Don't let this happen to you at the next mortgage conference: THOUSANDS PROTEST CORRUPTION

Maybe this person works for the Treasury Department, and the spill impacted the plans for Freddie and Fannie - which could be why the plans, which are "required" by the end of January per Dodd-Frank, have now been pushed back until mid-February. "

Officials say the delay is needed to accommodate other major policy initiatives, including next month's release of the annual budget and the president's State of the Union address today."

Try that excuse when delaying your 4/1 comp plan! It doesn't help that the Treasury has had some personnel turnover, and policy disagreements between Treasury and White House officials. When it does come out, expect two or three proposals for what should replace Fannie and Freddie, and discussions of the merits and drawbacks of the different approaches. FULL STORY: KICKING THE CAN DOWN THE ROAD

The plan needs to address a way for the government to continue backing existing mortgage-backed securities (F&F own or guarantee about half the $10+ trillion of home loans), and how to structure a market with no government guarantees for some products. Is there enough capacity in capital markets to finance mortgages without some type of government guarantee? If you're a money manager in Taiwan or Egypt, wouldn't you demand a higher rate of return to match the risk without any government guarantee? And if bank-owned cooperatives issue government-backed mortgage bonds, wouldn't that concentrate more power among the largest U.S. banks?

No matter what, smarter minds than mine say we need private capital to return to the market, Fannie & Freddie to raise fees they charge lenders for riskier loans, and possibly reducing the maximum loan limits for mortgages the companies can purchase to push more loans toward other institutions. One industry vet wrote, "Isn't it a bit funny that while the GSEs must reduce the size of their portfolio, the Treasury purchased over $1Trillion of MBS and continues to buy government securities for their portfolio through QE2."

While we're on the topic, wanna buy a house? Call the agencies - Fannie & Freddie's combined inventory of foreclosed residential property has quadrupled in just three years and now stands at $24 billion, and the number of properties on their books (over 241,000) has increased fivefold. That's roughly a third of the total U.S. portfolio of repossessed homes. And the numbers show no signs of declining, since it seems that nationwide foreclosures are going up faster than buyers can be found. Let me think about that supply versus demand curve... HOUSING GLUT

Say what you will about the Nationwide Mortgage Licensing System and Registry (NMLS), but it is a fact of life in our industry. The organization is conducting the third annual NMLS User Conference & Training February 7-10, 2011 in Orlando, Florida. "The NMLS User Conference & Training brings together state and federal mortgage regulators, industry professionals, compliance companies, top law firms, and education providers to learn about the latest developments in mortgage supervision and to discuss pressing issues confronting the industry." If the site of hundreds of compliance officers doing the rumba through a hotel lobby appeals to you, go to the Conference website HERE

On behalf of the state regulatory agencies participating in the NMLS, the State Regulatory Registry is inviting public comments on the Uniform Licensing Forms developed by state regulators and used by all states through NMLS; and the NMLS Policy Guidebook. UNIFORM LICENSING FORMS 

There is scuttlebutt out there that the FHA will suspend its anti-flipping rule for a second year in 2011. Whether investors go along with it remains to be seen, however. HUD's existing rule, that prohibits the FHA from insuring a mortgage on a home that was owned by the seller for less than 90 days, was temporarily put on hold last February to help liquidity. There are certain restrictions, well known in the industry, but a HUD spokesman reported told HousingWire that the rule is currently "in the clearance process."

Turning to LO compensation, one reader opined, "What I am hearing is that for the most part, the Dodd Frank legislation will indeed impact certain segments of the LO population. High volume producing agents may be the least impacted, since they often use the lowest margins already. Agents who originate few loans, but with high margins, will see the most change, and some management teams don't seem to mind since "we have the most problems with the agents doing the least loans." (Licensing hurdles and requirements have removed many already.) Production teams are working with producers to maximize their time and efficiency, although smaller-sized loans apparently still help originators from the aspect of adding to their reputation and helping with referrals."

And as was mentioned yesterday, here is part 1 of the MBA questions/Fed answers, published by SunTrust:

Q1: What does the restriction on compensation based on terms cover and how does it apply to payment of compensation or other costs through rate?
A. Fed Response - The Commentary accompanying the rule says that the restriction against compensation based on a transaction's terms includes the interest rate, annual percentage rate, loan-to-value ratio, or the existence of a prepayment penalty. The rule also prohibits a proxy for a transaction's terms or conditions such as credit score.

Q2. If compensation cannot be based on a transaction's terms, on what can it be based?
A. Fed Response - Compensation that is not based on a loan's terms may include: i. The loan originator's overall loan volume (i.e., total dollar amount of credit extended or total number of loans originated), delivered to the creditor. ii. The long-term performance of the originator's loans. iii. An hourly rate of pay to compensate the originator for the actual number of hours. iv. Whether the consumer is an existing customer of the creditor or a new customer. v. A payment that is fixed in advance for every loan the originator arranges for the creditor (e.g., $600 for every loan arranged for the creditor, or $1,000 for the first 1000 loans arranged and $500 for each additional loan arranged). vi. The percentage of applications submitted by the loan originator to the creditor that results in consummated transactions. vii. The quality of the loan originator's loan files (e.g., accuracy and completeness of the loan documentation) submitted to
the creditor. viii. A legitimate business expense, such as fixed overhead costs. ix. Compensation that is based on the amount of credit extended.

Q3. For purposes of (ii) above what is meant by long term-performance?
A. Fed Response - The term means any reasonable period of time over which the overall performance of an originator's loans can be measured including the time in which early payment defaults or payoffs occur. "Long term performance" is intended to cover overall performance of the originator's loans not the performance of individual loans. The language was not intended to require or permit loan-by-loan claw back based on loan performance. Lenders can consider early payment default or payoffs in overall loan originations of the originator with regard to the originator's future compensation or bonuses.

More Q&A tomorrow!

Onto  mortgage-related corporate news, Florida-based Bank United, a bank seized by the FDIC and now owned by private equity investors including Wilbur Ross and Carlyle, will be going public this week. Bank United will aim to raise $630 million in a test of investors' appetites for private equity-driven IPOs.

NYCB Mortgage Company (ex-AmTrust) is now accepting "condominium projects that have pending litigation against the homeowners' association or developer that involves minor matters defined as: Non-Monetary litigation involving neighbor disputes or rights of quiet environment. Litigation for which the claim amount is known, the insurance carrier has agreed to provide the defense and the amount is covered by the association's insurance. The homeowners' association is named as the plaintiff in a foreclosure action, or as a plaintiff in an action for past due homeowners' association dues."

Colorado State Bank & Trust Mortgage Group is hiring Mortgage LO's and Sales Managers for various offices throughout Colorado. (CSBT is a subsidiary of BOK Financial Corporation, a Top-50, and $24 billion financial holding company.)  Interested applicants should contact Gary Tackett at or visit the website at

Maverick Funding Corp., (, a privately held New Jersey-based mortgage lender licensed in 21 states which needs licensed loan officers in Southern California and New Jersey. The company is also expanding its retail footprint in Rhode Island, NJ, and CA. Contact CEO Ralph Vitiello at

Turning to the bond markets, no one is looking for a big rate move in either direction in the next few days. There is solid consensus that the economy will grow in 2011 - but by how much, and what will happen when all government stimulus is gone and the economy has to stand on its own? The FOMC starts its meeting today, with the information being released tomorrow - the last few announcements have been fairly optimistic about growth without too much inflation. That would be nice, as too much inflation will hurt the long end of the yield curve. Remember that the Fed continues to buy treasuries almost every day but mostly at the middle and short end of the curve, which mortgages tend to mimic.

A senior citizen said to his eighty-year old buddy:

"So I hear you're getting married?!"


"Do I know her?"


"This woman, is she good looking?"

"Not really."

"Is she a good cook?"

"Naw, she can't cook too well."

"Does she have lots of money?"

"Nope - poor as a church mouse."

"Well, then, is she good in bed?"

"I don't know."

"Why in the world do you want to marry her then?"

"Because she can still drive!"