If you don't open up one other link in this e-mail, at least open this link to a photo of a sign that surely has applications to residential lending. (Although this is pretty cool too.  Somehow, somewhere, in this short video there is an analogy to lenders dealing with the current, and expected, compliance environment).

What is Angelo Mozilo up to? Well, aside from living his life, he is granting interviews to Bloomberg. The industry, and especially CEOs, is watching any civil lawsuits that may arise as a bellwether for future litigation at a personal level.

Private mortgage insurance probably wasn't a BBQ discussion topic over the weekend, but plenty of high IQ folks are thinking about it. The latest piece is written by one of the directors of MGIC (Mark Zandi), and Jim Parrott (with the Urban Institute). If you don't want to actually click on the link, the gist of it is, "The Private Mortgage Insurance Eligibility Requirements, recently put forth by Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency, are... a thoughtful effort, these standards should succeed in ensuring that private mortgage insurers are strong counterparties to the government-sponsored enterprises and a much improved bulwark against excessive risk in the system. Several features of the rules as currently written, however, would likely unnecessarily increase costs and cyclicality in the mortgage and housing markets."

Today New York became the latest state to adopt the Uniform State Test (UST). Ohio, Connecticut, and Oklahoma will then follow soon after. NMLS approved course providers are encouraged to keep abreast of which states are adopting the UST and to update any course material accordingly. Adoption information is posted on the testing page of NMLS Resource Center. "Additionally, we have received several course submissions with incorrect test retake information.   As a reminder, an individual who attempts to take the test and fails to achieve a passing score of at least 75% must wait 30 days before they are allowed to retake the test. An individual may take the test a total of three (3) times before the SAFE Act requires the individual to wait 180 days before attempting it again. Detailed information about the MLO SAFE Test is available in the MLO Testing Handbook."

On August 20, the District of Columbia Department of Insurance, Securities and Banking (DISB) spread the word that as of September 3 it will begin using the NMLS to manage money transmitter, check casher, money lender, retail seller, sales finance company and non-bank ATM licenses and registrations. Beginning on that date, new applicants for such licenses and registrations must apply via the NMLS. Entities currently holding such licenses and registrations must create a complete record in NMLS and submit it to DISB for approval by December 31.

Last week HUD issued its final rule prohibiting mortgagees from charging post-payment interest under FHA's single family mortgage insurance program. The final rule is responsive to the CFPB's ATR/QM rule, under which post-payment interest charges will be considered a prepayment penalty in connection with FHA loans closed on or after January 21, 2015. Because prepayment penalties are prohibited on higher-priced FHA loans, the new definition of "prepayment penalty" under the ATR/QM rule would have effectively prohibited the making of higher-priced FHA mortgage loans. Also effective January 21, 2015, HUD's final rule ensures consistency among FHA single-family mortgage products and provides the same protections for all borrowers. Under the final rule, monthly interest on the debt must be calculated on the actual unpaid principal balance as of the date prepayment is received.

We also had HUD issuing its final rule to amend FHA's single family adjustable rate mortgage (ARM) program regulations to align with the interest rate adjustment and notification periods required for ARMs under the CFPB's new TILA mortgage servicing rules. The final rule is effective January 10, 2015 and adopted the proposed rule issued on May 8 without change. Under the final rule, interest rate adjustments resulting in a corresponding change to the mortgagor's monthly payment for an ARM must be based on the most recent index value available 45 days before the date of the rate adjustment. FHA's previous regulations provided for a 30-day look-back period. Further, the final rule mandates that mortgagees of FHA-insured ARMs comply with the disclosure and notification requirements of the CFPB's TILA servicing rules, which require at least 60-days, but no more than 120-days advance notice of an adjustment to a mortgagor's monthly payment. Previously, the regulations provided for only 25 days advance notice.

And Fannie Mae issued Lender Letter LL-201404, which reminds lenders that when a mortgage loan is selected by Fannie Mae for an anti-predatory and HOEPA compliance review, the lender must provide requested loan information to Fannie Mae. Further, the letter reminds sellers that mortgage loans with either an annual percentage rate or total points and fees payable by the borrower that exceed the applicable HOEPA thresholds are not eligible for delivery to Fannie Mae. Additionally, Fannie Mae released an optional worksheet, available on the Fannie Mae website, designed to assist lenders in responding to any information requests from Fannie Mae. This letter highlights the continued focus of Fannie Mae regarding its anti-predatory lending quality control process.

And I received this note from a concerned mortgage professional. "Rob, the commentary about FNMA and FHLMC allowing lenders to only provide W2, paystub, with the supporting 4506T illustrates that they are willing to continue to put good lenders in jeopardy.  The main reason many originators go that route is to not disclose 2106 expense or schedule C that would prohibit the borrower from qualifying.  We asked our QC team at FNMA what they thought. Their response was, 'If you know (or believe) the borrower occupation typically has 2106 expense you should ask for full returns'.  My thoughts are that they continue to put us in harm's way. Some lenders use this lack of proper documentation as a competitive recruiting advantage while the rest of us look long range at the implications.  By not fully documenting we run the risk of violating the ability to repay as well as creating a  repurchase risk later when FNMA or aggregator gets the taxes from the borrower during proposed workouts and  looks for borrower fraud."

Freddie Mac's Reps and Warrants Updates remind lenders that have mortgages that obtained selling representation and warranty relief between February and July 2014, your organization will receive a Selling Representation and Warranty Relief Date Report by mid-September. Also, Freddie Mac has terminated its relationships with the following law firms providing default-related legal services (DRLS) for Freddie Mac Default Legal Matters. Connolly, Geaney, Ablitt & Willard, P.C., in the following states: Massachusetts, New Hampshire, Rhode Island, Florida and Puerto Rico. The Castle Law Group, LLC, in the following states: Utah, New Mexico, Nevada, Arizona and Wyoming. Visit default legal services for detailed information for Servicers, law firms, and Legacy Matters. Bulletin 2014-15 covers a great deal of information including: Mortgages insured by Arch Mortgage Insurance Company, Suspicious Activity and anti-money laundering (AML) noncompliance reporting, Updates to counterparty eligibility, Updates to flood insurance requirements, Updates related to ULDD, Certificate of incumbency forms, and Requirement updates for manufactured homes.

Freddie Mac news and reminders covers Loan-to-value edits, elimination of ULDD data point for certain construction conversion mortgages and for seller-owned modified mortgages; both effective August 18th, upcoming ZIP code edit, and changes to allow the 'Field Review' option to be selected for conforming loans.

On Friday HUD came out with several proposed changes to its FHA 203(k) program. The possible changes prompted one veteran broker from New Jersey to write me saying, "There are some interesting proposals, including two appraisals (which we like) - 'as is' value and 'after improved' value. I am not sure I like the capping of the loan amount to 110% of after improved value now to include the EEM money, so hopefully I am misinterpreting this.

FHA posted revised hudclips form HUD/VA Addendum to Uniform Residential Loan Application to implement changes for VA-guaranteed mortgages. The VA update clarifies what constitutes a valid marriage for the purpose of obtaining VA benefits.

Risk versus reward: "Rob, when will your readers learn that all investors want more yield? Prime or subprime, QM or non-QM, residential or commercial, most want that extra .5 or 1%. Yes, there are varying degrees of risk, reps and warrants, and potential pitfalls down the road - and investors understand that. But if presented with two pools of loans, one made up of loans with a 42% DTI and yield 3% and the other made up of loans with a DTI of 45% and a yield of 3.5%, all else being equal, which pool will they buy?" I like to think that most folks understand that. In fact, there was a story late last week about pools of subprime loans with small credit enhancements having a resurgence of interest among investors.

We ended last week with the 10-yr at a yield of 2.34%. At the current time the U.S. economy is not doing well enough to warrant higher rates, and trouble overseas has increased foreign investment in our bond (and stock) market. We did find out, however, that U.S. second-quarter gross domestic product was higher than initially estimated - but it wasn't enough to reverse a rally in Treasury securities as the 30-year yield reached a 15-month low. Concern about Russian intervention in Ukraine and an expectation that the European Central Bank will soon launch a bond-buying program drove demand for U.S. government debt as a safe-haven investment in spite of second quarter GDP being revised higher to a 4.2 percent annualized rate. Headlines for housing data were mixed last week, but reports generally suggest the sector continues to gradually improve as home prices are increasing at more reasonable rates, supply is coming back and future recorded sales look to improve.

It's Tuesday already, and we have a lot of scheduled news staring us in the face. Today the ISM Manufacturing Index will report on the general direction of production, new orders, backlogs, inventories, employment and overall demand from 300 manufacturing firms nationwide. We'll also see Construction Spending for July. Tomorrow is Factory Orders and the release of the Beige Book (the status of the Federal Reserve Districts). Thursday the 4th will have International Trade numbers, Challenger Job Cuts, ADP Employment Change numbers, Nonfarm Productivity, and Unit Labor Costs.  On Friday, September 5th, the Employment Report tells us the change in Nonfarm Payrolls, Unemployment Rate, and Hourly Earnings.

Rates are higher this morning: as a benchmark, Friday we had a 2.34% close on the 10-yr T-note, and this morning we're at 2.38% (the 10-yr is worse by .375 whereas the 30-yr T-bond is worse a full point!). Agency MBS prices are worse between .125-.250. There is no late-breaking news, aside from stock markets around the globe rallying on Ukrainian tension subsiding somewhat.



Turning to some job news, I have lost track of the number of $600k a year jobs I have left. But Chelsea Clinton just left her first one - her NBC correspondent job with its $600k salary. "The 34-year-old mom-to-be revealed Friday she's giving up her gig 'to continue focusing on my work at the Clinton Foundation.' Though she had zero journalism experience and only filed a trickle of stories since 2011, Alex Wallace, a senior vice president of NBC News, said, 'Chelsea's storytelling inspired people across the country.'" I'm inspired!

Moving to job news that is relevant, United Fidelity Funding Corporation, a 20 year old national wholesale lender, has recently entered the California market by opening an operations center in Orange County. It is currently looking for a select number of AEs to work the entire state of California and is offering the right candidates an opportunity to work for this well-established lender that has not saturated the state with other AEs. "Take advantage of its wide-open state-wide opportunity with minimal broker account conflict. United's Irvine operations center is staffed and prepared to maintain industry leading turn times. UFF West is a direct seller to FNMA and FHLMC, an approved GNMA issuer, VA and USDA approved.  If you are interested in joining an experienced lender who has not oversaturated California and has industry leading products and pricing, turn times/service levels, please email Division Manager Mike McCarthy and/or visit UFF."

On the other side of the country, PHH Mortgage is seeking a Director of Fair Lending and UDAAP with a competitive compensation package, sign on bonus and relocation assistance offered. This role is located in PHH's Mt. Laurel, NJ office and is responsible for managing the company's existing fair lending and UDAAP programs throughout its sales, originations and servicing units. This is not a new position. This is an opportunity to join a team of dedicated compliance professionals and excel in an established and effective compliance program.  Interested candidates can email Jessica Winslow for more information or apply directly at www.phhjobs.com.

And a quick note - if there are any processors or junior LOs who'd like to work in Marin County (just north of San Francisco) for a top agent at Terra Mortgage (a division of Opes Advisors), or if you know of anyone, contact Marney Solle.