The employment picture continues to evolve. For example, earlier this week BB&T announced it will consolidate 37 markets into 23 and eliminate 14 regional president positions, as it seeks to streamline operations and reduce costs.

There will continue to be discussion about how the CFPB's QM will impact borrowers seeking lower loan amounts (will any LO want to do a loan below $100k?). But QE3 is a huge issue also, and impacts the global fixed-income markets. Warren Buffett, who knows a thing or two about economics, recently suggested that bonds are over-valued, given that the Fed is artificially keeping rates low. You can't really argue with him. But what will be the impact on investors, and on mortgage-backed securities, if and when QE3 ends? 

Yesterday the commentary discussed how important names were (RFC - GMAC - Greentree), and I received this note, "Rob, don't forget that ING Financial announced it will rebrand itself in the US and switch to the name 'Voya Financial,' which is short for 'voyage.' ING will roll out the new brand over the next few years." Thanks - it removed itself from the mortgage biz a few years back, but one never knows if it'll return.

"Rob, my team and I are coming out of the MBA's Secondary Marketing Conference, and among other things we had five meetings with five different companies that are suddenly pushing their correspondent divisions. My head of production loves it. My head of secondary and head of Ops are asking me why should we re-structure our operations in order to sell to companies whose business models are built around the juicy spreads from 2012? Why should I sign up with a company who is basing its strategy on 2012 spreads to create a correspondent division when one didn't exist before? What's a CEO to do?"

Darned if I know - that's why you're the CEO! Seriously, yes, spreads were huge last year, in spite of all the hurdles the industry had. And remember that companies are scrambling to add servicing assets that "the big guys" are under valuing for various reasons. Retooling your operations department for underwriting and delivery purposes is a business decision that you need to make. Brokers are well known for going with "the flavor of the month" because they are typically smaller than you are (this CEO's company happens to be doing a few hundred million a month) and more nimble, but to spend precious time, resources, effort, and money moving a production machine to a company that is .125 better this week is a decision that only you can make. Thus many lenders have sought direct agency approval, keeping the servicing if they can afford to or selling it in a bifurcated procedure, or are continuing to sell to the "usual suspects."

Lenders looking for new investors should remember that there is a difference between the smaller, "mini" correspondent programs and the new medium and large programs. (I am not going to name names.) Many brokers who have recently become mortgage bankers may see some benefit from using smaller correspondents, possibly citing service, training, and slightly better pricing - but the benefits for a large, established lender making a switch are questionable. Many of the "big guys" have raised their net worth requirements, nudging smaller lenders toward start-up correspondents. From the investor perspective, plenty of companies are hedging their bets, so if the wholesale channel shrinks they will have correspondent (and/or retail) to help provide some stability and to attract talent to the company in general while continuing to add servicing to their own books.

So yes, companies are continuing to evolve. Yesterday the commentary discussed Nationstar, and its first quarter earnings and its purchase of Greenlight Financial. It prompted this e-mail from a Wall Street analyst. "Don't forget that while Nationstar is making great moves to drive higher ROEs and grow the servicing portfolio, its growth is fundamentally based on its ability to replenish portfolio run-off. It needs to keep adding more loans to its servicing portfolio in order to make up for the loans that are lost when investors default (and the loan no longer generates serving income) or when loans are paid off (either by refinancing with someone other than Nationstar, selling the home and not originating a new loan with Nationstar or just paying off the mortgage). This is a tricky business because the more Nationstar grows its servicing portfolio, the more it needs to replenish its run-off. Historically in the mortgage business, there were not many opportunities to acquire large MSR portfolios but in the recent years as banks rethink their mortgage strategy or other servicing companies get swallowed up, there have been plenty of opportunities to grow servicing portfolios in big chunks."

She continued, "At some point this period of significant transfers will come to an end and Nationstar will need to be more reliant on its own mortgage origination capabilities to get new loans in its servicing portfolio. We're seeing that with its purchase of Greenlight, and its development of its wholesale channel. This evolution would make Nationstar look very similar to the pre-crisis mortgage banks (i.e., Countrywide). Once this happens, the company will be competing with the banks and companies like Quicken Loans for new originations, so adding production is very important. I hope that the company does not go the way of the pre-crisis mortgage companies who offered lower lending standards (i.e., going into sub-prime or Alt-A) or unique loan products - the same avenues that led to the run-up prior to the crisis. Not only would this be a complete repeat of the past, but this will be harder this time around with new regulations defining 'qualified mortgages' which will make it more costly to originate and securitize those types of loans." That analysis could apply to many companies currently in the business - thanks for the note.

Yes, I know that we're in May, and computers transmit data at the speed of light, but for some reason the FHFA (which oversees Fannie & Freddie, among other things) just reported HARP numbers for February. The Home Affordable Refinance Program (HARP) continued to increase refinance numbers in February, and F&F reported 97,738 HARP refinances throughout the month, bringing the total number of HARP refinances (from the program's inception) to approximately 2.3 million. FHFA also reported HARP refinances accounted for 21% of total refinance volume in February. In other late breaking news, the U.S. Post Office reported mail traffic increased 4% between 1973 and 1974.

The MBA is a little quicker with its application data, in fact downright fast by most standards. Yesterday it came out with the usual application numbers for the prior week, and this time purchases apps were at a 3-year high! Overall applications were up 7% with purchases +2.4% and refis +8.3%. The average size on loan refis jumped from 207k to 213.7k. Conventional refis moved up 8.8% while GNMA refis rebounded by 5.7%.

And a lot of those refis are flowing through to Freddie Mac. Freddie announced earnings of $4.6 billion from January through March, making it profitable in the past six quarters. That makes our government happy: it will pay a dividend of $7 billion to the U.S. Treasury next month and requested no additional federal aid for the fourth consecutive quarter. This is a nice increase from the $577 million it made in the first quarter of 2012. (And for those playing along at home, Fannie & Freddie have received loans about $170 billion and so far the companies have repaid a combined $62.2 billion.) Helping the agency's income is a better housing market (fewer delinquent loans on their books) and higher fees to guarantee the loans.

There continued to be "not much going on" in the fixed income markets Wednesday. MBS prices traded in a somewhat narrow range, although there was some jockeying among coupons and among swap levels. Demand was weaker-than-average for the 10-yr Treasury auction, but MBS prices moved higher after the results came out. The 10-yr closed at a yield of 1.76% - pretty close to where it started.

Today we'll have Jobless Claims at 8:30 EST. And the results from the 30-yr Treasury auction will come out around 1PM EST. Ahead of that rates are slightly higher, and the 10-yr is sitting around 1.78%. The weekly jobless claims figures, by the way, are expected to have risen by 11k from the previous week to 335k.