Bank of America spent $1.5 billion on legal fees in the last three months of 2010. Sometimes we have trouble imagining big numbers. In the US, our median household pretax income is about $50,000. If a household were to work for 300,000 years, it would earn $1.5 billion dollars. (300,000 years ago was about the same time that mortgage bankers began walking erect, and using burnt sticks to write HMDA information on cave walls.)

There are indeed jobs out there to be had. Merscorp Inc., the parent company of Mortgage Electronic Registration Systems (MERS) announced that R.K. Arnold has retired as CEO & president, and Paul Bognanno will take the job on an interim basis. He will lead the search process for a permanent replacement in MERS' Reston, VA office. MERS, as we know, has in its electronic database more than half of all the outstanding residential mortgages in the U.S., and is owned by the largest lenders and investors in the country.

Pacific Union Financial, a multi-state direct lender with both wholesale and retail platforms, is looking for personnel. (Pacific Union is GNMA approved, and today will begin accepting FHA applications for borrowers with FICO scores from 600-640 in addition to accepting borrower applications down to 580 at the retail level with some overlays. President Evan Stone said, "We are very excited to serve a segment of the marketplace that has been almost completely disregarded by large institutional investors. Our HUD Neighborhood Watch compare ratio is 25%, which represents our commitment to funding quality loans...") The company is looking for DE underwriters, retail loan originators (including branches), servicing personnel, and wholesale account executives for their Walnut Creek and Santa Ana offices. "For any of the aforementioned positions, please email Vicki Bonardi at"

Terra Mortgage Banking (an affiliate of Opes Advisors, a privately held regional financial services firm) is searching for "in-house" real estate branch-based loan officers north of San Francisco, CA.   Candidates must be proficient in purchase lending & NMLS licensed. Interested parties should contact Chris Solle by e-mailing: Another affiliate of Opes, Landmark Mortgage Group, is currently searching for a branch manager to run a new branch in the San Francisco area. "The ideal candidate is someone that wants to continue originating while supplementing their income with branch production overrides." Inquiries should be sent to

Kinecta Federal Credit Union continues to look is looking for seasoned Wholesale Account Executives in certain areas west of the Rockies. If you are interested, please send a resume to Erika Schlarmann at

A while back the MBA wrote to Federal regulators, asking for either clarification of the existing verbiage, or an extension past the 4/1 date for originator compensation changes. They responded. (Call me an internet amateur, but going to the MBA's website and typing "compensation" in the search engine reveals an MBA workshop but not the responses; I am sure that the regulator's answers are on there somewhere, I just could not find them.) SunTrust, however, has sent the regulator's answers out to their broker clients. They are quite lengthy, but I will be reproducing them in blocks for the next week, starting tomorrow.

Wells Fargo sent its brokers detailed compensation information. "In general, the Federal Reserve Board has provided the following examples of allowed or prohibited compensation arrangements: Loan officer compensation is allowed with a minimum and maximum dollar threshold per loan, paid as a percentage of the amount of credit extended, that varies by taking into account differences in the costs of loan origination, such as rent and other overhead expenses, or the loan officer's overall volume or quality of the loan officer's files, pull-through, or an hourly rate. Prohibited are loan officer compensation based on prohibited terms and conditions of the loan - including interest rate, APR, LTV, revenue or anything that could be a proxy for prohibited loan terms and conditions. Also prohibited is compensation that varies based on the following factors: customer credit score, customer fees collected, a loan's profit, a loan program - such as conventional or government, or profit-based incentive for producing branch managers.

What is the plan for the comp plan? Companies all over the nation should, per Wells, assess loan officer compensation from prior production data, project operating expenses for 2011, forecast 2011 volume and product mix (ratio of Conventional, Government, Non-conforming, etc.), and then "model your new compensation plan to meet the requirements of the new regulation, loan officer compensation needs, operating costs and profit targets." Wells' system is set up under a quarter-based system, where brokers will have the choice of several lender-paid compensation levels that will vary by state. Each level will have corresponding minimums and maximums. "You will operate under this lender-paid compensation level for a full quarter. You may select a different compensation level for the Wells Fargo lender-paid model in subsequent quarters to react to market changes."

Mountain West, a wholesale shop in California, is offering three webinars on LO compensation, February 2, February 18, and March 8th. The times are 10-11AM, 1-2PM, and 2-3PM, all PST, respectively. "Learning, understanding, and implementing the new guidelines." To sign up:  or   or

For investor news, in a week Chase is revising its Agency and Non-Agency Credit Report Inquiry Policy. "Freddie Mac previously announced this policy change in bulletin 2010-19. Chase has elected to apply this policy to all Agency and Non-Agency loans and will be a Chase Overlay for Fannie Mae DU loans. ("The underwriter must review the credit inquiries section of the credit report to determine if the borrower(s) has received credit not reflected on the report or included in the debt section of the 1003. If the credit report reflects a credit inquiry within 120 days of the credit report date, then additional documentation is required.")" Chase also told its correspondents that it will no longer require the "1-4 Family Rider" in the closed loan package on FHA and VA transactions. Lastly, given Freddie & Fannie's changes to their post settlement delivery fees, Chase is revising loan level price adjustments on Agency Amortizing and Interest Only Fixed and ARM transactions with greater than 15- year loan terms, Agency Amortizing Fixed and ARM loans with subordinate financing, and Chase Risk Based Price Adjustments on all Fixed Products.
SunTrust sent out its weekly set of bulletins. These included one titled "Portfolio Affordable Housing Mortgage Program Requires Stability in Current Position and in Same Line of Work" which states, "Salaried and hourly wage borrowers must be in their current position for six months and they must have a two year employment history in their line of work." SunTrust now requires ground rent escrow for Leasehold Estate properties, unless managed by an HOA. "Additionally, SunTrust Mortgage must underwrite conventional loans for condominium projects that appear on the 'SunTrust Mortgage Approved Condominium Project List' with approval dates that expire before March 23, 2011."

Starting today, SunTrust has a revised extension and/or extended lock option pricing based on routine risk analysis. Rather than me list it, here: The company came out with "Appraiser Independence Requirements" that replace the HVCC for conventional loan programs, and "maintain the core principals of the HVCC, and provide further clarifications to the requirements implemented under the HVCC."

CitiMortgage sent out a 5-page update to its programs, policies, and procedures. Reproducing it here is impractical, not to mention not very exciting. But the information addresses credit policy updates, MI restrictions, project insurance requirements, note rate limitations, program-specific credit policy updates, FHA products & case numbers, annual high cost loan adjustment in New Jersey for 2011, revised TIL, additional requirements for paystubs, cash out to borrowers, social security number requirements for a DU refi, etc.

Kinecta Federal Credit Union rolled out some new programs today: 25-yr Agency Fixed Rate Term Maximum LTV 97% (if >80%, then MI is required), and 97% LTV Option for Agency Fixed and ARM Products (maximum LTV 97% (if >80%, then MI is required)).

With all of this, rates continue to chop along. MBS prices were better by .250-.375 on Friday, and the 10-yr sitting at 3.42% keeps us right in the middle of our recent range. Traders reported "Seeing good buying of the basis by hedge funds and decent real$ buying 4.5s and 5s is helping MBS firm up into the afternoon. With the expectation of supply being light into the afternoon and continued rally, MBS could go out pretty well to end the week." The same might be said for this week.

The biggest economic event this week will be Wednesday's FOMC meeting, with an update on the economy and the Fed's plans for monetary policy (but don't look for any change in overnight rates). For economic news, there is nothing slated for today. Tomorrow we have the Case-Shiller 20-city Index, along with Consumer Confidence, the FHFA Housing Price Index (I lose track of the dozens of house price indices that come out every month), and, of course, the State of the Union Address. Wednesday we have the MBA applications index and New Home Sales, along with FOMC rate decision. Thursday has the usual Jobless Claims, but also Durable Goods & Pending Home Sales. Friday is the Employment Cost Index and GDP number for the fourth quarter along with the University of Michigan Consumer Sentiment survey. And don't forget that $99 billion 2-yr, 5-yr, and 7-yr supply. Currently the 10-yr is about unchanged at 3.42%, and MBS prices are also about the same as Friday's close.


Billy Bob and Luther were talking one afternoon when Billy Bob tells Luther, "Ya know, I reckon I'm 'bout ready for a vacation. Only this year I'm gonna do it a little different. The last few years, I took your advice about where to go."

"Three years ago you said to go to Hawaii. I went to Hawaii and Earlene got pregnant."

"Then two years ago, you told me to go to the Bahamas, and Earlene got pregnant again."

"Last year you suggested Tahiti and darned if Earlene didn't get pregnant again."

Luther asks Billy Bob, "So, what you gonna do this year that's different?"

And Billy Bob says, "This year I'm taking Earlene with me."