"What is a pirate's favorite place to shop? Taaaarrrget, of course - because of all the baaaarrrrrggggains."

Speaking of bargains, in July Retail Sales improved 0.3% on the heels of motor vehicle and gasoline station sales, but in some measure due to many stores marking down items to attract customers. This morning we had the August Retail Sales number, which again improved, this time +0.4% - about as expected or maybe a shade stronger.

Tabloid headlines - what can you say? "Panda mating fails - veterinarian takes over", for example, or  Bank of America... Buybacks could total $20 billion. 

Originators, employed or not, looking for something new on the west coast may want to contact Corky Watts, an industry consultant with Garrett, Watts & Co. He has a national bank client looking for new partners (originators and small mortgage bankers). Corky believes, "The partnership has been a great deal for originators. You get all the benefits of being part of a bank, but also maintain a high degree of branch autonomy." Contact Corky for more information at cwatts@garrettwatts.com.

If your company is busy actually locking and funding loans instead of mired down in processing, congratulations - you've bucked the trend. Mortgage bankers funded $357 billion of 1-4 unit residential loans in the second quarter, a 7% increase from the 1st quarter but a 39% decline from the same period in 2009.

As we head into the end of the 3rd quarter, do you remember what the initials "MDIA" stand for? "Mortgage Disclosure something-or-other" is not good enough. Since it went into effect it really hasn't hurt anyone, but now that rates have moved higher as companies gear up for month end, MDIA may make things a little tough for some. The 3/7/3 rule requires a seven business day waiting period, once the initial disclosure is provided, before closing a home loan. This means that before a borrower can close on a transaction the borrower must receive the initial GFE and initial TIL statement disclosing the final APR seven days prior to closing. If the final annual percentage rate APR is off by more than .125% from the initial GFE disclosure then the lender must re-disclose and wait yet another three business days before closing on the transaction. The consumer has the right to cancel and not proceed with the transaction if they so choose. Lenders can collect the credit report fee but are forbidden from collecting money for appraisals, loan applications, etc. prior to the delivery of the TIL. Etc.

By the way, it's Mortgage Disclosure Improvement Act.

What could be better than a free call on compliance issues? "Mortgage Compliance and QA Professionals, You are invited to participate in the next monthly conference call of the California Mortgage Bankers Association's Mortgage Quality and Compliance Committee. Please mark your calendar for the next call which will include a presentation on the topic of "How to Prepare for a DOC Audit" this Thursday, September 16, at 11AM PST. Dial in #: (800) 240-3895, Passcode: 22936#."

CitiMortgage clarified/reiterated its "Departure Property" policy for correspondent clients. Namely, "Effective for loan registrations on manually underwritten loans and loans processed via LP, on and after September 13, 2010: Where income/signed leases from a Departure Property are used for loan qualification, the borrower(s) federal tax returns must evidence a 2-year history of managing other investment property. This requirement does NOT apply to loans processed via DU and receiving an Approve/Eligible finding. Therefore, a 2-year history of managing other rental properties is not required on DU Approve/Eligible loans. However, all other applicable policies for Departure Properties and Real Estate Obligations must be followed, including DU findings."

Citi also told its correspondents that it is following the HUD/FHA insurance changes for the Up-front Mortgage Insurance Premium and Monthly MI structure for FHA loans with case number assignments dated on or after October 4, 2010. Further, HUD has changed the amount of the annual mortgage insurance premium that may be charged.

Wells correspondents received some good news (if you're in a jumbo market). Wells Fargo Funding has updated its Non-Conforming offering "to allow the use of business funds for the down payment or to meet post-closing liquidity (PCL) requirements when each of the following is met: borrowers have a verified 100% ownership in their business, average cash flow of the business must be greater than the amount to be withdrawn for down payment or used for PCL requirements, and cash indicated on the year-end balance sheet for each of the previous three years must be greater than the amount to be withdrawn for down payment or used for PCL requirements. A full analysis of the business must be completed to consider the effect of the withdrawal of the assets and the future strength and viability of the business. On top of that, Wells' correspondent channel will now accept Non-Conforming Loans with subordinate financing."

Kinecta's wholesale channel (Credit union) is certainly in the jumbo space. (I love that kind of talk.) For brokers it offers jumbo loans to $4,000,000, with a 660 FICO, to 50% DTI, HELOC's or fixed rate seconds to $500,000, and 1st and 2nd with the 1st at agency high-balance rates. On the conforming conventional side, Kinecta claims to offer virtually no underwriting overlays to Fannie's guidelines, no AMC (it has its own appraisal company), and will accept transferred appraisals from major banking institutions. It will even do 40-yr IO loans to $2,000,000 at no additional cost. Contact George Andrews at GAndrews@kinecta.org.

Freddie Mac extended its settlement deadline for the temporary Freddie Mac HAMP Backup Modification and the Cap-to-Reinstate modification for Home Affordable Modification program (HAMP)-ineligible borrowers. The date for the first modified payment was pushed from 9/1 to 12/1. Servicers should check out the BULLETIN.

Alaska has approved MGIC's Credit-Tiered premium rates. Credit-Tiered rates will be effective for AK MI applications received on or after Sept. 14, 2010. All states have now approved Credit-Tiered premium rates. The Credit-Tiered rate cards are posted on our website.

For the week ending on Sept 1, bank holdings of MBS went up by $18 billion and their whole loan portfolio went up $28.3 billion. It is a fairly sharp pick in both the categories since early July. It could be a sign that bank portfolios are retaining a lot of new production and that is why flows seen by origination desks have not been commensurate with the level of refinancing index and prepayment speeds in August.

Reverse mortgage lenders endorsed 6,645 HECM units during August, up about 13% from July and the 3^rd month in a row endorsements have increased. But overall volume for 2010 is still down about 38% from the same period last year. In an article in Reverse Mortgage Daily, according to Reverse Market Insight the average number of monthly endorsements per lender (almost 9) is at its second highest number in the last two years. The top lenders in the category: Wells Fargo, Bank of America, MetLife, One Reverse Mortgage, Urban Financial, Genworth, Generation, Financial Freedom, 1st AAA, and Guardian First Funding Group.

What are mortgage traders thinking out there? "Faster than expected prepayments cause mortgages to underperform and rolls to decline. Despite the recent bear steepening we continue to believe that we are at the cusp of classic rate induced refinancing wave and 2008/2009 4.5s and 5s are at most risk. Maintain underweight in agency MBS. Non-agency (e.g., jumbo, Alt-A) prices continued to rise amidst lower supply. The market is looking towards the coming weeks to get a clearer picture on market sentiment going into quarter end. We continue to overweight the non-agency market due to the yields offered by the sector and longer term based on the shrinking supply picture." The Dow ended up over 80 points, while the 10-year note rallied by almost .5 and mortgages did nicely Monday. Here this morning, after the Retail Sales number, rates have moved slightly higher. The 10-yr is sitting around 2.70% and mortgages are roughly 12bps better after a nice rally yesterday.

A woman takes a lover home during the day while her husband is at work. Her 9-year old son comes home unexpectedly, sees them, and hides in the bedroom closet. Then the woman's husband also comes home. She puts her lover in the closet, not realizing that the little boy is in there already.

The little boy says, "Dark in here."

The man says, "Yes, it is."

Boy - "I have a golf ball."

Man - "That's nice."

Boy - "Want to buy it?"

Man - "No, thanks."

Boy - "My dad's outside."

Man - "OK, how much?"

Boy - "$250."

A few weeks later, it happens again that the boy and the lover are in the closet together for the same reason.

Boy - "Dark in here."

Man - "Yes, it is."

Boy - "I have sand wedge."

The lover, remembering the last time, asks the boy, "How much?"

Boy - "$750."

Man - "Sold."

A few days later, the boy's father says to the boy, "Grab your sand wedge and golf ball.  Let's go outside and have some short game practice." The boy says, "I can't.  I sold my ball and sand wedge, Dad."

The father says, "What?! How much did you sell them for?"

Boy - "$1,000."

The father says, "That's terrible to overcharge your friends like that. That is far more than those two things cost.  I'm going to take you to church and make you confess."

They go to the church and the father makes the little boy sit in the confession booth and he closes the door.

The boy says, "Dark in here."

The priest says, "Don't start that stuff with me again."

ZING! It's just a joke!