Whether you're upper class, middle class, lower class, or drinking class, do you really think the distribution of wealth is somewhat widespread? Think again. According to the latest, soon the top 1% around the world will own more than the other 99% - and that is probably not the best of situations for political and economic stability...

About a month ago I was at a Christmas party and someone who works outside banking and lending asked, "So what ever happened to Lehman Bros, did they ever figure all that stuff out?" I know, 2008 feels like a long time ago....that is, unless you're a Lehman RMBS bondholder. As some may know, right before the New Year the bankruptcy court approved a protocol (RMBS Claim Protocol) for the RMBS Trustees and the Lehman estate to resolve claims related to R&W breaches. The protocol provides for loan file reviews on all Lehman-covered loans to resolve R&W related claims. According to the protocol, the trustees have until June 31, 2015 to submit claims on the first 50K loans and until March 31, 2016 to submit their claims on all Lehman-covered loans.

Overall, the court approval of the protocol to resolve RMBS claims should result in a more certain timeline to resolution. If the trustees are successful in loan file reviews and breach rates are found to be in the range of 57% (as seen in previous expert advisor reports from sample loan file reviews), there could be meaningful upside for RMBS bondholders. However there is a risk that trustees may not be able to adhere to the 15-month timeline stipulated in the protocol to review around 200K loans. What we know now is the RMBS Trustees sent a direction letter to Nationstar and Wells Fargo, the master servicers, seeking origination and servicing files on Lehman-covered loans; Aurora loan files will potentially serve as a template for any information the trustees would seek from the master servicers. The trustees needed to confirm by January 15 whether the information in the Aurora loan tapes are complete and sufficient to review and assert any potential R&W claims. Should the Trustees not get the requisite information from the Master Servicer, they would not be required to adhere to the timelines set in the RMBS protocol. And Lehman will be selling assets.

Speaking of legal issues, consent orders, and enforcement actions, I received this note from Brian Levy with Katten Temple. "To advise a client on how to act legally today, a lawyer must carefully analyze and interpret any statement or action by the regulators such as Consent Orders with individual companies, press releases, speeches at conferences by high (or low) ranking officials, rumored investigations and extrapolated policy extensions. That's definitely not what I learned in law school about where and how to find 'the law'. Meanwhile, there are some folks at the trade associations, think tanks and elsewhere who are starting to realize the immense challenge this growing development in regulatory policy creates for the industry and are questioning whether it goes beyond the bounds of our constitutionally protected rights of separation of powers, ex-post facto etc. With a firmly Republican Congress in both Houses, many of whom are sympathetic to reigning in government, I would expect to see some legislative action on these issues as well. Stay tuned."

But wait! "ALTA Says New CFPB Mortgage Forms Disclose Inaccurate Fees"! "The American Land Title Association (ALTA), the national trade association of the land title insurance industry, released the following statement from Chief Executive Officer Michelle Korsmo in response to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray's speech at the Brookings Institution:

"'ALTA and its members support Director Cordray's efforts to help consumers gain greater control and understanding of their real estate transaction, however, we remain concerned with the Bureau's new Closing Disclosure, which goes into effect Aug. 1, 2015, and replaces the current HUD-1 Settlement Statement. The Closing Disclosure misleads consumers about the actual price of their title insurance policies,' said Michelle Korsmo, ALTA's chief executive officer. 'We urge the CFPB to take swift action to ensure consumers receive the most accurate information about their mortgage costs, including title insurance premiums and settlement services.'

"'Unfortunately, the current Know Before You Owe forms will create confusion at the closing table for many consumers. In nearly half of the country, title companies are required by state law to charge title insurance premiums and discounts in a manner different than the Bureau would have them disclose those fees to the consumer. The Bureau must take steps to disclose accurate costs of title insurance premiums and settlement services to meet their goal of educating consumers of the true costs of owning a home.'

"Title and settlement agents will have to provide additional disclosure forms to consumers at closing to show the actual title insurance premiums charged and to prove compliance with state law governing industry-filed rates. We support a cleaner real estate transaction but not at the expense of consumers understanding of their actual mortgage costs.'

"'We agree with Director Cordray that an educated consumer is a more confident and empowered consumer. Our economy can speed up its recovery if we provide more stability, growth and affordability in the mortgage market. We will continue to work with the CFPB and our industry partners toward commonsense solutions that decrease consumer uncertainty and bring demand back into housing market.'"

Attorney Philip R. Stein with Bilzin Sumberg Baena Price & Axelrod LLP wrote a piece on the CFPB's aggressive enforcement actions.

Let's see what is going on with a couple lenders and investors out there - is credit really loosening?

Fernando Marques from Marques Commercial Capital posted information regarding the availability of Stated Income loans. For more information, email Fernando or check the website for this product. (Readers should remember that there is a little caveat with Reg Z. and section 43 (ATR).  It only applies to owner-occupied properties (primary, second homes) and technically not to investment properties as defined by Reg Z.  Looking into the program, it is for "income producing commercial and residential properties" therefore it looks like it is focused on investment properties only. Therefore it is not subject to ATR and the requirement to fully verify income/assets. So, for investment properties, stated/stated can be offered.  Investment properties are considered business credit under Reg Z which mainly only covers consumer credit transactions.)

Mountain West Financial has posted multiple USDA guideline changes including Overdraft and/or NSF Fees are not allowed, Manufactured and Condo New Construction are ineligible, all installment debt with more than ten months remaining shall be included in the qualifying ratios. Student loans are included in the qualifying ratios regardless of the remaining term or status. Include the greater of 1% of the outstanding loan balance or the verified fixed payment reflected on credit report.  Federal judgments must be paid, no exceptions. Non Federal judgments may remain open IF there is evidence of repayment for 3 months prior to loan application. Additionally, MWF has posted a change in Policy and Procedure. Effective for all loans submitted January 1, 2015 or later, the FHA/VA Amendatory/Escape Clause will be required to be executed by all parties to the loan transaction(Buyer, Seller, & Real Estate Agents) prior to closing. The Amendatory/Escape clause can no longer be executed at closing, and is now required to be signed by all parties before the loan can be cleared for docs.

Broadview Mortgage Corporation announced its new LOS, Relay, is now able to accept jumbo/investor prior approved loans. Broadview is requiring the setup and processing of all new jumbo/prior approved loans use Relay. Also, Broadview's VA Standard and High Balance matrices have been updated. Fannie Mae and Freddie Mac recently announced loan limits for 2015 that will be effective for Notes dated on or after Jan 1 2015, regardless of when the loan application was taken, or DU case file ID originated. Four California Counties will see increased loan limits. Information and resources are available by clicking Fannie Mae loan limits.

Chase Correspondent Lending offers "a rational selection of products to meet the diverse needs of your borrowers." For information, utilize the Quick Links: Non-Agency Products, Agency Products, Agency High Balance Products, FHA Loans and VA Loans, and Construction to Perm.

With 10-yr rates rallying below 1.75%, we have now firmly moved into an environment that is "negative" for mortgage-backed securities. Why would anyone pay a 6 point premium for an asset that may pay off in 4 months at par, creating a 6 point loss? Indeed, prepayment risk is taking center stage as most of the MBS market is trading above par. And the same with servicing: what is the value of servicing of a loan that you only have on your books for three months? Servicers and MBS investors are being forced to hedge their positions more actively.  

No doubt about it: rates are great. And we can talk about economic announcements until we're blue in the face but the fact of the matter is that the markets are dramatically influenced by the ongoing slide in oil prices. Last week we had a surprising fall in Retail Sales, and recently three inflation measures (the import price index, producer price index, and the consumer price index) all posed month-over-month declines. Uh oh - maybe the 4^th quarter wasn't so wonderful! But the readings on inflation continued to reflect the dramatic decline in oil prices.

For scheduled news this week (yes, it is already Tuesday), today we'll have the non-market moving NAHB Housing Market Index, tomorrow are MBA's Mortgage Applications numbers and the Housing Starts and Building Permits duo, Thursday are Initial Jobless Claims and the FHFA House Price Index, ending with Friday's  Existing Home Sales and Leading Economic Indicators. In fact, there isn't a lot that will move rates in that collection, so look for our rates to be pushed by events overseas. Speaking of which, not only is there a meeting in Davos Switzerland, but the European Central Bank is scheduled to meet this Thursday and the markets are expecting a big announcement regarding QE over there which is nearly guaranteed to move worldwide rates.

For numbers, looking back to Friday the 10-yr closed at 1.81% and this morning we're at 1.82% with agency MBS prices little changed.

Jobs and Announcements

Bay Equity Home Loans is actively searching for a recruiter to continue building "our already exceptional team of LOs and LO Teams in the San Diego region. Bay Equity has enjoyed record growth with our exceptional combination of outstanding pricing, broad product menu, top-notch client/partner marketing tools and a flat organization structure - all of which allow us to better serve our production staff, referral partners and clients. We are looking for ONE individual with established relationships to grow our family/team in San Diego. Our business model allows the right person will make a solid salary plus override on their recruits, in addition to being able to fund their own production and that of the team they bring with them." For a confidential conversation please reach Jamie Hughes.

On the retail side Churchill Mortgage is searching for outstanding Home Loan Originators in Southern California, Nashville, Northern Virginia, and Dallas. "Churchill - 'Where Top Talent Goes To Grow' - makes it a priority to help employees and their referral partners succeed.  Although we are staffed with several of the industry's award winners, we never stop looking for new ways to help even our top talent take it to the next level. We believe in investing in our people and in marketing that generates significant leads for our team. We also provide unique technologies and programs that bring real value to the real estate community, resources for healthy work life balance, community volunteer opportunities, as well as ownership in the company. Twenty-year old Churchill is owned 49% by the employees by way of the ESOP Trust, is a 'Tennessean Top Workplace', is the 'Best in Business' winner by the Nashville Business Journal, and is the only mortgage lender ever endorsed by Dave Ramsey." Visit Churchill's web site to learn more.

And a client of Menlo Company, a leading M&A and production growth management firm, is expanding its Retail Lending Footprint. "The lender's model organizes regional lending centers, built on and around your team, to provide a unique and highly service oriented offering of mortgage services to consumers in your market. Therefore, if your company and/or production team is looking to be acquired (or transitioned) to lead the expansion in your market, confidentially contact Rick Roque. The primary requirements are a production/LO driven entity with the leadership to manage more than $5M per month in volume, focused on retail mortgage lending (e.g. not commercial, real estate or insurance), and be purchase focused - but successful refinance teams or companies may be of interest.

It isn't the first and won't be the last: First Republic Mortgage Corporation of Indiana will be merging its operations with Ohio's American Mortgage Service Company of Ohio over the coming months.  First Republic is a full service mortgage banker and has been in operation in Indiana since 1996.  American Mortgage, in business since 1975, is a mortgage banking company doing business in nine states. In general, many lenders are looking for ways to work together, expand geographically, and do things more efficiently to reduce costs.

At the other end of the news scale, last week Altisource Portfolio Solutions served notice to over 800 employees and several hundred more contractors.  Layoffs in this country included Boston, but were worldwide. CFO Michelle Esterman mentioned the layoffs in an emergency investor call on Friday: "We are eliminating non-revenue generating businesses." Lenders know that the lion's share of Altisource's business comes from its former parent Ocwen. And Ocwen is busy grappling with the California Department of Business Oversight's possible suspension of Ocwen's mortgage license. Altisource is based in Luxembourg after being spun off from Ocwen in mid-2009. Altisource Portfolio Solutions later spun off Altisource Residential Corp. and Altisource Asset Management Corp. as two separate public companies in December 2012.