LA Dodgers' Tommy Lasorda reportedly said, "I found out that it's not good to talk about my troubles. Eighty percent of the people who hear them don't care and the other twenty percent are glad you're having trouble." But unfortunately the residential lending industry (and the commercial lending industry, due to lack of volume and expansion by companies) is having its share of troubles. M&As are on the rise (see the STRATMOR information below) and the rumor mill is working overtime as some companies eat into their cash reserves built up during 2012 and the first half of 2013, figure out how to cut more staff heading into the traditional lean six months of every year, and try to chase originators who specialize in purchases.

The steady rumbling about Nationstar's problems has increased, and I have received many e-mails about the number of Nationstar employees looking for work. SunTrust Bank said it will eliminate 800 jobs nationwide. SunTrust gave mortgage employees the news last week, bank spokesman Michael McCoy said, and the positions will be eliminated in the coming months, likely into the first quarter. And Residential Finance Corp has closed almost half of its 30 retail branches and let go hundreds of workers since the summer, company insiders told Inside Mortgage Finance.

Well, once again our government has kicked the can down the road, and we can look forward to all of this happening again right after New Year's Eve. The deal struck will reopen the government through January 15 and suspend the debt-ceiling through February 7. Short term Treasury bills rallied with solid demand for the one-month bills that were auctioned on Wednesday, and investors are now discussing the possibility that the government shutdown and debt-ceiling debate could delay the Fed tapering of bond purchases further. I received this note from Anthony Bird, owner & senior LO of Riverbank Finance LLC: "I am already getting emails from clients and realtors asking how soon they can close the home loans that were delayed due to the government shutdown. Here is the advice I am providing to my homebuyers and real estate agents." Thank you Mr. Bird!

Jim Cameron writes, "At STRATMOR Group we have designed a cultural compatibility survey that identifies areas of potential cultural mismatch between a buyer and seller in merger & acquisition transactions. The survey questions cover a range of key attributes of corporate culture and require respondents to rank each attribute based on a continuum of whether it best or least describes the organization's culture. Early in the due diligence process, STRATMOR requires that both the buy side and sell side management teams fill out the survey.  Once this is done, we compare the survey score for each attribute of corporate culture and identify areas where there may be cultural mismatch. For example, the leadership style of a buyer may be best described as top down or command and control. Conversely, a target seller may have a leadership team that is highly collaborative and makes decisions through consensus building. By identifying this key cultural difference early in the due diligence process, both the prospective buyer and seller can take steps to mitigate the mismatch through organizational design, training, enhanced communications, etc. In extreme cases, the two parties may decide to terminate negotiations because cultural differences may be deemed too significant to mitigate. Cultural compatibility is the number one factor that determines the success of M&A transactions. By measuring cultural fit early in the due diligence process, our clients can avoid deals that are doomed to failure or take proactive steps to mitigate the risk of cultural incompatibility." (For more information, contact Jim Cameron at jim.cameron@stratmorgroup.com.)

U.S. Bancorp's overall net income remained flat on a yearly basis, but mortgage banking revenue fell 37% from a year earlier (a $68 million drop) and 17% from the second quarter (down $191 million). Just like practically every other lender, mortgage banking revenue fell on a year-over-year and quarterly basis due to lower origination and sales revenue. But as with most companies that are servicing loans, it saw higher servicing income and a favorable change in the valuation of mortgage servicing rights. Origination activity for U.S. Bancorp totaled $63 billion during the third quarter, including $38 billion in commercial real estate and $23 billion of mortgage and other retail loan originations.

AllRegs is offering a free anti-money laundering course, designed for people who don't want to get caught laundering money. (Just kidding!) "We are offering an anti-money laundering online course with free registration. The details are here. And AllRegs is offering a compliance management system. "To help the industry meet the demands and needs of the CFPB's guidance on compliance management systems, we have the following solution: AllRegs Compliance Management System. The details are here and here.

The national Reverse Mortgage Lenders Association will be hosting "New Music: Changing the Reverse Mortgage Conversation," its 2013 annual meeting and expo, from November 4^th-6^th in New Orleans, LA.  The program will focus on HUD's changes to the HECM insurance program and features speeches from HUD and GNMA officials and professors from Columbia Business School, Texas Tech University, and the John Glen School of Public Affairs.  Register here.

Fifth Third reminds sellers that written income calculations are required for all files that are submitted for purchase, which includes Cash Flow Analysis documentation for self-employed borrowers.

Reverting to some shutdown news that we can probably recycle in January & February, with regard to the government shutdown, PennyMac is still requiring all documentation to be submitted per current policy, including tax transcripts and VOEs.  All Rural Housing loans delivered for purchase will continue to require Conditional Commitments, but PennyMac will accept loans with contingent Conditional Commitments that are issued "subject to the availability of commitment authority."  The Loan Note Guaranty remains a post purchase stipulation, and correspondents are still subject to the standard reps and warrants.

PennyMac has implemented its disaster policy for properties in the Colorado counties of Adams, Boulder, Larimer, and Weld, which, if their appraisals were not completed before the incident period end date, will require re-inspections. Full appraisals are required on all loans apart from DU Refi Plus, Open Access, and FHA Streamlines that contain an eligible inspection product.

In response to the flooding in Colorado a while back, Flagstar published a list of zip codes where properties securing Conventional loans will be required to be re-inspected if the effective date of the appraisal falls before September 16^th.  Note that this does not include Jumbo Fixed Rate or Jumbo 10/1 ARM transactions.  All Government loans whose appraisals are dated before September 16^th in Adams, Arapahoe, Boulder, Clear Creek, El Paso, Jefferson, Larimer, Logan, and Weld Counties will also need to be re-inspected.

WesLend has introduced its new Direct FHA program for 30-year Fixed and Fixed Streamline transactions.  The program aligns with HUD guidelines and allows for FICO scores down to 600, DTIs of up to 55, and 1-4 units properties.  WesLend has also been approved to purchase loans that have been funded by Tennessee Financial's warehouse line.

Under its WesLend Direct product, WesLend is now offering loans to borrowers with up to ten financed properties, transferred appraisals, 1 x 30 mortgage histories, conventional flips, and unpermitted additions.  Short sale, deed-in-lieu, and modified loans can be seasoned for as few as 24 months, and there is no seasoning requirement for cash-out refinances in circumstances where the property was purchased on an all-cash basis.

Carrington Mortgage is offering loans up to $2 million under its Jumbo program, offered as both 15- and 30-year fixed rate and ARMs.  Purchases, rate/term refinances, and cash-out refinances are available for 1-2 unit primary residences, and purchases and rate/term refis are available for second homes.  Both transaction types are subject to a maximum of 41% DTI and 80% LTV and a minimum 720 FICO (700 FICO and 80% LTV are eligible for loan amounts up to $1 million).

FirstRex has started making a name for itself in the non-Agency market by offering down payment assistance borrowers in high-cost MSAs in California, Washington, and Oregon.  So far its major partners include PacTrust Bank, HomeStreet Bank, and First Republic, and borrowers can receive up to half of their down payment with the option of buying equity back before selling.

Yes, the budget and debt ceiling issue has been kicked into January. Over in the House of Representatives, Speaker John Boehner (R-Ohio) congratulated his colleagues on the deal to resolve the shutdown, telling reporters, "This proves that when we work together, we can come up with a totally unsatisfactory solution to a completely unnecessary crisis." Seriously, the stock market liked the news on Wednesday, but is giving some of that back today, and the bond market's reaction was good for rates. (Lock desks can expect plenty of renegotiation pleas.) The deal extends the U.S. borrowing authority to February 7 and funds the government to January 15. The risk-free 10-year T-note improved about .375 in price and closed at a 2.67% yield, and agency MBS prices improved about .375.

Almost lost in the shuffle was the Fed's Beige Book. The report's information seems to lead many to believe that the odds of an October taper are slim, and that perhaps we'll see the Fed scaling back purchases in the first quarter. Remember when "taper talk" was all the rage? Now the Fed can look forward to dealing with a slower economy thanks to Congress & the President. It is estimated that the partial shutdown will impact Q4 GDP by -0.5%, or $20 billion. Of course Congress achieved no meaningful policy changes, and we can look forward to more of the same in January. This will hurt consumer confidence and slow our recovery - but don't look for a big increase in rates between now and then - the economy can't bear it.

Yes, we had the weekly Jobless Claims number this morning, but rates were a shade lower this morning prior to the number. The 10-yr is down to 2.63% and agency MBS prices are better by about .125 versus Wednesday's close.

DONATIONS

A driver was stuck in a traffic jam on the highway outside Washington, DC. Nothing was moving. Suddenly, a man knocks on the window.
The driver rolls down the window and asks, "What's going on?"
"Terrorists have kidnapped the entire US Congress, and they're asking for a $100 million dollar ransom. Otherwise, they are going to douse them all in gasoline and set them on fire. We are going from car to car, collecting donations."
"How much is everyone giving, on an average?" the driver asks.
The man replies, "Roughly a gallon."