I am very excited, because last night I received news that I had won $5 million in the Netherlands lotto! Unfortunately I will receive $5 for a million years... Seriously, not a day goes by that I don't receive some e-mail like, "Wherein your email address emerged as one of the online winning emails in the 1st category and therefore attracted a cash award of EUR1,500,000.00 (One Million Five Hundred Thousand  Euros) and a Compaq laptop." AND a laptop!? Life doesn't get any better.

How did mortgage rates and prices do yesterday? Not too bad, all things considered. Traders reported selling from money managers and originators and "lighter than usual" buying from the Fed at the start of the day, but then that reversed itself as the day progressed. There are no large Treasury auctions in the near future, unlike this week which finished things off with the $13 billion 30-yr bond auction yesterday. Today we've already seen a strong Retail Sales number, which has pushed rates higher. Retail Sales increased 1.3% last month, the largest advance since August, after rising by a downwardly revised 1.1% in October. It was the second straight monthly gain. Compared to November last year, sales were up 1.9 percent, the first year-on-year gain since August 2008. The numbers have pushed the 10-yr yield up to 3.54% and made mortgage prices worse by about .250.

One thing to note is that the Treasury's yield curve, basically the difference in yield between short term (like 2-yr notes) and long term (30-yr bond) yields, is at its highest level since 1992. An environment like this will help ARM rates relative to 30-yr fixed rates.

Through last week, the Federal Reserve's MBS program had purchased $1.071 trillion after adding another $16 billion for the week. They continued to focus on 30-year 4.5% securities, which generally include 4.75-5.125% mortgage, and mostly Fannie's. READ MORE

In the old days, and even today, the US government does not explicitly guarantee Fannie & Freddie mortgage-backed securities. Of course, everyone counts on the implicit guarantee. Earlier this week Federal Reserve Governor Elizabeth Duke said the government may need to "backstop" the market for mortgage-backed securities during future periods of stress: "Some form of government backstop may be necessary to ensure continued securitization of mortgages." She admitted what everyone in the business knows, along with every self-employed borrower: tighter credit standards have "restricted a lot of perfectly responsible lending," and that "Banks are reluctant to put any but the lowest possible risk loans in their portfolios. And the market for new private mortgage loan securitizations is essentially closed." READ MORE

Jamie Dimon, the CEO of JPMorgan Chase, said that the bank sees additional losses on home loans next year even as the economy shows slight improvements and initial signs of stability in consumer delinquency trends. He said that "JPMorgan could see losses on home equity loans reaching $1.4 billion over the next several quarters, compared with losses of $1.1 billion in the third quarter, prime mortgage losses may reach $600 million, up from $525 million in the third quarter, and subprime mortgage losses could grow from $422 million in the third quarter to $500 million in coming quarters. Interestingly, Dimon added that the bank's home lending portfolio may shrink 10 percent to 15 percent to about $240 billion in 2010 and $200 billion in 2011 if current trends continue. That decline would reduce 2010 net interest income in the portfolio by about $1 billion, the bank said. Fortunately investment bank profits (helped by the Bear Stearns acquisition in 3/08) have helped offset consumer businesses losses.

Dutch ING, still a player in the US wholesale channel, announced that it will repay half of its 10 billion Euro bailout money in the coming weeks.

In a story out of the Honolulu Star Bulletin (hey, who says I'm not well-read?) Central Pacific Bank's parent is exiting its West Coast operations (Pasadena) and will wind them down by 2012. The bank, which lost $183.1 million in the third quarter after taking two big charges tied to its California and Hawaii real estate operations, has aggressively been reducing its loan portfolio in California since last year and hasn't made a loan there in more than 18 months. Central Pacific acquired California's City Bank in 2004. The bank has accelerated its efforts to reduce credit risk by pursuing loan sales, including potential bulk sales, in addition to loan restructuring and pay-downs.

Are we having fun yet? Do brokers and agents out there really understand what is going to happen after January 1st, with the RESPA and appraisal changes, or are they ignoring it?

Union Bank, for example, told clients that they will order all appraisals after 1/1. For purchases, "the appraisal will be ordered at time of submission to Union Bank within established cycle times for 'Assignment of File'.  The purchase contract must be provided before the appraisal is ordered.  Additionally, the contact information for the appraiser to gain access to the property is required." Union Bank added a new form titled "Appraiser Access to Property Information" to the No Up Front Fees Certification.  For refinances, depending on the path the loan takes, "the appraisal will be ordered at time of submission to Union Bank within established cycle times for "Assignment of File", or "the appraisal will be ordered after the initial underwriting decision is made and the loan has been approved." There will be no up-front charge for the appraisal(s), but the cost will be collected at closing. Union Bank also details the requirements for second appraisals (typically larger loan amounts) since field reviews will no longer be ordered under these guidelines. 

GMAC came out with another set of announcements yesterday. These addressed a revision to their original announcement on DU 8.0, amended tax returns, down payment assistance programs, the removal of index rates from their daily rate sheets, and an update on their early payment default policy. Honestly, I'd thought that DPA's had vanished, but apparently not. GMAC's correspondent clients were told that, "all loans utilizing a Down Payment Assistance (DPA) program must be registered and have a GMAC Bank loan number prior to submitting the DPA for approval. DPAs submitted to GMAC Bank for approval without a valid GMAC Bank loan number will not be processed."

GMAC's early payment default policy is interesting. For them, an EPD occurs when "any of the first four (4) four payments due after purchase of the loan by Correspondent Funding becomes ninety (90) or more days delinquent and such delinquency is not attributable to an error in servicing or other material error of Correspondent Funding or its affiliates." And the "receipt of payments originally due prior to the date on which Correspondent Funding purchases the loan will not satisfy the EPD requirement." Loans underwritten by the client under delegated authority (even under DU or LP) will have an EPD fee, and possibly even repurchase, but if it is underwritten by GMAC there is no fee.

I don't want to turn the daily commentary into a job posting board, but after I mentioned how some mortgage companies are expanding one industry expert wrote and said, "A lot of the consolidation has to do with who has capital and thus warehouse capacity.  Lots of small guys will not meet the $2 million requirements of most warehouse lenders." The Western area sales manager for US Bank Consumer Finance's wholesale division wrote and said, "I am hiring for AE positions in Phoenix, Portland, and the Bay Area.  If you know of any quality people, would you send them my way?" Feel free to shoot an e-mail to Michael Erickson at michael.erickson@usbank.com. Also, Plaza Home Loans continues to hire operations and originators, and has opened up several new offices in the Western U.S.

A woman wakes up during the night and her husband isn't in bed with her. She goes downstairs to look for him and finds him sitting at the kitchen table with a cup of coffee in front of him. He appears to be in deep thought, just staring at the wall. She watches as he wipes a tear from his eye and takes a sip of his coffee.

"What's the matter, dear?" she asks: "Why are you down here at this time of night?"

The husband looks up from his coffee and says: "Do you remember 20 years ago, when we were dating, and you were only 16?" he asks solemnly.

"Yes, I do," she replies.

"Do you remember when your father caught us in the back seat of my car making love?"

"Yes, I remember," says the wife, lowering herself into a chair beside him.

"Do you remember when he shoved the shotgun in my face and said: 'Either you marry my daughter, or I'll send you to jail for 20 years?'"

"I remember that, too," she replies softly, placing her arm around him.

He wipes another tear from his cheek and says, "I would have gotten out today."