When I was in grad school at Cal, a student in the same apartment complex had a dog. Whenever his parents or a special girl were coming to visit, rather than clean the kitchen floor himself he'd grate some cheddar cheese and sprinkle it on the linoleum, and the dog would clean the floor for him. (Whenever guys hear that story, they think it's clever and cool; gals roll their eyes. Both are similar to the response of watching a Three Stooges movie.) I wish that I could say that he went into the mortgage business, which he didn't, but there are plenty of clever people in mortgage banking, and most continue to adapt to the regulatory hurdles.

For example, a few weeks ago HUD announced it will begin collecting NMLS identifier information for individuals and entities participating in the origination of loans submitted for insurance by the FHA. And recently the OCC issued a SAFE Act reminder notice of the expected start date for federal registration of residential mortgage loan originators employed by banks, savings associations, credit unions, and their subsidiaries. The registration period is expected to start at the end of this month and last for 180 days, after which any employee subject to registration under the SAFE Act will be prohibited from originating residential mortgage loans without having first met the registration requirements. Check out the NMLS site.  For a copy of the reminder notice, please see the official release.

And as this commentary noted a while back, law firm BuckleySandler reminds us that HUD issued Mortgagee Letter 2011-02. "The letter reminds mortgagees that, since the FHA no longer approves or monitors Loan Correspondents, mortgagees now must perform quality control reviews on all sponsored third-party originators (TPOs) from whom they acquire loans. Additionally, the letter states that mortgagees must create a report documenting (i) the methodology used to review TPOs, (ii) the results of each review, and (iii) any corrective actions taken as a result of their review findings. This report must be kept on file for two years." QUALITY CONTROL MORTGAGEE LETTER

It appears that, given what I am hearing, a broad range of lenders are seeing their locked pipelines down 50% from their peak in November. On the other hand, Flagstar wholesale sent out a bulletin, a portion of which stated, "Wholesale Support is experiencing a high volume of FHA Case Number Requests. They have exceeded their 48-hour turn time and are working to improve the turn time by next week."

In its latest downward revision, Freddie Mac estimates that mortgage originations will total $1.05 trillion this year, down from its projected $1.2 trillion last month. Most of this, of course, comes at the expense of refinancing as rates are expected to grind higher in 2011. Per Freddie, refinancing made up 69% of the total $1.55 trillion in home mortgage originations last year, but are expected to constitute just 41% this year and 35% in 2012. FREDDIE MAC OUTLOOK

If you haven't had enough conjecture about the future of loan officer compensation, you may want to check out this webinar. It will present "practical solutions for competitive loan officer and branch manager compensation following financial reform."  Presented by NYLX, it is tomorrow at 2PM EST, 11AM PST: MORE DETAILS

Freddie Mac released an update for servicers, and wannabe servicers, regarding new servicing technologies. (Freddie also extended its stay of foreclosure protections for service members.) "A dynamic, Web-based solution, the Service Loans application will provide greater operational efficiencies through a more intuitive and user-friendly servicing environment for investor reporting functions, including default reporting, when servicing Freddie Mac mortgages. Read all about the 6+ pages HERE

Last week JPMorgan Chase reported earnings and the numbers can be useful in showing how a mortgage bank can make money. Looking at mortgage production, mortgage loan originations hit about $51 billion at the end of 2010, up 46% from the prior year and 24% over the third quarter of 2010. CEO Jamie Dimon noted that, "In our mortgage business, while charge-offs and delinquencies have improved, credit costs still remain at abnormally high levels and continue to be a significant drag on our returns."

Mortgage banking and other consumer lending reported a net income of $577 million, an increase of $311 million, or 117 percent, from 2009. Mortgage banking net revenue was $2 billion, up by $1.1 billion. JPMorgan Chase's mortgage banking net revenue included $244 million of net interest income, $1.6 billion of mortgage fees and related income, and $108 million of other non-interest revenue. (Mortgage fees and related income were comprised of net production revenue, servicing operating revenue, and MSR risk management revenue.) Production revenue, excluding repurchase losses, was $1.1 billion, an increase of $618 million, reflecting higher mortgage origination volumes and wider margins.

Today we had Citi's results for the 4th quarter. Citi, typically in the top 5 list of mortgage origination volumes, reported only 4 cents per share versus 8 cents per share that was expected. Revenue came in at $19.5 billion, slightly less than expected, apparently due to investment banking revenues. Citi released a little over $2 billion of loan loss reserves, good news for credit quality which continues to improve.

But a Bloomberg story points out that Citi's earnings mask flawed mortgage loans sold to Freddie Mac: FULL STORY

The Ally Financial board of directors declared quarterly dividend payments for certain outstanding preferred stock, namely payable to the US Treasury. The parent of GMAC stated that it will have paid a total of approximately $1.9 billion in dividends to the U.S. Treasury since February 2009.

GMAC released its new policy requirements for processing the IRS Form 4506-T. This updated policy applies to all financing types - Conforming, Jumbo and Government loans, subject to certain exceptions. The requirements are based on whether the loan was approved using DU or LP, date of submission to GMAC (June 15th, 2011 is a key date regarding 2009 or 2010 tax forms), jumbo or manually underwritten loans, or the loan is an FHA Streamlined program.

SunTrust revised its Property Ownership Affidavit requirement ("If a new application includes a PIW or PIA, the revised Property Ownership Affidavit (COR 0061) must be completed by the borrower prior to submission to underwriting. For existing applications where the Property Ownership Affidavit (COR 0061) has not been signed use the new Property Ownership Affidavit (COR 0061).") SunTrust also issued an overlay, similar to Citi's, for DU Refi Plus loans for correspondents partners. "This tool aids in identifying areas where SunTrust Mortgage, Inc. has additional credit requirements supplementing investor guidelines" but has no new guidelines. In the last week or so SunTrust has also released announcements focused on appraiser eligibility, settlement agent eligibility, condo project approval status, Truth-in-Lending disclosure changes, acceptable warehouse lines of credit, MERS registration requirements, allonge usage in a conventional note, etc., etc.

Nationstar sent the word out to clients that it "will not accept appraisals transferred by another HVCC compliant lender if the effective date of the appraisal is greater than 30-days old at the time of the loan submission. All loan submissions which contain an appraisal over 30-days old will require a new appraisal to be ordered through the Nationstar Appraisal Order Portal. Nationstar will not accept a loan submission which contains a FHA or VA appraisal with an effective date greater than 30-days old at the time of the loan submission. In addition, Nationstar does not accept any transferred appraisals with FICO's of 660 or below. Every transferred appraisal will be reviewed by Nationstar and may be subject to a field review, which can lower the value, but never increase." The company also told patrons that it will not require 2010 tax returns until approximately June 1, 2011. Until then, 2008 and 2009 tax returns should be ordered.

KInecta Federal Credit Union told its brokers that for DU Refi Plus loans (existing loan not currently serviced by Kinecta), "we are eliminating the MI requirements for loans with LTVs >80%," if the loan meets certain criteria including a maximum LTV of 90%, primary occupancy, 1 unit SFR, PUD, or condo, minimum FICO of 720, etc. "Please refer to eligibility matrix for complete requirements." Kinecta also spread the word that Oregon has been approved as an eligible state. "All products will be available with the exception of the Piggyback HELOC" which will be available in all states with the exception of Oregon.

Lenders and mortgage investors rolled out the new risk-based pricing matrices over the weekend. For example, in California, wholesaler Pinnacle Capital alerted brokers about it: ANNOUNCEMENT

Given the lower supply, one would think that, relative to Treasury yields, mortgage rates and prices should be doing ok. And they are - MBS prices are about 1.5 points off their lows (worst) last week. Friday MBS prices finished the day about unchanged from Thursday's levels, and the 10-year T-note closed off .250 in price hitting 3.33%.

Besides earnings, this week's news includes some "Empire State" manufacturing data today, Housing Starts and Building Permits tomorrow, and weekly Jobless Claims, Existing Home Sales, Leading Economic Indicators & the Philly Fed on Thursday. There is zip scheduled for Friday. FULL ECON CALENDAR

A woman, upon arrival in heaven, asked "God, why did you create man before woman?"

God answered "to every good design, there's a rough draft".