Accenture Credit Services announced that, "Low interest rates, less competition, more regulation and tighter credit standards have pushed the time it takes the biggest mortgage lenders to refinance a mortgage loan from 45 days a year ago to more than 70 days now." Underwriters, who in the past could underwrite 6-8 files a day, now do 2-3 - and they've turned into auditors instead of underwriters. And the borrower, of course, is the one who pays the cost of the longer time frames and the higher overhead.

But refinancing cures all evils, right? Wrong: "The number of FHA-insured home loans entering foreclosure jumped in March after half the mortgages it modified to ease repayment terms were in default again a year or more later." More on that HERE.

Speaking of loans heading south, to complicate things, the MBA distributed its delinquency numbers: "The first quarter 2012 report shows that the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 7.40% of all loans outstanding," down 18 basis points from the fourth quarter of 2011 and 92 basis points from one year ago.

Last week in New York I asked an official with the CFPB how many employees, roughly, this new bureau has. He replied, "900". 900!? The CFPB already has 10x the employees that GNMA has. (Granted, Ginnie has always had the reputation as having the most billions per employee.) The business is still ruminating on the CFPB's new rulemaking proposals from last Thursday that not only change compensation to a flat rate but would require background checks for mortgage originators and complement a previous rule that prohibits loan officers from steering borrowers to higher-priced products. But the intentions are good.

As best I can tell, the consensus around the country is that the CFPB is the judge, jury, and executioner. Cottage industries have sprung up around the agency itself, either interpreting its actions, its 800+ page examination manual, in preparing for its audits (I have the impression everyone will be audited at some point, banks and non-depository mortgage banks alike), and so on. CFPB Director Richard Cordray said in a statement. "We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them." This is a noble goal, to which few will disagree. But there is general agreement that this agency knows no bounds, and although it began with the easy targets of credit cards, student & auto loans, and residential lending, there are rumors of expanding to nearly almost every event that touches a consumer or money - and what, in our economy, doesn't? Enforcement officers accompany auditors, and one mortgage company owner wrote to me saying, "Are we guilty until proven innocent? Where is my copy of George Orwell's '1984'?"

The bureau operates under its jurisdiction under the Dodd-Frank Act, which calls for measures to do away with longtime practices seen as deceptive and unfair. Once again, this is very reasonable - but to whom does the CFPB report? The new comp proposals stirred up the industry again - if they take effect, the new rules would add to a list of measures related to the financial reform law that aim to refashion the way the mortgage industry packages and sells home loans to borrowers. One would supplement an earlier rule finalized by the Federal Reserve last April that prohibits mortgage loan originators from receiving dual compensation, effectively tying off any financial incentives from a loan product's term and conditions or in instances where loan officers receive payments directly from borrowers. In addition to new background checks for mortgage brokerages and companies, the rules would also obligate LO's to print their license and registration numbers on documents - not a bad thing in itself, but...

The next seven months will be a busy time for the CFPB, given what must be finalized by January 2013. It appears that we can expect the rule-making process, consisting of the issuance of a formal proposal, a comment period, and then the issuance of a final rule to take place on a tight timeline. And in the various state-based MBA groups which I've visited this year, there is definitely a "call to action" about having the industry's voice heard.

(Take a deep breath before reading.) Anytime an agency is weighing prohibiting upfront points and fees except for discount points which result in a minimum reduction of the interest rate and origination points which are flat and do not vary with loan amount, sunsetting the limited exceptions under consideration to eliminate upfront points and fees altogether in transactions with creditor-paid loan originator compensation, Interpreting the prohibition of dual compensation consistent with the Federal Reserve Board's earlier loan originator compensation rule in order to allow salaries or wages to be paid to individual employees of brokerages, implementing the prohibition of compensation based on terms or conditions of a loan (other than loan amount) in transaction for which compensation is consumer-paid, clarifying which contributions or payments by employers based on company profits are permissible, setting standards for TILA, ECOA, and GFE documents, allowing mortgage loan originators to make certain pricing concessions to cover unanticipated increases in their-party settlement charges under certain circumstances, clarifying that point banks are considered "compensation" and are permitted only if the amount of the contribution by the creditor for a given transaction is not based on the transaction's terms or conditions, and the creditor contribution is fixed over time, providing a test to determine whether a factor is a "proxy" for a loan term, requiring criminal background checks to screen for felony convictions, requiring training to ensure a knowledge regarding types of loans originated, and establishing the entire set of QM guidelines, it is time to take notice.

Here is a brief example of a piece of the decision making - additional information regarding the CFPB's Small Business Review Panel process is available HERE.

Here are some somewhat recent agency & MI updates. As always, it is best to read the actual bulletin, but this will give one a flavor for what is happening out there. In no particular order...

Freddie Mac has expanded its policies to allow electronic signatures to be used on more initial loan documents and to eliminate superfluous borrower information verification.  It is no longer necessary to validate each borrower's Social Security number if they were already validated during the origination process or the preclosing quality control review except in cases where this was done by a broker or correspondent.  The list of acceptable income and employment verification providers has been removed as well, so any third-party providers will do provided the verifications meet the requirements outlined in the Single-Family Seller/Servicer Guide.

For those who originate and sell HARP loans, Freddie has expanded the Cash and Guarantor execution options for Relief Refinance Mortgages.  The cash adjustor value has been updated to zero basis points and can now only be applied to LTV ratios over 125%.  Beginning on June 1st, Relief Refinance Mortgages with LTV ratios of more than 125% may be sold under a Guarantor execution.

Other Freddie policy updates include the addition of a provision that will recapture premiums for loans paid off early; allowing ARMs that don't have original note rates, marginal, and lifetime ceiling in 0.125% increments; revised eligibility requirements for balloon/reset mortgages; and the prohibition of selling mortgages on properties that have particular private transfer fee covenants.  The Counterparty Authorization forms and Appendix D of the Uniform Appraisal Data Set have been updated as well.

United Guaranty updated an earlier clarification on unacceptable Agency AUS recommendations.  If a loan is underwritten by both of the Agencies' AUS and one of the recommendations received is deemed acceptable, it is eligible for insurance.  The previous guidelines stated that such loans required both recommendations to be considered acceptable to be eligible for insurance. UG also has revised its Performance Premium pricing, which will be effective for both mortgage insurance applications and rate quote requests received on May 14th or after.  The new Geographic Quality Index (GQX) will be up by May 14th as well and has been updated to indicate the improvement in 58 markets and the worsening of seven markets; see the ZIP code lookup tool and complete lists at for the full details.  UG has also enhanced its Optimal Blue offerings to include a comparison of the five-year cost of FHA insurance alongside the comparisons of other payment options for the borrower and a streamlined rate quote.

As of May 14th, the updates made to the UG system to support the underwriting requirements introduced back in February will be fully implemented.  All eligibility messages on the EDI connection, LOS, and the MI Guide RAPid Link application will now be consistent with the new requirements.

MI provider Essent Guaranty announced that it has written $2 billion of new insurance year-to-date as of April 30, 2012, marking two years since the issuance of its first MI policy.  Essent also reports that it currently has $600 million of invested and committed capital and $5.3 billion of insurance in force.

Whatever seems to be happening in the markets pales in comparison to what is happening in the real estate and lending industries. But if you "sniff the wind," one starts to sense that not only are rates unlikely to go up much, but now experts are talking about them going down even more. We're not talking about the overnight Fed Funds rate, which is near 0% already, but instead talking about market-determined mortgage rates and Treasury yields. Yesterday's release of the April FOMC minutes revealed heightened uncertainty among Fed officials' economic assessments. Risks were generally seen as to the downside for growth and upside for unemployment, while inflation risks were broadly balanced, which has economists dusting off their "QE3 in September" predictions. Remember that Operation Twist set to conclude at the end of June - will it be extended or replaced?

So although the status quo was maintained, given the chatter about a continued/worsening slowdown yesterday's activity consisted of a rally in bond prices (and a drop in rates), resulting in practically every investor and lender improving their prices. When was the last time that happened? Originator supply, close to $3 billion, was offset primarily by the Fed, as usual, with the rest willingly soaked up by money managers and hedge funds. Will HARP 2.0 volumes peak this month? Perhaps - but investors are concerned about lower rates prompting the refinancing of loans funded in 2011 versus LO's who are licking their lips in anticipation.

So yesterday agency MBS prices improved by about .125, and the U.S. T-note rallied to a yield of 1.76%. This morning we've had the weekly Initial Jobless Claims (370k, unchanged from a revised number last week), and we'll have Leading Economic Indicators at 7AM PST (expected +.1%) and the Philly Fed (expected up). So far fixed income markets are roughly unchanged from Wednesday afternoon, with the 10-yr at 1.75%, and MBS prices perhaps slightly better.

I came home from the bar four hours late last night.
"Where the devil have you been?" screamed my wife.
I said, "I've been playing poker with some guys."
"Playing poker with some guys?" she repeated. "Well, I've had enough - you can pack your bags and go!"
"So can you," I said. "This isn't our house anymore."