98% of Americans say, "OH before going in the ditch on a slippery road. The other 2% are from Wisconsin and Minnesota, and they say, "Hold my beer and watch this!"

That quip has nothing to do with mortgage banking or renting, but seemed right given the weather in many areas. Every renter has enough worries without concerns about their landlord bailing on the mortgage. THIS may help. (Thanks to First Priority Financial for sending it along.)

Was your Lock Desk busier last week? Borrowers are taking advantage of the lower rates, as the MBAA reported that applications hit their highest level in two months (up 8.5%). Purchases were up 4% and refinancing was up over 11%, with refinancing accounting for almost 75% of apps.

Is it my imagination, or is everyone tightening up their guidelines, changing processes and procedures, and making it tough for compliance staffs to do their jobs? And it isn't only the Fannie 8.0 release; there are many other changes also. Of note, some firms, like GMAC, are giving deadlines to buy Fannie 7.1 loans (Bank of America is February 26th), whereas others, like Wells, are not. This is often a result of loan programs that were acceptable under 7.1 being eliminated, and some large investors were never purchasing those programs.

Flagstar reminded their patrons about their MDIA requirements. After 12/14, the minimum credit score required for all VA loans is increasing to 620. The new credit score floor applies to all VA purchase, cash-out and IRRRL transactions. Flagstar will continue to underwrite VA loans for borrowers having no credit scores due to a lack of traditional credit, but VA loans for borrowers with credit scores below 620 must be registered on or before 12/13 - after that, no luck. Flagstar adjusted their government pricing for FICO scores between 640 and 659 (worse by .250), and set forth their loan limits for 2010. (FHA loan limits for counties that are not high cost areas are unchanged for 2010, but loan limits in high cost areas are determined using area median home prices and are $729,750 for one unit, $934,200 for two, etc.)

Flagstar made their Guaranteed Rural Housing pricing worse by .250 for FICO scores between 620-659, and announced that after 12/14 will no longer be applying a line item fee for an escrow waiver but instead a new price adjustment will be added of .250. They are ending Fannie's HomeStyle Renovation program after this Friday, and told clients that condominium developments must be approved through HUD Review Approval Process (HRAP) or the Direct Endorsement Lender Review and Approval Process - Flagstar will not be approving FHA condominium projects. "Flag" will be making changes to 2-4 unit property loan limits, in that all 2-4 unit properties will be capped at a maximum loan limit of $650,000 (including Alaska, Hawaii, and the U.S. Virgin Islands) for all loan programs (conventional conforming and FHA/VA) allowing for 2-4 unit properties. They will no longer accept new registrations of 3- or 4-unit properties on either Fannie or Freddie programs. In addition, any 2-unit properties will be limited to a maximum loan amount of $650,000.

Starting Monday AgFirst will accept Fannie Mae's new MI coverage option called "Minimum MI" which will be available as part of the DU Release scheduled for this weekend. "With the Minimum MI option, comes a new and non-refundable Loan-Level Price Adjustment (LLPA)... the underwriting findings in DU on many loans with an LTV of 80% or greater will show two options of MI, both the Standard MI and now Minimum MI." AgFirst points out that the minimum levels (with an LLPA) "are not eligible for Refi Plus and DU Refi Plus loans, unless the existing loan already has minimum levels of mortgage insurance coverage.  No mortgage insurance LLPA will be assessed on Refi Plus or DU Refi Plus loans."

Wells Fargo correspondents were greeted with a bulletin which included MERS Registration Required on all Loans - Effective January 4, 2010, Rental Income Policy for Documenting and Qualifying Income for Manually Underwritten Loans, RESPA Reform - Recent HUD Announcement Does Not Affect Wells Fargo's Implementation, Clarification: Initial Uniform Residential Loan Application (Form 1003) Required, Providing Notification to Mortgage Insurance Companies is Required. They even threw in their 2010 holiday schedule for good measure.

They definitely made it clear that sellers need to become MERS members quickly, and starting 1/4 all closed loans delivered for purchase must be registered by MERS. All sellers must be MERS members, able to register and transfer loans through MERS, and all loans must be registered with MERS by the Seller at time of delivery to Wells Fargo. Loans may be suspended, so read Wells' guidelines for the most precise information.

CitiMortgage has addressed appraiser eligibility with their clientele for all conventional, FHA, and VA transactions. Starting New Year's Day, Citi will be posting an "Appraiser- Monitor/Ineligible List" instead of an Approved Appraiser List. "Any appraiser not on the Appraiser- Monitor/Ineligible List may be used, subject to the other guidelines for appraisers and their appraisals set forth in the Manual." Appraisers will be grouped into those that will require "monitoring" and be identified on the list with the caption "AMC Field Review Required" (self explanatory), or those appraisers whose appraisals are ineligible for submission to Citi and will be designated on the list with the caption "Appraiser Ineligible" - and will not purchase loans based on appraisals prepared by these appraisers.

"As a website login is required to access the list, customers who wish to provide their vendors with access to the list may do so by sending an email to National Client Services at cmicorrnational@citi.com with the contact information and email address of the person requesting access. The vendors will be provided a generic login allowing them restricted website access and not access to any Correspondent or borrower specific information." At this time Citi has approved Finiti, LSI, PCV Murcor, or ServiceLink as appraisal review companies. In addition, Citi is "encouraging" its correspondent clients use the First American CoreLogic Correspondent Validation Program ("CCVP") to validate the value of an appraisal used in a loan transaction.

"CitiMortgage will begin processing all loans, prior to loan purchase, through LoanSafe, the fraud tool provided by First American Corelogic, beginning with closed loan packages received on and after 12/14/09. Correspondents must continue to also submit an acceptable fraud report with a closed loan package."

US Bank Home Mortgage Wholesale Divisions, are, of course, following the Fannie DU 8.0 changes, even if the loan goes through LP. They warn clients that after December 12, Qualifying Ratios will have a maximum of 45% DTI when using an LP approval and a minimum FICO of 620. The minimum required reserves from borrowers own funds for a second home will be 2 months PITI, and an investment property 6 months PITI. Bankruptcy, previous foreclosure, or deed-in-lieu credit qualifying guidelines have been updated in the product guides.

Would you want TARP money showing up on your balance sheet at year end, or limiting your pay any longer than necessary? Probably not, and Citigroup & Wells Fargo are seeking to repay billions in federal bailout aid but so far haven't received permission from the government. How much capital would the banks would need to raise to repay taxpayers? Citigroup received $45 billion in bailout money and is now 34 percent owned by the government, and the government supposedly has told Citi that it would need to raise at least $20 billion in common equity to quit TARP. Wells Fargo received $25 billion. This has been motivated not only by year end but by Bank of America announcing it would return $45 billion it had received, adding to the $71 billion already repaid by about 50 other financial companies. Of course, TARP recipients are subject to restrictions on employee compensation until they repay the government.

Bob from Carolina State Mortgage wrote, regarding his chatting with a fellow who sells used golf balls at a local golf course, "Up through late spring he would find mostly Top Flites and since summer he has noticed a remarkable increase in the number of Titleist ProV1s.  He indicated that based on this he feels confident the recovery is underway." Isn't that as accurate as some survey by supply managers?

Rates moved up slightly yesterday, which some attribute to a fair/decent/average 3-yr note auction by the Treasury. Still, it showed that this country continues to underwrite debt at lower and lower yields with demand still solid. Wall Street dealers are seeing light origination, and "not great" liquidity in spite of mortgage prices behaving very well since the unemployment data on Friday. Today for excitement we have the $21 billion 10-yr note auction, currently yielding 3.40%. Mortgage security prices appear to be giving back early gains, but are mostly unchanged at the moment after being  worse by about .250 early in the session.

Dispatcher: 911 - What is the nature of your emergency? 
Caller:   I'm trying to reach nine eleven but my phone doesn't have an eleven on it. 
Dispatcher: This is nine eleven. 
Caller:    I thought you just said it was nine-one-one 
Dispatcher: Yes, ma'am nine-one-one and nine-eleven are the same thing. 
Caller:    Honey, I may be old, but I'm not stupid.