorten the length of the MI.  Some attorney out there may see that and think the broker could be liable for putting in such an unrealistic low number."

How are our banks doing? In a quarterly report to Congress, the special inspector general for TARP said 351 community banks with assets below $1 billion owe $15 billion to the government but will have a "significant challenge" in raising funds to repay the debt. Overall, a total of $118 billion is still owed under TARP from all borrowers, including AIG, GM, Ally Financial and others. The FDIC issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The CRA focuses on insured banks and thrifts meeting local credit needs, including those of low- and moderate-income neighborhoods, consistent with safe and sound operations. (There's the rub!) Here is the latest: Lastly, in Florida, Security Bank, National Association, wasn't so secure, and the OCC & FDIC moved its deposits over on Friday to Banesco USA in Coral Gables.

Investment bank Keefe, Bruyette & Woods has been busy in the past couple of weeks, acting as the sole placement agent and financial advisor in several major transactions across the country. On April 20th, KBW sold $26.3 million of the Costa Mesa, CA-based Pacific Mercantile Bancorp stock at $6.26 per share to the Carpenter Funds. The Carpenter Funds, comprised of Carpenter Community BancFund LP and Carpenter Community BancFund A-LP, are Pacific Mercantile Bancorp's largest shareholders after having acquired about 26% of the company's outstanding voting securities. Also out west, Umpqua Bank will be acquiring the Californian American Perspective Bank at a price of $10 per share.  This puts the value of the deal at around $44.7 million, which, after the operational integration, will increase Umpqua's assets to $11.8 billion.  Once the deal is completed, all American Perspective Bank branches will operate as Umpqua Bank branches, expanding Umpqua's reach to the Central Californian coast in addition to its existing operations in Northern California, OR, WA, and NV. The agreement, which happens to be KBW's 90th US bank or thrift transaction since 2009, is expected to be fulfilled in mid-2012.

KBW has also served as the joint book-running manager for public offerings made by Hatteras Financial Corp and Tompkins Financial Corporation. Late last month, Hatteras made a public offering in which it priced 17,500,000 shares of common stock and granted underwriters 30 days in which they could decide to purchase up to 2,625,000 shares to cover over-allotments. S&T Bancorp and Gateway Bank of Pennsylvania, with KBW acting as the exclusive financial advisor, have agreed to a merger in which Gateway will be acquired by S&T Bancorp for $22 million, 75% of which would be stock and 25% of which would be cash.  By acquiring Gateway, which has two branches and assets of $120 million, S&T will expand its presence in the northern and southern suburbs of Philadelphia, probably to be completed in the third quarter of 2012.

The markets had the weekend to chew on Friday's employment data. As one trader noted, "The Employment data this morning has produced either confusion, distress, or acceptance, depending on one's view of the overall economy. Non-Farm Payrolls rose a weaker than expected 115K (distress) but prior month was revised up from 120K to 154K (acceptance) while the Unemployment Rate fell from 8.2% to 8.1% (confusion caused by a drop in the participation rate). There is no question that the pace of job growth has slowed along with other readings on the momentum of the economy, and we need jobs and housing, housing and jobs to really move the economy. In a prize for stating the obvious, Fed Chair Bernanke said last week, "If unemployment looks like it's no longer making progress that will be an important consideration in thinking about policy options".

After a fair amount of news last week, this year the market doesn't have much, and in fact nothing of substance is really scheduled here in the States until Thursday's Jobless Claims. On that day we also have the trade balance figures, and import & export prices. Friday we have the Producer Price Index and some kind of consumer sentiment number out of the University of Michigan. That being said, world stock markets were pummeled today by election results in Greece and France that heightened uncertainty about Europe's ability to solve its debt crisis. And, this could easily result in continued flight to the U.S. debt markets, helping our 10-yr (which closed Friday at 1.88%) and mortgage security prices.

His request approved, the CNN News photographer quickly used a cell phone to call the local airport to charter a flight.
He was told a twin-engine plane would be waiting for him at the airport.
Arriving at the airfield, he spotted a plane warming up outside a hanger.
He jumped in with his bag, slammed the door shut, and shouted, "Let's go!"
The pilot taxied out, swung the plane into the wind and took off.
Once in the air, the photographer instructed the pilot, "Fly over the valley and make low passes so I can take pictures of the fires on the hillsides."
"Why?" asked the pilot.
"Because I'm a photographer for CNN," he responded, "and I need to get some close up shots."
The pilot was strangely silent for a moment.
Finally he stammered, "So, what you're telling me, is...You're NOT my flight instructor?"