Mortgage rates are low.

But volume is a problem.
Raise our margins now!

(See Miss Hickox? Your 7th grade haiku section really paid off!)

Fannie Mae bumped up its volume forecast for 2012. According to a new forecast, Fannie's economists now believe that for all of 2012, originations will come in at $1.34 trillion, compared to a month ago forecast of $1.31 trillion. In 2011 mortgage bankers originated $1.45 trillion in home mortgages - wouldn't that be something if 2012 was unchanged from 2011! So instability in Europe, and a "slow recovery" here in the United States, is helping to keep our rates low. That is certainly helping the mortgage industry, and firms are looking to capitalize on the potential volume that is out there and are hiring. (In fact, many investors are absolutely swamped with business - see the lender/investor changes below.) For example...

Independent retail mortgage banker Vitek Mortgage Group is seeking a VP of Mortgage Operations for its Sacramento headquarters. The 25 year old purchase-focused company (, which has its GNMA seller/servicer approval, continues to grow through builder & realtor partners. This VP position will be responsible for partnering with VP of Production, implementing processes and procedures for consistently meeting contract contingency periods and scheduled close of escrow dates with effective standards for compliance, processing, underwriting, funding and post-closing. Expert pipeline management, strategic leadership, maximizing productivity with on time closings, development and coaching for all of the operations team are requirements of the role. The ideal candidate should have 10+ years of senior operational experience. Candidates should send their resumes to Karen Drew at kdrew@teamvitek .com.

I have been retained by a technology-focused, nationally licensed mortgage lender based in Charlotte, NC, that is seeking a VP of Credit Risk Management to add to its rapidly growing organization. The company will increase volume more than 100% to over $1.5 billion of on-line mortgages in 2012.  Key responsibilities include QA/QC reporting on UW's, tracking current investor guidelines and managing company product offerings, cross-functional project management and managing the restructuring of difficult loans for eligibility to be sold on the secondary market.  This position will also provide process improvement expertise on work flow for sales and operations and own all on-going communication over underwriting, products, and programs.  Requirements include prior experience in project and operations management, experience and understanding of selling direct to FNMA, DE certification (VA SARS a plus), past management of investor/third party relationships and familiarity with IT, system enhancements, and automated underwriting systems with six sigma certification preferred. If interested, please send a confidential resume to me at rchrisman@robchrisman .com.

GMAC Mortgage is expanding its loan origination business at its Costa Mesa, CA location and will be holding an interview event on June 28. "We are hiring processors, funders, closers, operations managers, and pre-funding auditors." Interested candidates should send their resume to OperationsResumes@gmacm .com, and qualified applicants will be contacted by GMAC Mortgage.

Jobs and housing, housing and jobs. Yesterday morning the MBA reported that mortgage applications declined by 0.8% last week following the biggest gain in over a year.  Purchase applications reportedly fell -8.5% last week, after soaring up 13% the prior week. (Refi's now account for 81% of new applications.) Mike Fratantoni from the MBA observed that, "Refinance volume increased again last week, but the composition of activity changed markedly. Despite rates remaining near all-time lows, conventional refinance application volume declined, and the HARP share of refinance activity dropped to 20 percent. On the other hand, FHA refinance volume exploded to an all-time high, more than doubling over the week.  New, lower FHA premiums on streamlined refinance loans came fully into effect, and borrowers seized the opportunity to lower their mortgage rates without increasing their FHA premiums."

And today we'll have Jobless Claims. That, and the first-Friday-of-the-month unemployment numbers are usually enough to give us a picture of the jobs market. But for further fine tuning, one can watch job opening numbers...and they aren't good.

Recent lender, investor, and MI changes continue, and the ones from yesterday, below this Freddie clarification, are especially indicative of what is going on out there.

First, a clarification on PMI cancellation requirements from Freddie Mac. It should have read, "For an automatic cancellation of MI one 1- unit primary residences: the date on which the LTV ratio of the Mortgage, irrespective of the unpaid principal balance of the Mortgage on that date, is first scheduled to reach 78% based on the original value of the Mortgaged Premises as defined in Section 23.1, or the date on which the midpoint of the amortization period of the Mortgage is reached. (The midpoint occurs halfway through a Mortgage's amortization period. As an example, in the case of a 360-month or 30-year Mortgage with a payment Due Date on the 1st of each month, we deem the midpoint to be the 1st day of the 180th month. Assuming that the 180th month is April 2021, and that the Due Date for the April 2021 payment is April 1, and that the payment record conditions below are met, you must have mortgage insurance canceled effective for the 181st month's payment, i.e., the payment whose Due Date is May 1, 2021.) For an adjustable-rate Mortgage or a Balloon/Reset Mortgage (either HPA or Pre-HPA), the LTV ratio set forth above and the midpoint of the amortization period are both based upon the current amortization schedule following the most recent rate change. Paying down the mortgage principal will not eliminate the need for MI unless the current balance is 80% or less of the current value."

Investors, and lenders, are swamped with business. Anecdotal evidence show minimum review times of 45 days for institutions such as BofA (retail processing) and Chase. Are all the contract underwriters being used by Freddie and Fannie and others to re-underwrite the loans the industry did five years ago? One vet wrote, "See how long does it take to train a new underwriter. If you are out of the industry for 120 days you're probably gone. I have a processor who came back after 3 years, and she lasted 1 week."

Number 11 in total originations in the 1st quarter of 2012, BB&T sent a note to clients, "To align with recent market events, BB&T Correspondent Lending will cease purchasing FHA Streamline Refinance mortgages that are not currently serviced by BB&T effective with new registrations and locks on and after June 21, 2012. Locks prior to June 21 will be honored. Please note that BB&T Correspondent Lending will continue to purchase credit qualifying and non-credit qualifying FHA Streamline Refinance mortgages currently serviced by BB&T. The product parameters have not changed for these mortgages as stated in the FHA Product
Description located on our website."

But then we have "Carrington Mortgage Services remains committed to FHA Streamline Refinance transactions and we continue to accept submissions for this product.  As a Ginnie Mae seller-servicer we are uniquely positioned to offer FHA Streamline Refinances regardless of servicer. Our non-credit qualifying FHA Streamline has a minimum FICO of 620, no appraisal, no income documentation and a tri-merged credit report with FICO and mortgage rating only.   Visit our website,, for more information and our guide to submitting a CMS FHA Streamline Refinance or contact our knowledgeable AE's."

Chase Correspondent was rumored to have followed Wells and the others in "giving the Heisman" (think trophy, with the outstretched arm) to non-same-serviced FHA Streamlines. I have not seen it. What Chase did, however, was increase their jumbo. "The maximum loan amount on Non-Agency products is increasing to $3,000,000 in specific geographic locations." Chase also did something else on trust income documentation requirements, but the focus is on the $3 million - but don't forget those limitations! Check the bulletin.

REMN sent a note out to its clients, "Despite the introduction of a temporary .75% price add-on for conventional refinances announced last week (Announcement 12-09), the number of conventional refinance submissions has continued to increase.  Therefore, as part of our ongoing effort to ensure that REMN continues to offer industry-leading service on purchase transactions, the submission of all conventional refinances is temporarily suspended. The suspension does not apply to any loan that has already been submitted (as a full or a lite file) or locked prior to this announcement. To reiterate, this has become necessary in order to preserve our level of service on purchase transactions.  As you would expect, the dramatic increase in the volume of refinances has begun to cause our condition review turn times to deteriorate.  We are aggressively increasing our staff in order to accommodate more volume without compromising the service you have come to depend upon (including opening an additional underwriting center in Wall, NJ).  Once we have successfully increased our staff, we will again accept conventional refinance submissions."

In recent weeks Flagstar reminded its clients that "underwriters are once again available to respond to inquiries which involve existing files only. Underwriters will respond to emails and voicemails (to increase efficiency, please use one method of contact only) that are specific to a loan that has been submitted and reviewed by Underwriting, along with curative questions regarding declined loans. Please provide the loan number and borrower name with your inquiry and allow four (4) business hours for response."

Fifth Third's broker clients received the note: "The items below pertain to Fifth Third's Wholesale Lending: Price Adjustment on VA and FHA Base Loan Amount Greater than $417,000. Effective with all loans locked or relocked after 8:30 am EST on Thursday, June 21, 2012, the adjustment for FHA and VA loans with base loan amount greater than $417,000 will be updated. The rate sheet currently states that for FHA 15 and VA 15 products, with base loan amount greater than $417,000, there is a .75 hit to the pricing. Tomorrow's rate sheet will reflect that this adjustment applies to the FHA 30 and VA 30 products also." (On the correspondent side, 5 3 is going away with full underwrites and is moving to all post close submissions only, rumored due to a lack of capacity.)

The Fed announcement came and went, but by the time the dust settled our 10-yr T-note's yield really hadn't changed that much and it closed at 1.64%. The Fed said that there will be no additional MBS purchases but "Operation Twist" is extended in Treasuries. So it will continue to reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities, buying $267 billion more in longer-dated securities by the end of 2012. Traders seem to view this decision as the Fed maintaining "status quo". The Federal Reserve, by extending its monetary stimulus, pretty much said that a U.S. economic recovery is at risk of stalling. "This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative."

The focus on Treasury securities, and not residential mortgage-backed securities, brought an immediate adverse knee-jerk selling response in MBS's. So although Treasury yields didn't do much Wednesday, we saw several intra-day lender price changes as spreads on 30-year 3.5% and 3.0% coupons went from slightly "tighter" throughout the morning to "wider" by .125 to .250 versus the 10-yr.

For thrills and chills today we'll have weekly Jobless Claims (expected to drop slightly), Existing Home Sales for May (also expected down slightly), Leading Economic Indicators (expected up), and the Philly Fed. Lots of numbers - individually they might not nudge rates much, but collectively they could. Too early to tell...

(These are from a book called Disorder in the American Courts, and are things people actually said in court, word for word, taken down and now published by court reporters who had the torment of staying calm while these exchanges were actually taking place - part 1 of 3.)

ATTORNEY: What was the first thing your husband said to you that morning?
WITNESS: He said, 'Where am I, Cathy?'
ATTORNEY: And why did that upset you?
WITNESS: My name is Susan!
ATTORNEY: This myasthenia gravis, does it affect your memory at all?
ATTORNEY: And in what ways does it affect your memory?
WITNESS: I forget.
ATTORNEY: You forget? Can you give us an example of something you forgot?
ATTORNEY: Now doctor, isn't it true that when a person dies in his sleep, he doesn't know about it until the next morning?
WITNESS: Did you actually pass the bar exam?
ATTORNEY: The youngest son, the 20-year-old, how old is he?
WITNESS: He's 20, much like your IQ.