"Ok, we start with the side of a cow..."

For you football fans out there, this is a big weekend, here is some non-mortgage information of great interest - video on how Wilson makes footballs! Any HR person will be amazed at the number of years these factory workers have been doing THIS

Folks wonder what the most reliable sources of mortgage news are... Besides US, People, and Martha Stewart's Living, this is quite amazing. Put your mouse on a city and see today's newspaper's front page: VERY COOL

But speaking of news, according to a paper published by the Federal Reserve Bank of San Francisco, in the years leading up to the financial crisis of 2008-2009, a combination of factors including low interest rates, lax lending  standards, the proliferation of exotic mortgage products, and the growth of a global market for securitized loans promoted increased household borrowing.

Is this late-breaking news to anyone in the mortgage business?

"Homebuyers with access to easy credit helped bid up U.S. house prices to unprecedented levels relative to rents and disposable income. The rapid rise in household net worth encouraged lenders to ease credit even further based on the assumption that house price appreciation would continue indefinitely. U.S. household leverage, as measured by the ratio of debt to disposable income, reached an all-time high of 130% in 2007."

The research piece goes on to say that house prices in the United States have dropped on average by about 30% from their peak in 2006, but also that the personal saving rate trended up from around 1% to about 6% in the third quarter of 2010 while the ratio of household debt to disposable income dropped from 130% to 118%.

As has been written in the past, on the one hand "higher saving rates imply correspondingly lower rates of domestic household consumption growth so that a larger share of GDP growth would need to come from business investment, net exports, or government spending. On the other hand, an increase in domestic saving would help rebuild household nest eggs in preparation for retirement and also help correct the large imbalance that now exists in the U.S. current account."

Fraud in Michigan? No way! "The owner of a mortgage brokerage company pleaded guilty this afternoon to conspiracy to defraud the U.S. by falsifying documents to obtain loans for unqualified applicants." My advice - don't drop the soap: he faces up to five years in prison and three years on supervised release when sentenced, along with paying back the money. FULL STORY

JPMorgan Chase announced earnings today, which were $1.12 per share versus the $1.00 that was expected. Revenue came in stronger for the 4th quarter, and credit losses declined, and CEO Dimon noted that credit trends continued to improve. Non-performing loans are declining, which is very good to see. READ MORE

Flagstar rolled out a jumbo program, sure to turn some heads. Program features include a 5/1 & 10/1 LIBOR ARM options (5/2/5 caps); 2.25% margin, loan amounts from $417,001 up to $2,000,000, manually underwritten, maximum 40% debt-to-income; note that all assets listed on the 1003 must be verified. (The loan amounts depend on credit score, LTV, primary versus second home, etc.) As always, it is best to read the actual guidelines from Flagstar.

Flagstar requires a life-of-loan flood insurance certificate for all properties secured by FHA insured mortgages. Additionally, properties located within a "Coastal Barrier Resource System" are not eligible for FHA financing. With the exception of the spot loan provisions, FHA has extended the temporary condominium guidance announced in FHA Mortgagee Letter 2009-46a. The extension applies to all FHA condominium case numbers assigned on or before June 30, 2011.

Bank of America correspondents learned that it, as expected, will be following the agency loan level price adjustments (LLPA's) effective on or after January 17, 2011, and BofA's Agency Price Guide will be updated accordingly for all conventional Best Effort and Mandatory commitments. "Changes have been made to: LLPAs by Credit Score/LTV, LLPAs for Subordinate Financing, LLPAs remain unchanged for DU Refi Plus mortgage loans." BofA's correspondents were also reminded of the changes coming up on the 30th. Namely, "effective with all loan applications taken on or after January 30, 2011, the interest rate, corresponding monthly payment and any escrow amount for taxes and property and/or mortgage insurance must be disclosed on the TIL in the form of a summary table. The table must contain only the information required, be in a prominent location on the TIL and be printed in a minimum 10-point font. A disclosure must be included stating there is no guarantee that the consumer can refinance the loan to lower the interest rate or periodic payments. In addition, if an escrow account is required, that fact must be disclosed, along with an estimate of the amount of taxes and insurance, including mortgage insurance."

Wells Fargo's brokers were also told about its new standard conforming LTV/loan score and secondary financing adjusters, which kicked in for them a few days ago. Impacted are "All Conforming loans except Freddie Mac Relief Refinance Mortgage and Fannie Mae DU Refi Plus." In addition, brokers were reminded that certain state laws provide a "redemption period" after a foreclosure or tax sale has occurred, during which time the property may be reclaimed by the prior mortgagor or other party upon payment of all amounts owed. The length of redemption period varies by state and does not expire automatically upon sale of the property to a new owner. "Any property with an unexpired right of redemption is NOT eligible for financing."


Wells Fargo Funding told its correspondent clients to please disregard its update from earlier this week, instead sending out a new bulletin addressing the recent changes to Fannie Mae and Freddie Mac's Standard Delivery Fee matrices. The bulletin stated the new Wells Fargo Funding adjusters, noting that these adjuster changes do not apply to Fannie Mae DU Refi Plus Loans. The changes are effective for best effort production (locks, relocks and renegotiations) on and after January 12, 2011. The original fee structure will be retained on extensions. For mandatory sales, "to receive the old adjusters, Loans should be delivered by February 18, 2011, to ensure purchase by February 25, 2011. For Loans purchased after February 25, 2011, the new adjusters will apply."

U.S. Bank Home Mortgage Wholesale/Correspondent Division reminded us that the new Risk-Based Pricing rules, issued by the Federal Reserve Board and Federal Trade Commission, became effective on January 1, 2011. "The new law requires that all borrowers be provided with the Risk-Based Pricing Notice before loan closing, but not earlier than the time the approval decision is communicated to the borrower.  The Notice provides borrowers with information regarding their credit, including how their credit score compares to the credit scores of other borrowers."

Franklin American issued updates on conventional property flipping, gave notice that it had approved a new MI company (Essent), clarified documentation requirements for rental income from a 1-4 unit investment or 2-4 owner occupied subject property on conventional conforming loans, noted that for FHA/VA loans two years tax returns and transcripts are required for all self-employed borrowers regardless of AUS feedback, and let clients know about an underwriting fee increase of $50 that will take place in March. FAMC also spread the word about new file delivery deadlines, updated disaster area requirements, an updated electronic signature policy, risk based pricing credit score disclosures, invoices for third party fees, and Truth in Lending document changes. Check with the actual bulletin for full details too lengthy to reproduce here.

Lastly, M&T also notified clients of changes to its guidelines, which apply to its FNMA Standard & FNMA High Balance product line(s).

Turning to the interest rate markets...yesterday was a good day! Volumes picked up in MBS sales, which, when prices are moving up, is a good sign. But overall volumes are less than where they were a month or two ago, indicating that indeed a slow-down is occurring. On the demand side, traders are reporting good demand for MBS production - given how clean and well documented this paper is, who wouldn't want to own it? Of course, that doesn't help the foreclosure numbers for 2010, which set a new record. Anyway, the 30-yr bond auction went ok (at least it is out of the way). MBS prices closed up nearly 1/2 point on 3.5s to 1/4 point on 5.5s, rate-sheet mortgage prices improved by .250-.375.

(Warning, parental discretion advised.)

I was a very happy man. My wonderful girlfriend and I had been dating for over a year, and so we decided to get married.

There was only one little thing bothering me....It was her beautiful younger sister. My prospective sister-in-law was twenty-two, wore very tight miniskirts, and generally was bra-less.

She would regularly bend down when she was near me, and I always got more than a nice view. It had to be deliberate. Because she never did it when she was near anyone else.

One day her 'little' sister called and asked me to come over to check the wedding invitations.

She was alone when I arrived, and she whispered to me that she had feelings and desires for me that she couldn't overcome. She told me that she wanted me just once before I got married and committed my life to her sister. Well, I was in total shock, and couldn't say a word.

She said, "I'm going upstairs to my bedroom, and if you want one last wild fling, just come up and get me."

I was stunned and frozen in shock as I watched her go up the stairs. I stood there for a moment, then turned and made a beeline straight to the front door. I opened the door, and headed straight towards my car.
Lo... And behold, my entire future family was standing outside, all clapping!

With tears in his eyes, my father-in-law hugged me and said, "We are very happy that you have passed our little test. We couldn't ask for a better man for our daughter. Welcome to the family."

And the moral of this story is: Always keep your condoms in your car.

There will be no commentary on Monday in honor of the Martin Luther King Holiday.