This morning we had the Retail Sales figures. Shopping in Texas can be a different experience (30 seconds).

Small lenders can be assured that whatever happens to larger players in mortgage banking will eventually impact them in some way. It appears that the Obama administration is putting more pressure on Fannie & Freddie to write down principal. (I have never missed a mortgage payment - where do I sign up for that program?)

For the Chicago area only, I have been retained by a well-established, 100 year old community bank, based in far NW Suburban Chicago. It is looking to expand its presence in the North, Northwest and Western suburbs with the addition of a Branch Manager and production team. The bank is an approved FNMA seller-servicer, and also offers several correspondent options. They have local operations for underwriting, processing, etc. Any interested parties should send their resume to me at

In other parts of the nation, hiring also continues. Carrington Mortgage Services is expanding its sales force in both retail and wholesale channels. It has LO positions open in CA, AZ, FL, GA, NC, VA, PA, and NJ. Carrington is also hiring Wholesale AE's and Area Sales Managers for the following states: CA, AZ, WA, CO, UT, TX, NM, IL, FL, GA, VA, PA, and NJ. "Carrington is a Ginnie Mae Direct Seller Servicer offering a wide variety of loan programs: FHA/VA direct GNMA, Conventional, Fixed, ARM and more." All wholesale candidates are required to have an active broker base prior to consideration. Interested candidates contact John Cervantes at

Friday I noted that the Financial Crimes Enforcement Network (FinCEN) has new regulations that require non-bank residential mortgage lenders and originators to establish anti-money laundering (AML) programs and file suspicious activity reports (SARs), and that law firm Ballard Spahr has a free webinar on Thursday for its attorneys to explain the new requirements and discuss the steps non-bank residential mortgage lenders and originators must take now to comply with the new requirements.  There is a link to the webpage where readers can learn more about the webinar.

The drama with FHA continues. For many months analysts have been pointing to its reserve fund, saying it is below congressionally mandated levels and some suggesting it is basically insolvent. Even the White House, in its budget proposal, noted that the agency's capital reserves would run out in the coming year, forcing it to draw as much as $688 million from the Treasury. But wait - HUD Secretary Donovan later said that the banks involved in the $25+ billion mortgage servicing settlement had agreed to pump close to $1 billion into the FHA. He also said the agency would raise premiums on loans it insures in a further step to bolster its reserves, with the numbers coming this week. Broadly speaking, HUD's 2013 budget requests $44 billion from Congress, about the same as this year. In addition, "HUD is asking for authority to guarantee $400 billion in mortgages through FHA's Mutual Mortgage Insurance Fund which is expected to provide 1.2 million single family mortgages, $149 billion in loan volume, during the year and $500 billion in Ginnie Mae guarantee authority in order to help finance a wide array of government-insured products" per Mortgage News Daily.

So let's see - first, additional guarantee fees are levied by the agencies for the next 10 years in order to pay for a payroll tax cut for two months. And now the five banks involved in the servicing settlement are chipping in $1 billion in order to support the FHA? Soon the FHA's increase in mortgage insurance premiums will at least go to support itself. The FHA now backs nearly $1 trillion in mortgages, and more than 9% of those loans are at least three months past due, per a story in the WSJ. Remember that the FHA doesn't make loans but instead insures lenders against losses for mortgages that meet its standards, and earns income by charging upfront and monthly insurance premiums to borrowers. The agency said Monday it would increase the annual insurance premiums by one quarter of one percentage point for loans that exceed $625,500.

The FHA is taking some additional steps to limit risk and strengthen finances, and HUD may require indemnification for 'serious and material' violations of FHA origination requirements, and for "fraud and misrepresentation such that the mortgage..."  Many lenders have not prepared for this risk and have not begun reserving for the risk but it may not be enough. There are options, one being insurance to protect from repurchase or contractual liability tied to loans sold, including FHA. Contact Justin Vedder with Arthur J. Gallagher at to learn more.

Speaking of taxpayer support, recently the CFPB has released its first semiannual report to Congress outlining its activities. The report indicated the CFPB had hired more than 750 employees; fielded 13,210 consumer complaints (70% involved credit cards, 18% involved
mortgages and 12% were other); launched a supervision program to promote compliance with consumer protection laws; and evaluating and developing disclosures that make financial products' costs and risks easier to understand. The Bureau will soon unveil a prototype for a new monthly mortgage statement (VIEW) for consumers designed to clearly show important information from their servicer. The statement will include the principal owed on the loan, the current interest rate, the next date on which the interest rate could change, a description of late payment fees and a phone number and email address the homeowner could use to contact the company servicing the mortgage. The agency also is working on a new disclosure rule for hybrid adjustable-rate mortgages that would require consumers to be notified months before their first interest rate increase, as well as to be provided with a good-faith estimate of the new monthly payment. Servicers also would have to tell customers about alternatives to try to head off a higher interest rate, such as refinancing, per Politico.

Jerami A. Marshal, the Chair of the Massachusetts Mortgage Bankers Association, was recently quoted, "Investors continue to tighten their evaluation of loan files under post-closing and pre-purchase review.  For the first in three decades, investors are asking for additional documentation that is not required within GSE guidelines or investor overlays in an attempt, as they say, 'to strengthen the loan file.'  Marshal went on to say, "The typical mortgage banker is left to interpret investor guidelines on a more conservative manner than normal, not as a means to correct the direction of past mortgage lending philosophies, but to ensure salability of the loan transaction into the secondary market.  Because of this, the low credit risk borrower, with a high credit score and low debt-to-income ratio, is finding it even more difficult to obtain financing at record low interest rates".  In his opinion, Marshal says, "There seems to be a clear direction that the days of common sense analysis under delegated underwriting authority may become a thing of the past, in the not too distant future."

Most, if not all, of lenders use some type of Appraisal Management Companies, a vendor industry that sprang from HVCC. Yesterday a press release from NAIHP noted that it discovered many AMC's are operating without authority in most states and have failed to pay state income tax. "When businesses are formed, they are required to register with their Secretary of State, for authority to conduct business. That registration alerts the State Tax Department you exist and may be responsible for certain taxes. The same holds true if you operate outside your home state, according to Marc Savitt, NAIHP President. Most AMC's are only registered in a handful of states, but operate nationwide. If you're not registered, you're not paying taxes, said Savitt. Although, HVCC and now Appraiser Independence rules don't mandate the use of AMC's, many banks and large lenders, who own all or part of certain AMC's, require their usage by consumers. RESPA requires disclosure of these affiliated relationships. After polling NAIHP members in several states, we haven't found one AMC or any of their partners disclosing these affiliations. We've also discovered other RESPA violations as well, said Savitt."

Turning to the markets, Monday was more of the same: limited selling by originators met by buying the Fed and the usual suspects of money managers, banks, and hedge funds. There was no news here in the U.S., and Greek issues continued to dominate the press. By the close on Monday the 10-yr was at 1.97% and MBS prices were pretty much unchanged. This morning things have picked up a little with Retails Sales for January, +.4%, less than expected, but ex-auto was +.7%, better than expected. Import Prices +.3% as expected. The impact on the market is negligible: the U.S. 10-yr note is unchanged at 1.93%, and MBS prices are up.

In honor of Valentines Day:
If Laura, Kate and Sarah go out for lunch, they will call each other Laura, Kate and Sarah.
If Mike, Dave and John go out, they will affectionately refer to each other as Fat Boy, Bubba and Wildman.
When the bill arrives, Mike, Dave and John will each throw in $20, even though it's only for $32.50. None of them will have anything smaller and none will actually admit they want change back.
When the girls get their bill, out come the pocket calculators.
A man will pay $2 for a $1 item he needs.
A woman will pay $1 for a $2 item that she doesn't need but it's on sale.
A man has six items in his bathroom: toothbrush and toothpaste, shaving cream, razor, a bar of soap, and a towel.
The average number of items in the typical woman's bathroom is 337. A man would not be able to identify more than 20 of these items.
A woman has the last word in any argument.
Anything a man says after that is the beginning of a new argument.
A woman worries about the future until she gets a husband.
A man never worries about the future until he gets a wife.
A woman marries a man expecting he will change, but he doesn't.
A man marries a woman expecting that she won't change, but she does.
Ah, children.  A woman knows all about her children.
She knows about dentist appointments and romances, best friends, favorite foods, secret fears and hopes and dreams.
A man is vaguely aware of some short people living in the house.
A married man should forget his mistakes.
There's no use in two people remembering the same thing!

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at . 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.