On the heels of the State of the Union address, the MBA has issued its annual State of the Mortgage Industry release, and the assessment is generally positive. The consensus was that states hit hardest by the housing crisis will continue to deal with the aftermath but that 2012 should see some degree of recovery. The MBA pointed to a number of recent upticks. Upheavals in the single family market have actually helped the multi-family market, for one. The rental market has seen some very positive activity, as more lenders, many of them life insurance companies, have moved into the sector. Of course, the residential market and refinancing remain thorns in the industry's side.  MBA President and CEO Dave Stevens attributes the dearth of financing to market uncertainty, which has been aggravated by both unrest in international markets and regulation in the US.  Much of the proposed legislation needs to be more specific, especially when it comes to underwriting and the definition of "ability to repay"-crucial to ensuring a safe haven for lenders. The idea of a high degree of risk is still not terribly attractive. Also criticized was the current structure of the mortgage market - the MBA points out that the GSEs or FHA are involved in 90% of lending, which was described as "simply unsustainable," and that he private sector should therefore be encouraged to re-enter the market. As for unemployment, the MBA expects 150,000 jobs to be created per month, which would have a positive effect on the mortgage market, though that number would of course vary for different demographics.

A story in American Banker by Kate Berry summed up the PHH news over the last few weeks. Namely, "PHH will cut back on correspondent lending, sell non-core assets and reverse its drive for market share in the mortgage business to alleviate investors' liquidity concerns," per CEO Glen Messina. He said that PHH may cut correspondent lending in half, directly related to PHH's near-term focus on hoarding cash since "loans originated with minor defects take up capacity on PHH's balance sheet because they typically are not eligible for warehouse financing." The article noted that, "Though PHH captured 4% of the mortgage market in the fourth quarter, Messina said that going forward 'setting a market share target' was not consistent with the company's near-term focus on liquidity and cash. PHH will no longer provide market share guidance."

At the other end of the spectrum, per Bloomberg, Bank of America's retail channel has been unable to keep up with demand for borrowers wanting to refinance, thanks in part to HARP Phase II, which is beginning to roll out. Per the article, borrowers are being placed on a 90 day waiting list. "Bank of America is telling some customers who call during high volume periods of the day to make a reservation. And once they do that, it could take anywhere from 60 to 90 days just to hear back. Even then, it's unclear how much longer it will take to apply for a refinance, get the loan underwritten, and finally get it funded." And don't forget that it stopped offering cash out refinances last month so if borrowers want to tap their home equity, they'll either have to try a HELOC or go elsewhere. Borrowers with checking accounts or those who visit a branch stand a much better chance of an earlier time frame.

A few weeks ago received information that Freddie Mac has extended the Uniform Loan Delivery Dataset implementation date, providing mortgage professionals with additional time to apply the first phase.  Freddie has given substantial notice-new implementation requirements apply to loans whose applications were received on or after 12/1/11 and are delivered to Freddie on or after 7/23/12.  The Freddie Mac selling system, positioned to be updated on January 23rd, will now be changed on April 23rd. For details go to: http://www.freddiemac.com/sell/secmktg/uniform_delivery.html.

Given the number of e-mails I have received, out in the Western U.S. it seems that Reunion Mortgage, with ties to Citi, has ceased its wholesale business. For example, "It seems it pulled out of wholesale only (I didn't realize they even had a retail presence) but it sure seem to be doing it quietly.  It seemed that the only brokers that received the email from them were the ones that were active with them.  They didn't issue a rate sheet yesterday."

Fifth Third is expanding its policy on borrowers taking a leave of absence from their jobs in the wake of revised guidance from the GSEs now mandates that short-term income on the temporary leave is eligible for all conforming and portfolio products.  Borrowers must meet a number of requirements, which include written intent to return to work in the same employment situation upon completion of the leave, verification of employment and income prior to the leave, and completion of necessary documentation. Also released by Fifth Third were its AMC turn times, which can be viewed at www.53.com/wholesalemortgage.

Mountain West is applying changes to conventional price adjusters for cash out and investment properties to loans locked on or after February 13, 2012 as well as loans that relock after that date.

For vendor news, Wednesday marked the launch of the free Zillow Mortgage Marketplace App for Android by real estate Web site Zillow. Also available for the iPhone, the newly launched app offers home shoppers on-the-go access to the loan shopping experience of Zillow Mortgage Marketplace. The app includes features that enable shoppers to narrow their home search to a specific price range, based on income, down payment, and monthly debt information. Technology marches on...

On to a few recent letters that I received. "A wise friend mentioned to me that before the government gives money to mortgagors who are underwater there should be a test to determine if a cash-out refi was done. The amount the poor, unfortunate homeowners extracted from the equity should be deducted from any principal reduction the government is handing out. Of course, this reduction will be mitigated an amount equal to the influence of the unscrupulous loan originator. I'm old enough that I will be done soon, and I am very glad that I won't have to participate in this farce much longer."

Steve Emory wrote, "I would hope that members of the industry quit going along with the mass media lies about the mortgage industry. No servicer tells a borrower to quit making their payments. This is almost an urban legend it gets so much press. Most servicers record calls with borrowers that call customer service lines. But assume somehow they avoided the subpoenas to get the recording, certainly with the volume of borrowers claiming this has happened to them there would be validated borrower recordings with proof of this practice. I've heard none and you have to know NBC, ABC, CBS, Huffington Post, etc. would plaster the airwaves with one if they had it. Sure there may be a few off the reservation ones but I haven't even heard a recording of one of these. Not one document in writing either. The press should know telling a borrower you can only process a modification for someone behind on payments, is not the same as telling the borrower to get behind on payments. A depressed homeowner may spin/twist that statement in that manner, but that is personal responsibility associated with a human tragedy, not servicer liability nor big banks/Wall Street's fault. The press should quit writing these allegations unless they have back-up proof. This lie, along with the lies of "banks want to foreclose" and "just lower the principal on all underwater homes to fix the housing crisis" are leading the uninformed distressed borrowers to conclusions that are harming those very borrowers. It helps progressive legislators pass laws that harm the financial services industry, which tighten lending standards beyond reason. It is harming people that otherwise would make their payments. It is demonizing lenders unfairly and tightens lending, which lowers the number of borrowers that qualify, which lowers home values further. It is a downward spiral that must stop before housing will recover."

And lastly, regarding the recent news about Fannie & Freddie bonuses, David Lewis, the managing consultant for Con-Serve Capital Consulting, wrote, "I guess I am among the short sighted members of the profession.  I made my living as Chairman, President and CEO of two different mortgage banking companies.  My span in the day-to-day business went from June of 1984 through June of 2010. From my perspective, employees at FNMA /FHLMC are government employees.  As such, they are responsible to the Federal authority, and not to some Board of Directors in a "for profit" corporation.  What else could they be, other than Civil Service employees, entitled to all the perks and benefits of such an employee?  They certainly deserve to be graded, as are other government employees, by the grades and salary ranges appropriate to the responsibilities of their respective jobs."

Mr. Lewis continues, "For a number of reasons, these employees and the executives they report to, are no different than any employee/executive at HUD.  To worry of their exodus for jobs in the private sector is to fret about the migration of any government employee.  Short sighted or not, I, for one, could care less whether the new broom in Washington, D.C stays for a year or a day. FNMA/FHLMC/HUD employees raise no capital.  All the capital is provided by the Federal government.  If any of the entities loses money in a given fiscal period, the bills and the salaries continue to be paid with tax payer monies. FNMA/FHLMC premises are owned by the government, not the stock holders.  So too, the furniture, fixtures and equipment are part of the public domain.  Sales of securitized loans are sold into a market which is "made" by the Federal Reserve Board.  What private enterprise is involved here?  Lacking any private enterprise, in a not-for-profit corporation, how are any employees or executives different from any other publicly held department or division? The people who work at HUD, FNMA and FHLMC are public employees, period.  As such, they deserve all the benefits and perquisites of public employment, and no other."

Last week I noted, "For all of you with any money left, be aware of the next expected mergers so that you can get in on the ground floor and make some "big bucks." Watch for these consolidations in 2012." I missed a few, which some readers kindly noted.
"And 2 railroads, the Norfolk Virginia Southern and the California Reading Way are merging, offering coast-to-coast overnight shipping. Coast-to-coast overnight shipping via rail? Norfolk-n-Way!"
And, "An unconfirmed rumor is that Dolly Parton will buy controlling interest in Piggly Wiggly, Big Lots and Harris Teeter.  All 3 brands will operate under the name 'Dolly's Big Wiggly Teeters'."

And yesterday's joke had "I love you" in various languages, including one phrase from the southern states and a few in Canada, and received these notes:

"In Alabama, 'Nice Rack, Get in the Truck' is something you mutter under your breath when you see a big deer walking across your field.

And, "You know, in a lot of the states you mentioned in your Valentine's Day message, 'Nice rack' is actually something already in the truck. Just saying..."

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog discusses residential lending and mortgage programs around the world, part 2. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.