IndyMac is back in the news. Last week a jury ordered three former IndyMac loan officers (in the homebuilder division) to pay $168 million to the FDIC for negligently approving 23 loans to developers who never repaid them. The FDIC said the lenders had "significant departures from safe and sound banking practices," driven by a desire to get bonuses.  Here is the dirty laundry. And folks wonder why the lending industry is cautious about making loans...

"Rob, is there a better alternative being discussed to credit score underwriting?  For example Mississippi has the lowest scores in the nation, but also the lowest default rates." Not that I know of. In the "old days," Thornburg was known for doing "make sense" loans, and certainly the old subprime companies like Household or Beneficial (the training grounds for many good folks) would encourage lending if the loan officers felt they could collect on the loans. But at this point, although there are some portfolio products or private banking models, I don't see a lot of variance from the standard underwriting models in place - companies are busy enough as it is with vanilla product underwritten to vanilla standards.

Turning to the jobs front, in San Jose fast growing Western Bancorp is searching for loan officers, account executives, and operations staff. If you're highly organized, productive and passionate please apply online and/or visit Western's career page.

And in Southern California, seasoned mortgage broker Back Bay Funding is seeking experienced and talented loan officers to join a very established team of originators and processors, many of which have worked together for many years.  Back Bay Funding is a mid-size firm located in Irvine, CA and works with over 35 lenders (backbayfunding .com). Originators have the ability to generate conventional, jumbo, VA, FHA, construction, commercial and private loans, along with portfolio and private banking products, and take advantage of fast turn times, and very competitive commissions. Loan officers will need to be DRE and NMLS licensed to be compensated; satellite offices welcome. For inquiries contact Darren McLellan or Amisha Hansji at Darren@backbayfunding .com or Amisha@backbayfunding .com.

What if husbands were treated like FHFA directors, and only "acting?" ("Oh, him over there? He's my acting husband.") Maybe Ed DeMarco will apply to one of the jobs above. Well, probably not, but he is probably looking. The Wall Street Journal is reporting that the Obama Administration is planning to name a permanent Director of the Federal Housing Finance Agency, perhaps as soon as the beginning of next year. Nick Timiraos reports that, while the White House has declined comment, sources familiar with the Administration say officials are gathering names of potential nominees but have not yet whittled it down to a short list or interviewed anyone for the post. Edward J. DeMarco has been Acting Director of FHFA since August 25, 2009, replacing James B. Lockhart. Did you know that in almost 5 years the FHFA has never had an actual director? They're always "acting," since the government seems unable to come to enough of a consensus and confirm someone. Officials are said to be considering an array of candidates: financial regulators or professionals, academics, and current administration officials.

What does this mean for the average guy in the biz? Replacing Mr. DeMarco could give the administration greater latitude to expand initiatives to refinance underwater borrowers or to embark on a tailored principal forgiveness program. Any replacement would also play an important role guiding any process of overhauling Fannie and Freddie as the administration prepares to unveil more details about its preferred course. That's right - another refi program to keep us all busy!

If you think servicing is a walk in the park, just ask Ocwen. A review of Ocwen's mortgage servicing practices has found indications of non-compliance with recent servicing reforms, New York's Department of Financial Services announced. In a release, Superintendent Benjamin Lawsky said a review of Ocwen's business showed that "in some instances, the company failed to demonstrate that it had sent out required 90-day notices before commencing foreclosure proceedings or even that it had standing to do bring the foreclosure actions." The exam also found that Ocwen sometimes failed to provide a single point of contact for borrowers, pursued foreclosure actions on borrowers seeking loan modifications, failed to conduct an independent review of loan mod denials, and failed to ensure that borrower and loan information was accurate and up to date. He added that the examination of Ocwen's servicing practices came about after the department received complaints about the company. Following the examination, the department is now requiring that Ocwen hire an independent monitor to review its operations and identify and report on corrective actions. And those recently announced deals to acquire ResCap and Homeward Residential's servicing assets? Well, they seem to be on hold:

On Saturday, just in time for Sunday's open houses, the commentary discussed how the first time home buyer had been left out of the recent excitement. Deb S., a top Realtor from California, wrote, "Unfortunately for our overall well-being, those purchasers were investors and first-time homebuyers cannot compete with cash. Period. So, they are scrambling like crazy and running from property to property and simply get beaten out (either due to the terms or they can't even make a decision as quickly as a number-oriented buyer can) every time.  I am witnessing HOA being slow to react, with management  not well-trained or asleep at that wheel, and they are not making any rules about what % of units must be owner occupied and the result is the complete makeover of many complexes into below 50% owner occupancy and thus, unable to get a loan. The homeowners aren't informed from the management, they have no idea who is buying, what the repercussions are, and they are suddenly in a home they cannot refinance and must sell at a substantially lower price when our market stabilizes and the investors slow down. I can't wait for prices to take a jump up so the market is in balance and homeowners can sell again with some equity and the buyers are a more balanced lot... OR maybe what really needs to happen is for rents to drop off their highs and those properties won't look as appealing. Nothing good came out of the Vegas buyout or the Arizona buyout and they are happening all over again - this time add Reno plus many, many more.  Can I interest you in Stockton??"

And another note regarding Saturday's commentary came from Mike L. who wrote, "I have a comment on the "lack" of first time homebuyers that actually are buying homes. By my experience, it's not for the lack of them trying. I have pre-qualified a multitude of First Time Homebuyers and they are writing offers on homes. Typically they are using either FHA financing or Conventional financing with 5% to 10% down (some even with 20% down). However they are typically writing offers on lower priced "entry level" properties. These properties are also very attractive to investors, so we are getting constantly beat to the punch by investors using all cash or very large down payments. It's hard to blame the seller. Why wouldn't they take an "all cash, higher priced offer" over the lower down payment first time buyer? Some of my first time buyers have been trying for well over a year to have their offers accepted. Combine this with the lack of inventory here in Southern California and the problem is amplified even further."

How about some relatively recent investor and vendor news?

Barbara Werth with Mortgage Training Today points out that in reading a recent blog there was a statement in there about "FNMA requiring 5% down.  I am including for you a link to the single family guide stating that the minimum down is 3% and it does not have to be the borrower's own funds.  FHLMC requires 5% of the borrower's own sourced and seasoned funds.  Now, of course PMI still have to be considered and MGIC is the only company that will do PMI on these loans. There is information is located here:" And Barbara also points us to and  (FHLMC). Thank you!

Starting December 10th, the FHA will accept manual delivery of credit scores and will be adding a field to the Connection Insurance Application in order to differentiate between Credit-Qualifying and Non-Credit Qualifying Streamline refinances.  The credit type indicator will become mandatory on March 31, 2013.

In response to the large number of suspensions and post-purchase defects associated with large deposits, Citi reminds clients that the source of funds must be documented if they're coming from an account that was either opened within 90 days of the mortgage application or if they exceed 25% of the borrower's total monthly qualifying income.  This applies to the sum of unexplained deposits that meet the large deposit criteria as well.

Citi has also issued a few general reminders about asset verification, the first being that verification documents should not be more than 45 days old at the time of application and 50 days old as of closing.  The funds required for closing as per the HUD-1 must either match or be less than the value disclosed on the AUS findings, and AUS findings that reflect required assets should either meet or exceed the amount verified through documentation.  No more than 60% of the face value of retirement accounts can be used to calculate the amount of available funds, and all retirement accounts must be verified with the two most recent months' bank statements after having subtracted any outstanding loans and, if required for closing, proof of liquidation.
Effective for all HASP Open Access and DU Refi Plus products, Fifth Third is now basing the expiration date of HARP programs on the Application Received Date rather than the Note date for new mortgages.  All new loans must have application dates on or before December 31, 2013.

Turning to the markets, Monday was a snoozer, but here is what one trader noted yesterday: "So far in December we've seen slightly lower origination numbers and expect these decreased volumes to continue which has us bullish on the basis." If originators are indeed seeing things slow down a little, the production environment could become interesting. If home loan rates stay here for the next year or so, the pool of available loans for refinancing will drop. Two big wild cards, however, are a) the purchase market heating up due to the economy picking up steam, or b) the government introducing yet another refi program. There are a lot of experts thinking (b) is exactly what is going to happen. Regardless, things are pretty quiet, interest rate-wise, and this morning we find the 10-yr pretty close to where it closed Monday, which is pretty close to where it was all last week (it is currently around 1.64%). And MBS prices this morning might be slightly worse - but don't look for much change on rate sheets as companies may just absorb the difference into their margins.

We're entering the college football bowl season, so how about part 2 of 2 of gridiron humor? (Suitable for changing to any school - don't send me "you insulted my daddy's alma matter" e-mails please.)
If three Florida State football players are in the same car, who is driving? The police officer.
How can you tell if an Auburn football player has a girlfriend? There's tobacco juice on both sides of the pickup truck.
What do you get when you put 32 Arkansas cheerleaders in one room? A full set of teeth.
University of Michigan Coach Brady Hoke is only going to dress half of his players for the game this week; the other half will have to dress themselves.
How is the Indiana football team like an opossum? They play dead at home and get killed on the road.
Why did the Nebraska linebacker steal a police car? He saw "911" on the side and thought it was a Porsche.
How do you get a former Illinois football player off your porch? Pay him for the pizza.