In paying a short visit to Kansas, I learned that there are plenty of "oldest trick in the book"'s from which to choose - but here is one that actually helps community banks. The Outdoor Advertising Association of America reports more billboard advertisements are used by local small businesses than large national ones and represent 75% of total revenue. It turns out that about 80% of companies that advertise this way have less than 50 employees, so clever community bankers, as they drive around town, look closely at every billboard they pass and check the name of the business advertising. Then, when they get back to the office, turn in the names of those companies to relationship teams to try and generate new business.

A couple weeks ago the commentary mentioned the MBA/STRATMOR Peer Group Survey and Roundtable Program. ("This program creates a forum for participating mortgage banking companies to review their financial results and operating practices in relation to their peers...detailed benchmarking outputs by production channel...1.5-day roundtable meetings that allow companies to network and share ideas and issues with peers.") I received a lot of questions about the surveys and peer meetings, which are very good, but as a reminder it is best to ask about participating by contacting  Marina Walsh in MBA's research and economics division, at mwalsh@mortgagebankers .org, or Jim Cameron at STRATMOR Group at jim.cameron@stratmorgroup .com.

On to something a little less fun. Uh oh. I can't weigh in on the validity of this comment, but it comes from a reliable wholesale rep and if true is the first thing I've seen come out of an exam. "After our recent CFPB visit they made us make changes...no more Flat Fee, required us to have Borrower Paid and Lender paid at the same level...max Lender Paid at 3%, but at least they didn't tell us we had to only offer one comp plan.  Also coming is the inability to let Brokers fix their GFE's if there is a problem with even one of the ancillary boxes, so after sitting in line for GFE review the broker will have to start over. If the brokers don't see the writing on the wall they never will."

Continuing with the CFPB thoughts, I received this note on the CFPB's complaint process. "Imagine you owned a company and a group that worked for you spent millions of dollars developing a free service to increase customer goodwill.  Now imagine if 1% of the customers that used the service were so unhappy that they went to the trouble to file complaints.  What would you guess the satisfaction levels of the other 99% of users to be and how much goodwill would you guess was being generated?  This really illustrates the problem of regulators believing they can create a perfect world without having any experience of the difficulty of actually delivering a service that people will pay for. I think the major regulatory issue for the mortgage industry today is that the government has permeated every aspect and corner of the business and that its involvement is hodge-podge and uncoordinated.  Even if all the separate agencies and regulators had perfect intent and execution, they are uncoordinated and one agency often acts to counter another agency's impact rather than something happening in the market.  Between the Fed, FIDC, FHFA, CFPB, OCC, FTC, FHA, etc., etc.  -  the federal government somehow needs to get a grip on its overall impact on housing and finance.  While I don't think the federal government caused the financial crisis, it certainly enabled it."

Congrats to Kevin Watters, who, besides having the honor of probably having to spell out his last name as many times as I have, was just promoted by JPMorgan Chase to be chief of its home loan business, relieving Co-Chief Operating Officer Frank Bisignano of the temporary assignment to clean up the lender's mortgage issues. Watters, 44, had been responsible since 2010 for originating mortgages and now will also oversee mortgage servicing and problem loans and hold the title CEO of Mortgage Banking.

Let's move on to some bank, investor, and vendor news. As always, it is best to read the full bulletin for details, but these will give you an idea about trends.

Kansas' CoreFirst Bank & Trust ($1.1B) will close three branches in January after monitoring foot traffic for 5 years and finding these branches had seen steep declines. (Let's not make any snap decisions!) Meanwhile, Missouri's First Bank ($6.5 billion) indicates it will sell 8 of its 19 branches in Florida to Homebanc ($521mm, FL) for an undisclosed sum and close 3 other branches, as it consolidates within the state and moves to save costs.

Arvest Bank ($13.9B, AR) said it will purchase 29 banking offices from Bank of America for an undisclosed sum in AR, KS, MO and OK. The purchase adds $750mm in deposits and 650k new customers.

On the flip side, on Friday Community Bank of the Ozarks, Sunrise Beach, Missouri, was closed and business transferred to the Bank of Sullivan, Sullivan, Missouri.

In response to an increased number of borrowers retaining their previous home while purchasing a new primary residence, US Bank has updated its conventional policy to allow the current primary residence to be pending sale, converted to an investment property, or converted to a second home.  Conventional borrowers will be subject to additional underwriting guidelines, which require the existing full PITI housing payment, the proposed PITI housing payment of the subject mortgage, and documentation for reserves equal to six month PITI for both mortgages to be submitted as part of the underwriting analysis.  The relevant FHA guidelines are in effect for all FHA products, for which borrowers will be need to submit the same additional information as described above for conventional loans.  This applied to all applications taken on or after December 10th.

US Bank now allows borrowers to use long-term disability income to qualify for loans provided that the income has been verified as deemed likely to continue for at least three years from the date of the mortgage application.  In order to be eligible, borrowers receiving long-term disability will need to submit the most recent two months' bank statements and either the policy or a benefits statement in order for US Bank to determine their current eligibility, the amount and frequency of the payments, and whether or not there is a contractually established termination of modification date.

GMAC has updated its disaster policy for DU Refi Plus loans to require a re-inspection after a Major Disaster Declaration has been issued by FEMA.  In cases where the inspection reveals that the property has been damaged, an interior and exterior inspection will be required and any necessary repairs will need to be completed before closing.  Same Servicer DU Refi Plus properties do not need to be re-inspected.

MSI has announced that it will not be applying the Fannie fees for Property Inspection and Property Fieldwork Waivers.  As such, sellers are not permitted to charge borrowers any kind of "waiver fees" or disclose them on the GFE or HUD-1.  Any loans with previous underwriting conditions that call for PIW or PFW fee disclosure will be cleared by MSI.

The MSI relock policy has been amended to allow a third relock in cases where the maximum relock period is less than ten calendar days, the seller has provided a valid closing date, and all parties agree to have pricing be worse case based on the last relock price.  Third relocks will also be subject to a 0.375 fee in addition to worse case pricing.

Stonegate Mortgage has updated its FHA product guidelines and now requires all loans with credit scores between 620 and 639 apart from 203(k) and Streamline refinances to have received a DU Approve/Eligible or LP Accept/Eligible in order to qualify.  The FHA Streamline refinance guidelines have also been revised to require a Verbal Verification of Employment, a full credit report, and a mortgage pay history.  Loans with credit scores between 620 and 639 are now able to qualify provided that they receive a DU Approve/Eligible or LP Accept Eligible. The new guidelines are effective for all loans locked on or after December 3rd.  Stonegate is also levying additional fees on FHA Streamline refinances with FICO scores under 680. All such transactions with FICO scores between 620 and 639 will be subject to a 1.5% fee on top of the existing costs, while those with scores between 640 and 659 will incur a 1% fee.  An extra 0.50% will apply to loans with scores between 660 and 679. 

In response to recent high volume, Plaza Mortgage will be increasing its appraisal fees.  Consult the Plaza Lock Desk for more information.

Franklin American has implemented new pricing adjusters for jumbo loans in Florida, Nevada, Arizona, Michigan, and California.  Consult the FAMC matrix for full details.

Now is a good time to be a builder, apparently. Forget about all that shadow inventory or foreclosure noise - that is yesterday's news! The National Association of Home Builders/Wells Fargo index of builder confidence increased to 47, the highest since April 2006. "Builders across the country are reporting some of the best sales conditions they've seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market," observed NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. "However, one thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today's overly stringent lending standards." (Editor's note: I know plenty of mortgage investors who are perfectly happy with the current lending standards, and can't believe their volume numbers with the current standards.)

Things are really slowing down heading into a week when they are going to slow down even more. Folks may be at work, but productivity won't be setting any records! As a prelude, Tuesday rates drifted higher and MBS prices worsened (although not as much as Treasury prices) on slightly-higher-than-average volume. Our risk-free 10-yr T-note sold off almost .625 in price and closed at 1.83% as investors remained less risk averse on perceptions of progress on the fiscal cliff. MBS prices worsened about .250 in price.

Today we've had the MBA applications data, which confirms what lock desks already knew. Apps dropped last week by almost 13%, with refi's tumbling 14% and purchases dropping 5%. We also will see the Housing Starts and Building Permits tandem for November. Housing Starts is projected to decline 2.3% while Permits is expected to increase slightly. At 1PM the Treasury auctions $29 billion in 7-year notes which is the final coupon auction for 2012. In the early going the 10-yr is slightly better at 1.81% but don't look for much improvement in MBS or rate sheet prices this morning, and in fact may even be a little worse depending on what the lender did about yesterday's sell off.

(A repeat, but it becoming a tradition.)
Three men died on Christmas Eve and were met by Saint Peter at the pearly gates.
"In honor of this holy season" Saint Peter said, "You must each possess something that symbolizes Christmas to get into heaven."
The Englishman fumbled through his pockets and pulled out a lighter. He flicked it on. "It's a candle," he said.
"You may pass through the pearly gates", said Saint Peter.
The Scotsman reached into his pocket and pulled out a set of keys. He shook them and said, "They're bells."
Saint Peter said, "You may pass through the pearly gates".
The Irishman started searching desperately through his pockets and finally pulled out a pair of ladies' panties.
St. Peter looked at the man with a raised eyebrow and asked, "And just what do those symbolize?"
The Irishman replied, "These are Carols."
And So The Christmas Season Begins......