The U.S. Census Bureau projected the United States population to be 320.1 million as of yesterday. (And no, not all of them contribute to NAR.) This would be an increase of 2.33 million (0.73%) from a year ago. Currently the U.S. is expected to see a birth every 8 seconds and 1 death every 12 seconds. The net international migration is estimated to add 1 person to the U.S. population every 33 seconds, with the combination of births, deaths and net international migration increasing the U.S. population by 1 person every 16 seconds. The anticipated world population on January 1^st, 2015 is 7.21 billion, an increase of 77,381,246 or 1.08% from New Year's Day in 2014. During January 2015, 4.3 births and 1.8 deaths are expected to occur every second, worldwide. If you have nothing else to do, absolutely nothing else to do, you can track this growth using the Census Bureau's Pop Clock.

Happy New Year to Bank of America! Ambac Assurance Corp sued Bank of America Corp to recoup hundreds of millions of dollars of losses from insuring roughly $1.68 billion of securities backed at least in part by risky mortgages from the bank's Countrywide Home Loans unit. Earlier this week, in a New York state court, Ambac accused Countrywide of lying about how well it underwrote so-called "pay option adjustable-rate mortgage negative amortization" loans that backed the 8 securities issued between 2005 and 2007. Reporter Jon Stempel reports that Ambac said it faced potential claims exceeding $600 million as of Oct. 31, and that pools of loans supporting its insured certificates had suffered $3.07 billion of losses by Nov. 30. It also said it would have never guaranteed payments had it known of Countrywide's deception. "We have resolved our significant legacy mortgage-related exposures, and we will analyze and address these most recent assertions by Ambac," Bank of America spokesman Lawrence Grayson said on Wednesday. Ambac filed for Chapter 11 bankruptcy protection in November 2010 and emerged from bankruptcy 2-1/2 years later.

For those of you who want to play along at home, the case is Ambac Assurance Corp et al v. Countrywide Home Loans Inc et al, New York State Supreme Court, New York County, No. 653979/2014.

And there is more litigation news. New York's Golden First Mortgage Corp. has agreed to a $36 million judgment and its former president (David Movtady) will pay $300,000 to resolve civil claims that they defrauded the federal government into insuring poor quality home loans, costing taxpayers millions of dollars. Movtady also accepted a permanent ban on doing business with the government. The defendants admitted to and accepted responsibility for failing to ensure that loans they submitted between 1989 and 2010 to the Federal Housing Administration's Direct Endorsement Lender Program qualified for insurance. NY accused the company of emphasizing speed and volume over quality, and said its use of just three workers to close 100 to 200 loans a month made it impossible to perform adequate due diligence.

And Toll Brothers and TBI Mortgage are the focus of this news story that highlights consumers losing deposit money.

As mentioned in this commentary a few weeks ago, the CFPB, Fed, and OCC have adjusted the threshold for smaller loans that are exempt from the appraisal requirement for "higher priced mortgage loans." The appraisal requirement became effective January 18, 2014, and the exemption, which is subject to annual adjustment for inflation, currently applies to credit extensions of $25,000 or less. So from January 1 through December 31 of next year the exemption threshold is increased to $25,500.

While we're on the government's role in residential lending, let's see what Freddie, Fannie, and HUD (FHA, VA, and USDA) have been up to in recent weeks.

Fannie Mae has eliminated the 15% net and 25% gross adjustment guidelines and provided clarification with respect to expectations for the appraiser to analyze the market for competitive properties and provide appropriate market-based adjustments without regard to limits on the size of the adjustments. See Announcement SEL-2014-16 for details.

Freddie Mac announced additions and revisions to improve processes and response times. All changes announced are effective immediately as shown in bulletin 2014-23.

Fannie Mae's Quarterly Compass has been posted to provide key dates and important information regarding RD-502 and HUD-184 Loans, Collateral Underwriter^TM, 97% LTV Options, UCDP®/UCD News, and Dec. 13 Release Updates (DU®, EarlyCheck^TM, QAS).

Fannie Mae has amended its policies and requirements for the Fannie Mae MyCity Modification to, among other things, delegate approval of the modification terms to the servicer based on these policy changes, and expand the workout option to include eligible properties located in Cook County, Illinois. This Announcement replaces Servicing Guide D2-3.2-11, Fannie Mae MyCity Modification and F-1-20, processing a Fannie Mae MyCity Modification in their entirety.

Fannie Mae is providing advance notification to servicers of changes to its foreclosure bidding instructions and third party sales. The servicer is encouraged to implement these requirements as early as February 1, 2015, but must do so no later than March 1, 2015, for all mortgage loans with a foreclosure sale to occur on or after April 15th, 2015. Click the link to view the Lender Letter.

FHA announced that subject to the U.S. Department of Treasury's guidelines, FHA-HAMP borrowers will also be eligible to earn $5,000 in the sixth year of their performing loan modification. This incentive, in conjunction with annual incentive payments of $1,000 per year during the first five years of a performing loan modification, may reduce an FHA borrower's unpaid principal balance by as much as $10,000. However, as a result of Mortgage-Backed Security (MBS) requirements and FHA-HAMP modifications being executed at market rates, performing FHA-HAMP loan modifications and FHA stand-alone loan modifications may not be re-amortized. For additional information about this announcement, please direct inquiries to HUD's National Servicing Center at (877) 622-8525.

Let's take a deeper dive into some recent changes put into play by the FHFA through Freddie and Fannie by quoting directly from the Agencies - more specifically information regarding potential future buybacks. For example, under the current Selling Guide provision, Fannie Mae may enforce a remedy for all lender violations of applicable federal, state and local laws that may have a material effect on Fannie Mae. To provide more transparency and certainty to lenders, Fannie Mae is limiting those situations for which it may enforce a repurchase to those situations in which: 1) the lender's failure to comply could be expected to impair Fannie Mae's or its servicer's ability to enforce the note or mortgage; 2) the lender's failure to comply could be expected to impose assignee liability on Fannie Mae; or 3) the loan is found to have been in violation of, or if Fannie Mae has made a finding, based on the facts available to Fannie Mae, that a violation may have occurred, of one or more of the following laws or related regulations: Office of Foreign Assets Control (OFAC) of the Department of Treasury laws and regulations; Fair Housing Act; Anti-discrimination provisions of the Equal Credit Opportunity Act (ECOA); Unfair, Deceptive or Abusive Acts or Practices under federal and state law (UDAAP); or Securities Exchange Act of 1934.

With respect to UDAAP, Fannie Mae will take into consideration published federal and state announcements of interpretations as well as all published judicial and administrative decisions and will not enforce a repurchase if the matter can be cured by remediation to the injured party and the lender makes such remediation. However, three or more years after the acquisition (or MBS pool issue date) of a loan, Fannie Mae may not seek repurchase on UDAAP grounds regarding a specific practice unless a lender self-reports or a federal or state enforcement authority has indicated, asserted, or claimed that such practice violates or may violate UDAAP, or a federal or state court has held that a specific practice violates UDAAP.

A repurchase request based on a 'compliance with law' violation will include supporting facts and findings made by Fannie Mae in the course of considering the facts and circumstances before it. Fannie Mae's determination that a violation has occurred must be consistent with the facts and circumstances provided by the lender and any other information obtained by Fannie Mae as part of its evaluation of the situation.

If Fannie Mae issues a repurchase request in connection with a failure to comply with laws when there is pending litigation underway involving that same issue or a government agency with authority to make a determination regarding the issue has publicly stated that it is reviewing the issue, the lender will not be required to repurchase the loan until 30 days after the litigation has been dismissed, settled, or concluded at trial in an adjudication or the government agency has made a final determination (collectively, the "Resolution"). After the Resolution, the lender may request that Fannie Mae review the appropriateness of the repurchase request in light of the Resolution, and Fannie Mae will withdraw the repurchase request where appropriate.

The lender is obligated to indemnify Fannie Mae for losses, judgments, damages, claims, costs, expenses, legal actions, and legal fees related to any claim of non-compliance with laws.

As previously announced, Fannie Mae will not issue a repurchase request based on violations of the ability to repay provisions under the Truth in Lending Act (ATR) unless a court or regulator concludes the loan did not comply with ATR.

The provisions in the Selling Guide that address responsible lending practices also reflect other underwriting practices that may overlap with the substance of representations and warranties covered in Subparts B1-B5 of the Selling Guide that are subject to relief. In the interest of clarity, Fannie Mae is revising A3-2-02, Responsible Lending Practices, to reflect that the portion of A3-2-02 entitled "Underwriting Standards" is relieved under the representation and warranty framework (subject to applicable life of loan exclusions). However, the framework does not grant lenders relief from the first part of A3-2-02 relating to Fannie Mae's responsible lending practices.

Switching gears and moving into the markets, we had a fair amount of news on Friday. Uh, I mean Wednesday. Today is Friday! US Jobless Claims were +17k to 298k for the prior week. The 4-week moving average was 290,750, little changed from the prior week. The Chicago Purchasing Manager's Survey fell 2.5 points to "58.3" in December. But for 2014 as a whole the CPM put in the best performance in three years, averaging 60.8 compared with 56.1 in 2013 and 54.6 in 2012. Lastly Pending Home Sales showed a modest gain in November. Lawrence Yun, NAR chief economist, says signed contracts inched forward in November and have been fairly stable but haven't broken out even as the economy picked up steam this spring. "The consistent economic growth and steady hiring we've seen the second half of this year is giving buyers enough assurance to consider purchasing a home before year's end," he said. "With rents now rising at a seven-year high, historically low rates and moderating price growth are likely to entice more buyers to enter the market in upcoming months."

By the time the dust settled analysts noted that, in spite of predictions from a year ago to the contrary, Treasuries closed 2014 on a winning note. This was despite the Fed ending its asset purchase program and ongoing talk of the U.S. economy gaining recovery traction. The 10-yr note yield settled 2014 at 2.17% versus 3.04% at end of 2013. Capital Markets staff knows that trading volume was light Wednesday and will be again today, making it somewhat easier to move the market.

As we head into 2015 the hot buttons, guaranteed to change, include continued repression of inflation fears as oil prices continue to fall, festering angst about the political dealings in Greece and both political/economic matters in Russia, interest rate differentials as sovereign bond yields in Europe continued to drop. The only news is December ISM and November Construction Spending - the usual "first Friday of the month" employment data is set for next Friday. In the early going the 10-yr is at 2.20% and agency MBS prices are off a shade.