In mortgage banking, just like gymnastics, you have to get up after you fall down.

Totaling through May, California (133,000), Florida (92,000), Michigan (60,000), Texas (58,000), and Georgia (57,000) accounted for nearly half (400,000) of the completed foreclosures in the entire country during the last 12 months. The foreclosures in May brought the 12 month total to 819,000 foreclosures which is an average of 2,440 each day. Since the financial crisis began in September 2008 there have been approximately 3.5 million completed foreclosures across the nation and, as of the end of May, another 1.4 million homes were in the national foreclosure inventory, down from 1.5 million in May 2011, but still 3.4 percent of all homes with a mortgage. Though the national foreclosure inventory levels remain steady, there have been dramatic shifts at the state level with foreclosure inventories in most states are declining, but foreclosure inventory is still rising in many judicial states. The five states with the most completed foreclosures are also the top states in terms of their foreclosure inventory.  Four of the five states, Nevada being the exception, use primarily a judicial foreclosure process which has been blamed for much of the backlog of loans that are severely delinquent but not yet foreclosed.

"Rob, here we are in the mortgage business. Congress is gunning for us, the CFPB is gunning for us, the public is gunning for us, and the press is gunning for us. Everyone is upset about all the compliance, rules, and regulations that have been put in place. Yet, volumes are through the roof, margins are high, and many companies are 'going gangbusters.' How am I supposed to complain about the cost of doing business when this is happening?" That is a good question. It seems like it is a dirty little secret that mortgage companies, in general as I am sure that there are exceptions, are very profitable right now. Remember, however, that a portion of this money is a) due to less competition, b) servicing value fluctuations, and c) companies increasing margins to reserve against future liabilities, litigation, and buybacks. But yes, from a money perspective it is a good time to be a mortgage origination company, and the government & regulators continue to install hurdles against new companies.

Where are the loans coming from? Many borrowers can't take advantage of these incredibly low mortgage rates due to negative equity, strict underwriting, and originator backlogs. The only thing that can really extend refi activity in a low rate environment is a loosening of underwriting or documentation or appraisal standards to bring more borrowers into the market, something that isn't likely to happen anytime soon. Twice this year the market did see a surge in refinancing, with the expanded the Home Affordable Refinance Program for borrowers who owe more on their mortgages than their homes are worth and the FHA changing the rules on its streamline refi program for borrowers who already have FHA loans, dropping underwriting almost entirely. Some LO's tell me that most of the activity in recent months are from the same borrowers who refinanced a year or so ago refinancing again. While programs like HARP and FHA's Streamlined Refi can provide a temporary surge in refi's, especially for banks, they still only account for a relatively small share of borrowers.

Non-bank lenders are often confused as to whether or not they will be subjected to CFPB scrutiny. They will be, just as several non-banks are being audited. The Consumer Financial Protection Bureau's Office of Fair Lending and Equal Opportunity released expectations for non-banks concerning compliance with fair lending and unfair, deceptive, or abusive acts or practices ("UDAAP") laws. The Bureau intends to create a level playing field between banks and non-banks, but CFPB representatives have indicated that they understand that fair lending programs take time to develop and that they will need to help educate executive and senior management at non-banks concerning the importance of fair lending laws and the risks of non-compliance.  As a result, the CFPB does not expect to find fully developed and implemented fair lending programs in place at non-banks during the initial examination cycle and recognizes that such programs will evolve.  Nonetheless, non-banks will be expected to quickly develop and maintain fair lending programs that are comparable to those at banks. Similarly, it is expected that UDAAP programs will evolve for both banks and non-banks as the CFPB continues to define "abusive" practices through examinations and enforcement actions. Fair lending risk assessments will continue to be required for banks and are expected for non-banks. One issue that continues to garner discussion among both banks and non-banks is the presence of enforcement attorneys in examination meetings throughout the examination process. The Bureau understands that both banks and non-banks will want to have their attorneys present if CFPB enforcement attorneys attend compliance examination meetings. The CFPB would not object to the presence of in-house or outside counsel for financial institutions at these meetings so long as such attorneys are not acting in a manner that obstructs the examination process reports law firm BuckleySandler LLP.

When in doubt, attend training or a conference! Seriously, the training and conference calendar is important to know, as are relatively recent investor/agency updates to give one a flavor for trends in the industry.

The Community Mortgage Lenders of America (CMLA) represents nearly 90 mid-sized community bankers and mortgage bankers from throughout every major metropolitan region throughout the country. The CMLA is holding its Annual General Session and Business Meeting this Sunday, August 5.  The General Session will feature a presentation from Christopher Lombardo - Assistant Regional Director of the CFPB's Midwest Region. The CMLA is determined to establish sustainable business and regulatory strategies to support community based lending, competition and consumer advocacy while fighting policies that would increase concentration in the marketplace among the nation's largest financial institutions. To learn more about the CMLA, please visit or contact Kevin Cuff, Executive Director, at kmcuff@thecmla .com.

FinCen's August 13th is fast approaching and with it, the new requirement for Anti-Money Laundering policies for Mortgage Bankers and Brokers. Barbara Werth is hosting a free webinar on Anti-Money Laundering policies on August 1st from 1-2PM CST. There is no cost of the webinar, and anyone interested should email Barbara at: barb@MTToday .co so she can send you call-in information.

Fannie is offering its servicers free loss mitigation training under the Know Your Options Customer CARE initiative. The training complies with the Single Point of Contact Standards set forth by the Office of the Comptroller of the Currency and the Consumer Finance Protection Bureau as well as the FHFA's Alignment Initiative.  See the Know Your Options website for more information.

On August 14th in Boise, ID, the FHA will host a realtor training session in the local HUD Field Office.  The event will cover topics such as FHA updates, rehabilitation loans, Energy Efficient mortgage programs, and selling HUD-owned properties.  Interested parties can register here.

A full-day training on FHA appraisals will be held in Little Rock, Arkansas on August 22nd.  The session will cover appraisal protocol, updates to FHA appraisal policy, and property eligibility and is suitable for both new and experienced FHA appraisers. Register here

On August 23rd, the FHA will be hosting "A Day with the FHA," an event that will cover a number of fields relevant to those who work with the organization.  Policy updates, refinances, and REO calculations are all on the agenda.  Registration info is available here
Who says that there are no new investors? Norcom Mortgage, one of the fastest growing non-bank lenders on the East Coast, is launching a correspondent program. It will focus on high quality credit unions, banks, and select mortgage companies. Effective immediately, Vice President's Patti White and Susan Sheffer will be leading the correspondent team's expansion efforts on the East Coast. (Norcom is a FHLMC seller/servicer and a GNMA issuer.)

Under its "Just Miss" program, Mid America Mortgage is offering clients the option of having MAM purchase closed FHA-, VA-, and USDA-insured loans that aren't able to be sold in the traditional manner due to "just missing" investor guidelines.  To qualify for the program, loans must be RESPA-compliant and insured with MIC, LGC, or LNG.

Turning to merger and acquisition and closure news, West Virginia's WesBanco will buy Pennsylvania's Fidelity Bancorp for $70.8mm million in cash and stock, or about 1.62x tangible book. New York Private B&T, the parent company for Emigrant Savings Bank, has reached agreement to sell 30 branches and $3.2B in deposits to Apple Bank for Savings ($8.4B, NY) for an undisclosed sum. This is the largest branch transaction of 2012 and the largest in the New York City area in over 10 years. KeyCorp said it will close 5% of its branches (about 50) in an effort to reduce expenses by $150mm to $200mm. And Bank of America continues to sell branches in smaller "noncore" markets with populations of less than 150k people or MSAs with less than 500k people, as it works to close 750 branches over the next few years.

To improve performance, Iberiabank ($11.7B, LA) said it will close 10 underperforming branches. Keefe, Bruyette & Woods announced that Mission Bancorp, the Bakersfield-based parent holding company for Mission Bank, has entered an agreement with Mojave Desert Bank whereby it will acquire the latter's branches in Mojave, Ridgecrest, Lancaster, and Helendale.

Osage Bancshares announced their agreement for Osage to be acquired for an aggregate value of $27.4 million by American Heritage Bank through a merger transaction.

Capital One will pay $12 million to military customers to settle charges from the DOJ and OCC that it improperly foreclosed on them and overcharged for credit card and auto loans.

A few weeks ago Stonegate Mortgage released its 2nd Quarter results that were of note. Its revenues year-to-date had increased 340% over 2011, servicing portfolio increased by 235%, and its correspondent channel has grown 519% over 2011. The Indianapolis-based company was recognized last month by Indianapolis Business Journal as the 9th fastest growing privately held company in the city. "At Stonegate, we are always focused on the next few years ahead and that includes expanding into more states, increasing originations in our wholesale and correspondent channels, expanding our retail branch network through acquisitions, building our servicing portfolio and brand awareness," said Jim Cutillo, CEO of Stonegate Mortgage. In March Long Ridge Equity Partners, a New York based private equity firm invested $25 million in Stonegate Mortgage to support the company's continued growth and further acquisitions.

Monday - another summer day in the fixed-income markets. There was little news over the weekend and nothing here in the United States. Demand for agency mortgage-backed securities was steady, and supply from originators dropped off a little. But where the heck did July go? Anyway, by the end of the day the U.S. T-note closed at 1.50% and MBS prices were better by about .125-.375, depending on coupon.

Today, however, we have a heckuvalot of data, along with the start of a 2-day Fed meeting. (The Fed announcement is tomorrow, but don't look for a lot of change in their statement.) We've had Personal Income and Consumption, unchanged and +.5% respectively. Although pretty much on target, the numbers are somewhat disappointing for the economy given that consumer spending drives growth. No spending = no growth. The Employment Cost Index was on target. 9AM offers May's S&P/Case Shiller home price index (+0.4 vs. +0.7 last - but there is always a two month delay in this number), 9:45AM EST has July's Chicago PMI (52.4 vs. 52.9 previously), and 10AM EST we'll have July's Consumer Confidence (less so at 61.4. vs. 62.0). Early on the 10-yr is at 1.46% and MBS prices are again better by .125-.250.

RETIRE WHERE?   Here are some of your choices - I keep receiving them from readers, part 7 of 7:
You can retire to the Deep South where...
1. You can rent a movie and buy bait in the same store.
2. "Y'all" is singular and "all y'all" is plural.
3. "He needed killin"  is a valid defense.
4. Everyone has 2 first names:  Billy Bob, Jimmy Bob, Mary Sue, Betty Jean, Mary Beth, etc.
5. Everything is either "in yonder," "over yonder" or "out yonder" It's important to know the difference, too.
You can retire to Colorado where...
1. You carry your $3,000 mountain bike atop your $500 car.
2. You tell your husband to pick up Granola on his way home and so he stops at the day care center.
3. A pass does not involve a football or dating.
4. The top of your head is bald, but you still have a pony tail.