The bitcoin movement just became a little more complicated: JPMorgan Chase is going after the bitcoin biz by patenting a similar system. But these few slips of paper I have in my wallet are worth something, right? Right?

Things tend to slow down during December, but LOs are still out there for business. Garth Graham with the STRATMOR Group writes, regarding the C's of lending, "The 'four Cs' of lending still serves as a good basis for deciding whether to approve a loan, although it's now been subsumed into a new acronym: 'ATR' (ability to repay). However, the more compelling discussion at this week's tech show was what I refer to as the '3 Key Cs' of business success this coming year: capacity, conversion and compliance.

Right now we're in the middle of an interesting transition. Lenders are moving from an operational mode that was built around managing capacity, specifically how to build systems to crank more loans through the process as demand for mortgages remained high. Now, the capacity question is not about doing more loans, but doing the lower volume of loans with less staff, as organizations are beginning the rightsizing of the organization to the new market norms. That creates its own technology challenges.

"The second key C is conversion, and this was a much bigger part of the discussions at this year's show. In fact, today lenders are measuring everything in an attempt to convert more of the leads they have and are focused more on pull through of the loan applications they are lucky enough to secure. There was a lot of great discussion at this conference about lead generation, lead management and converting those leads into closed loans. I heard one expert admit from the podium that in January, 95% of his business came from refinance loans, whereas today more than 65% are purchase money loans.

When the phone isn't ringing with new business every day, it becomes very important for lenders to learn how to cultivate those leads and close those loans. As lenders make the move from managing capacity to managing conversion, they must bear in mind that the deciding factor is the customer's experience. We are returning to a mode of business where word of mouth will be a critical factor in how many leads, and what quality of leads, a lender can attract. Figuring out how to keep consumers happy and get them to refer business is a key success factor going forward.

"The other important change, of course, is that lenders are no longer viewing compliance out of the corner of their eye, but rather are setting up systems that allow them to swiftly move leads through their process in a manner that guarantees compliance at every point along that line. They are also taking customer satisfaction very seriously and taking steps to measure it as often as possible. In fact, questions about STRATMOR's SAT product ranked among the top three comments I received during the show, as lenders realize how critical measuring consumer satisfaction is."

Is the final piece of the QM sector in place? HUD issued its final QM rule defining a qualified mortgage (QM) for FHA-insured loans. The rule is effective January 10, 2014, the same date the CFPB QM takes effect. MBA summarized the rule.

"The Dodd-Frank Act contained a requirement that the lender must make a reasonable and good faith determination that a borrower had the ability to repay their loan as well as a provision for a qualified mortgage that is presumed to meet that requirement. CFPB promulgated the general Ability to Repay/Qualified Mortgage (ATR/QM) rule and FHA was among the government agencies required under the Act to define its own QM rule. FHA issued a proposed rule on September 30, 2014 with a 30 day comment period. The final rule does not significantly differ from the proposed rule.

Let's continue with some relatively recent investor, agency, and vendor news to gain a sense of current trends!

Western Bancorp announced a 5/1 ARM for self-employed borrowers using Alternative Income Verification (AIV). The program also offers an interest-only option, non-owner occupied and options for first time borrowers, with loan amounts from $200,000 to $2,500,000.  Income is verified using bank statements to support the borrower's income, with no tax returns, no P&L, and no 4506T requirement. Western Bancorp lends in California, Washington, Idaho and Montana. Contact Western Bancorp for details on availability in your area.

Titan Capital is now allowing inter vivos revocable trusts on its standard Jumbo product; however, land trusts, blind trusts, and irrevocable trusts will not be accepted.  Condos, including Garden, mid-rise, and high-rise (greater than four stories), have been added as an acceptable property type with the exception of Non-Warrantable properties.

M&T Bank has clarified in its VA and HomeStyle product descriptions that it will be doing a pre-purchase review on all relevant transactions and has updated the FNMA HomeStyle eligibility matrix to state that C1-a of the HomeStyle MMWS cannot be more than 50% of the appraised value upon completion.  For FNMA High Balance loans, the guidelines have been revised to reflect the LTV change for 1-unit primary residences, purchases, and LCO refinances with 660 FICOs from 75% to 80%.

Impac has updated its guidelines for its FNMA Fixed and LIBOR ARM, DU Refi Plus, Freddie Fixed and Super Conforming, and LP Open Access, the primary changes to which are the addition of Essent as an approved MI company and the addition of condos on Freddie products using Fannie's CPM Expedited Full Review approval process as an eligible property type.

PHH is now requiring 7/1 and 10/1 ARM borrowers to be qualified at the greater of the note rate or fully indexed rate, replacing the previous qualification using the note rate based on a fully amortizing principal and interest payment.  The selling guide has also been updated as well to define restructured mortgages as a loan for which the terms of the original transaction has changed and resulted in forgiveness of a portion of the principal and/or interest on either a first or second mortgage, principal curtailment by a lender to simulate principal forgiveness, conversion of any portion of the original mortgage to a "soft" subordinate mortgage, or conversion of any portion of the original mortgage from secured to unsecured. As a reminder, any transaction that qualified as a restructured mortgage is not eligible for purchase by PHH.

Effective immediately, PHH has relaxed its Conventional Conforming guidelines to allow FICOs down to 720 for single family PUDs and condos with LTVs over 80% and LTVs up to 95% for purchases and rate/term refis on owner-occupied co-ops (85% for 2-units and 90% for second homes, purchases, and rate/term refis with a FICO of at least 720).  Owner-occupied, purchase, and rate/term refi transactions now permit FICOs down to 660 with LTVs of 80% and over, and the maximum cash-out for owner-occupied transactions with an LTV over 80% has been increased from $75,000 to $100,000.  In addition, the overlays for soft, distressed, and severely declining markets have been eliminated for the 15- and 30-Year Fixed P&I Conforming Plus and 30-Year 3/1, 5/1, 7/1, and 10/1 ARM P&I Conforming products.

Effective immediately, Envoy Mortgage has removed the -.250 adjustor for FICO scores of 620-639 and the -.125 adjustor for scores of 680-739 on all Conventional Conforming fixed rate products.

WesLend has revised its DU High Balance guidelines to allow FICO scores down to 620 with up to 80% LTV for purchases and rate/term refinances, replacing the previous minimum score of 660.  For cash-out refinances, the minimum FICO has been lowered from 740 to 680 with LTV capped at 60%.  In compliance with the recent DU updates, Interest Only transactions are no longer permitted, and the maximum tradeline and DTI are now dictated by DU.  WesLend has also approved Hawaii as a state.

I spent Wednesday in San Jose with the local chapter of CAMP, and a fair amount of comments were directed at interest rates. Prices were lower from the outset and spreads (to Treasury rates) veered wider. The current thinking is that with Washington/Congress accomplishing things, the economy might actually pick up some steam, which could in turn lead to higher rates. Agency MBS prices finished the day worse by .125-.375, depending on coupon.

This morning I am heading to our 50th state, and it is pretty early. But we'll have weekly Jobless Claims, Import Prices, and November Retail Sales (expected higher), along with a 1PM EST auction of $13 billion 30-yr bonds. In the early going rates haven't changed much: the 10-yr closed Wednesday at 2.84% and this morning it is at 2.85% with MBS prices "off a shade."