Let's say that you have a warehouse line with Bank of America, or anyone else for that matter. You come into work and either the line is frozen, or the company announces that it is eliminating that business line. What do you do? Well, hopefully the CFO has planned for it, and has other warehouse lines in place, because without a warehouse line a mortgage bank is basically dead in the water. A CFO will tell you that a new warehouse line can easily take up to 60 days to set up, and, unlike marriage, having an extra relationship or two is a good thing (besides certain isolated compounds in Utah). Unfortunately I don't have room to print the dozens of institutions offering warehouse lines, but in this time when many companies are reevaluating business segments, nothing should come as a surprise.

Out on the West Coast Guarantee Mortgage is continuing to expand. It is one of the West Coast's "leading independently owned mortgage broker and banker is continuing to grow its sales team and is hiring loan consultants as well as expanding their existing branch network.  Ranked among the top volume mortgage companies in the industry, Guarantee Mortgage consistently funds close to 2 billion per year and has been around for 20 years lending in CA, OR, WA, and Hawaii. If you know anyone interested joining the Guarantee Mortgage team, they should contact Ryan Madden at rmadden@gmwest.com.

Speaking of originators, I received this note from an AE out in California: "Is there anything out there to help the good client who has made all payments on time, rate of 8% with MI who received a home possible loan in 2007?  They don't fall under HARP and have tried to work with existing servicer with no luck. The property is worth $200k and their loan balance is $280k. They don't want to ruin their credit and stop making payments, just to be told they can't do anything. Any advice out there?"

Apparently the press release noting the allegiance between Google and LoanSifter last week was somewhat inaccurate. "LoanSifter...regrets to advise that the announcement that was distributed on November 7^th regarding its relationship with Google was made prematurely and wishes to retract and clarify the following inaccuracies: 'Google Comparison Ads' should be referred to as 'Google Advisor,' LoanSifter is not a 'strategic partner' with Google, but one of multiple pricing engines on Google Advisor that share the same vendor relationship, and the pricing information Google provides is not 'real time' pricing. Stated LoanSifter President Bruce Backer: 'We apologize to Google and its partners for these inaccuracies and look forward to a continued relationship with Google.'"

For an update on the extension/restoration of higher loan limits, and, perhaps not coincidentally, NAR's contributions to politicians behind the extension go here. And any investor who owns pools of jumbo loans took careful note when Moody's said, based on its analysis of mortgage-backed bond portfolios, homeowners with jumbos now constitute "greater strategic default risk" than any other type of borrowers, including subprime. "That's because an exceptionally high number of jumbo owners - many in high-cost markets hit by real estate deflation over the past several years - are stuck with persistent negative equity. More than half of the jumbos analyzed by Moody's where owners are still making payments have home market values lower than their outstanding loan balances." Full Story

The CFPB sent out two draft designs for a new real estate mortgage closing disclosure form that would combine TILA and RESPA disclosures for borrowers.  The CFPB has proposed two model forms and has given the financial industry a tool to give them feedback as to which we prefer. If you'd like to vote go to http://www.consumerfinance.gov/knowbeforeyouowe/ and click on "switch to industry tool."

Investors are not only concerned with default, but also pools paying off. Last week Sterne Agee released a prepayment report which stratified GNMA collateral by state, loan type and collateral program.  "We see that states with higher concentrations of home loans guaranteed by the U.S. Department of Veterans Affairs (VA) have higher prepayment activity. Within GNMA, VA loans are the fastest prepayers by a wide margin, generally followed by FHA loans, and then lastly by Rural Housing loans. Additionally, we see that GN I's tend to pay faster than GN IIs owing to higher WAC's (weighted average coupon)."

Sometimes originators ask, "Why won't an investor pay 104 or 106 for a loan?" The answer is, of course, that the investor believes a loan like that is going to prepay early. And the latest prepayment news is relatively enlightening, especially for loan agents targeting refinances. This comes from a Wall Street research desk: "The dominant feature of last month's prepayment report was the focus on refinancing high-credit borrowers. Although the overall level of paydowns was consistent with market expectations, the distribution of refinancing across cohorts diverged from Street expectations. The (recent) trend of increased focus on the high-credit borrowers should continue, leading 30-year 4.0s and 4.5s to diverge further from the lower-credit high coupons. The October prepayments will reflect the peak levels of the MBA refi index reached in the late summer/early fall. 15-year MBS, which has prepaid faster than 30-year collateral during the current refi wave, is forecast to remain 2-3 CPR in front of the 30-year sector."

MetLife Inc., currently looking for a buyer for its mortgage origination groups, has announced to its retail and wholesale origination channels that it will require a financial assessment of all of its reverse mortgage borrowers beginning today. "The announcement comes following underwriting guidance published by the National Reverse Mortgage Lenders Association that aims to assist lenders in assessing whether reverse mortgage borrowers are able and willing to pay the taxes and insurance on their loans." While FHA has not made an official rule on the issue, Acting Commissioner Carol Galante issued a statement last month to the effect that there is nothing stopping lenders from conducting such an assessment, which for MetLife focuses on three criteria including residual cash flow, credit history, and principal limit usage (PLU). Other reverse lenders, such as Generation Mortgage and Security One Lending, are expected to do the same.

Wells Fargo's wholesale group turned some heads, and turned them again, last week. It first announced that, "The minimum Loan Score for non-credit qualifying FHA Streamlined Refinances (including High Balance) will increase to 700" starting today, but that, "Loans not meeting the new minimum Loan Score can still be processed as a credit-qualifying Streamlined Refinance or a Rate/Term Refinance when the Loan Score is at least 640." But then Friday Wells' announced, "FHA Streamlined Refinance non-credit qualifying minimum Loan Score changes have been postponed until further notice."

What is in a name? For VA Mortgage Center, it must have been something since it changed its name to Veterans United Home Loans. Started in 2002, Veterans United Home Loans "grew by leveraging online leads into customers that its specialized underwriting staff could help through the process of qualifying for a VA loan" and "the cost to generate online leads has tripled in the past few years" so new marketing efforts are underway.

A name that is going away is Community Bank of Rockmart, of Rockmart Georgia, which was closed Friday and its depositors placed with Century Bank of Georgia over in Cartersville.

Pinnacle Capital Mortgage recently spread the word among its clients that the "USDA recently announced that commitment authority for refinances is temporarily unavailable. Until further notice, PCM will NOT LOCK or FUND any USDA refinances with "subject-to" conditional commitments." In addition, the Mortgage Broker Fee Agreement is no longer required by PCM.

SunTrust Mortgage updated several documents to remove references to the eliminated Portfolio Affordable Housing Mortgage Program.  FHA no longer charges an annual (monthly) mortgage insurance premium (MIP) on loans with a 78% or less LTV and a 15-year or less loan term. Additionally, on FHA mortgages with a loan term of 15 years or less, the annual MIP automatically cancels when the LTV ratio reaches 78%, regardless of the length of time the borrower has paid the annual MIP. SunTrust also enhanced the guidelines for its Key Loan program.

Chase released a bulletin with information regarding appraisal services available through DataQuick, a new Chase-approved Appraisal Management Company (AMC).

Well, mortgage origination has slowed slightly, and the Fed keeps buying MBS's, so what should that do to prices? Make them go up, of course, at least relative to Treasury prices. And that is what happened Thursday. (The weekly NY Fed recap saw another $1.1 billion per day of MBS purchases by the Fed.) For economic news we have zip today. Tomorrow we'll have the Producer Price Index, Retail Sales, and Empire Manufacturing. Wednesday is the Consumer Price Index, Industrial Production & Capacity Utilization, and a NAHB Housing Market Index. Thursday is Jobless Claims, Housing Starts, Building Permits, and a Philly Fed number. Friday is Leading Economic Indicators. In the early going the 10-yr T-note is at 2.08%.

(Warning: Parental discretion advised!)
First-year students at the Purdue Vet School were attending their first anatomy class with a real dead cow. They all gathered around the surgery table with the body covered with a white sheet. The professor started the class by telling them, "In Veterinary medicine it is necessary to have two important qualities as a doctor. The first is that you not be disgusted by anything involving the animal's body."
For an example, the professor pulled back the sheet, stuck his finger in the rump of the cow, withdrew it, and stuck his finger in his mouth. "Go ahead and do the same thing," he told his students.
The students freaked out, hesitated for several minutes, but eventually took turns sticking a finger in the butt of the dead cow and sucking on it.
When everyone finished, the Professor looked at them and said, "The second most important quality is observation. I stuck in my middle finger and sucked on my index finger. Now learn to pay attention. Life's tough but it's even tougher if you're stupid."

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog takes a look at the impact of HARP 2.0 and the differences in the agency's programs. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.