There are seasons to many foods. And folks into the culinary arts, and sustainable agriculture, will tell you that it is better to eat a peach in August grown within trucking distance rather than a peach in February flown in from Chile. Some say it makes sense to eat an entire meal made from whatever is in season, such as cauliflower, carrots, whatever. And right now it is Girl Scout Cookie season! Each Thin Mint has 40 calories, 28 per box. So the total number of calories is, let's see...0...32...0...8... for a total of 1,120 per box. So if I manage to find some time for exercise, a box for breakfast can be worked off at some point. I hope.

I bring this up, not because I could actually eat a box for a meal, but because I continue to hear about "seasons" in real estate and in lending. In some areas that might be true - folks out in California might buy more houses during the summer, when the kids are out of school and before it starts again, or in Florida during the winter. But refinances don't appear to have a season, and from my limited perspective, I am seeing pipelines down 10-20% from late 2012. Sure, spring may bring a pick-up in home buying, if "For Sale" signs start popping up heading into the summer from sellers excited about prices going up. But for any company relying on refinances, hoping for lower rates or another government-sponsored program, well, the borrower can do that regardless of season - it is a rate and program situation. And applications have dropped for three straight weeks - so sharpen those pencils!

And anyone who relies on the FHA will want to see how the potential upcoming spending cuts (sequestration) will impact this government agency.

Companies continue to expand and hire. For example, Stonegate Mortgage is searching for a 203k Manager for its HIP Group in Indianapolis, IN. Stonegate Mortgage's Home Improvement Program ( is a renovation mortgage solution that allows homeowners or buyers to make improvements or updates to their house and roll the costs into a single loan with one payment and one interest rate. Those who have 203k experience and are interested in leading the HIP department, please send confidential replies to Missy Dewey at mdewey@stonegatemtg .com.


Silvergate Bank (La Jolla, CA) is seeking to fill roles in secondary marketing, operations, compliance, and information systems to become part of the newly formed correspondent services group being established to complement the bank's existing warehouse lending and reverse mortgage platforms.  Secondary marketing responsibilities include establishing pricing mechanisms, investor approvals and managing rate-lock/investor delivery functions.   Operations candidates must have underwriting and process design experience underscored by a strong grasp of compliance management.  Compliance managers interested will have the opportunity to oversee all management systems within residential lending to ensure regulatory adherence.  The information systems position is expected to have experience in designing operating system business rules in test environments and loan origination administration. Silvergate Bank is an equal opportunity employer, and the positions are in La Jolla, in the San Diego area. Confidential inquiries should be submitted to Vera Cavazos at

Lastly, a privately held mortgage company based in Dallas, TX seeks and experienced financial executive as CFO. As a key member of the Management team, the Chief Financial Officer will report to the President and assume a strategic role in the overall financial management of the company. The CFO will have primary day-to-day responsibility for planning, implementing, managing and controlling all financial-related activities of the company. This will include direct responsibility for accounting, finance, forecasting, strategic planning, job costing, property management, service/product pricing and banking relationships. Previous experience in this type of role in the mortgage industry is required. Please send your confidential inquiries to me at rchrisman@robchrisman .com.

I continue to see concerns in the market about the fate of "affiliate relationships" in a QM world, especially in regard to builder/lenders. (Remember that Debra Still, the chairman of the MBA, comes from PulteGroup.) Recently I received this e-mail, filled with questions: "Would not the 'builder concession' be considered a borrower paid cost because the price of the home they pay creates the funds for the concessions? Shouldn't there be an anti-steering form that accurately reflects what the rate would be if the borrower obtained financing elsewhere and another form reflecting the cost of the home without concessions? Wouldn't it be in the borrower's best interest to require full consumer disclosure and awareness of the true cost with new construction? I have done lending for a 'production builder' I do understand and know how builder concessions work. Is there legislation in process that will address this practice?"

I sent this along to a friend in the builder/lender sector, who replied: "I assume the question relates to when the builder agrees to pay closing costs or provide some other incentive (like granite counters) in exchange for the borrower using the affiliated mortgage company.  I'm not sure that I would term it a 'concession' - it's more of a homebuyer option. If the borrower wants to use the mortgage, title, or other affiliated services, they receive the incentive. If they choose not to use them, they don't receive the incentives. Presently, about 70% of the homebuyers that buy a home from our affiliated homebuilder (and whom aren't cash buyers) choose the incentive, 30% do not. I assume that both the 70% and the 30% have run the numbers and are making rational economic decisions - but that may not be the case. I believe that Realtors, friends in the business, the builder's commitment to the affiliate model and other factors beyond the pure economics of the transaction influence homebuyer behavior in ways that are at times inconsistent with the borrower's best economic outlook."

The note goes on. "I only have my experiences here to draw on, but I believe that the notion that we somehow 'gross up' the price of the home to pay for the concession/incentive is flawed.  We have specific internal and external policies that prevent us from charging more for a home that is being financed by the affiliate than a home not being financed by the affiliate. Therefore, I'm unconvinced that 'the price of the home... creates the funds for the concession.'

"The notion of a comparison is interesting - although I think the industry already has such a form called the GFE - but I think the challenge would be that there is no way to compare a scenario where a borrower received a certain APR on a loan as opposed to another scenario where they received a different APR and granite countertops or $2,000 towards closing costs.   For 2012, it seemed like we were priced better than most other mortgage enterprises since capacity wasn't an issue for us since we don't do refinance loans.  In many markets our rate surveys showed us among the price leaders because we had ample capacity and didn't change our profit margin requirements in the face of increased industry volume.  I say that because I reject the notion that our rates are consistently materially higher than the rest of the industry.  I qualify that by stating that applies to my employer only, and not the builder affiliated mortgage companies as a whole since I don't do surveys on their pricing.  Also, if 2013 becomes more competitive as refinance volume drops and excess capacity starts cropping up in the industry it may well be that my company, for the period of time until the industry rationalizes capacity. May be materially more expensive that other mortgage providers.

"Let's pull the lens back and think about why the homebuilder has an affiliated lender.  Basically, the homebuilder sells homes, in various states of construction, with the expectation that the borrower will qualify and perform.  If we consider that the homebuilder makes a $200,000 or $300,000 investment to build a home for a buyer - I'm thinking of a dirt start here - and the buyer can't ultimately perform then the builder is faced with stranded capital and having to re-sell the Chrisman dream home (model, options, exterior appearance) to some other party that will probably pay less for the home.  Margins on finished homes are usually lower than margins on homes built from dirt.  So, the single most important thing we do at the mortgage enterprise is really, really, really rigorously underwrite the borrower's credit before we start building a home so that there are no surprises down the line. Our pre-qualification, because of our affiliation with the homebuilder, is more rigorous and usually more durable because we understand that if the home has to be re-sold at a lower margin that might mean $5,000, $10,000 or even $20,000 in reduced profit for the home builder. Contrast those motivations with the pre-qualifications the homebuilder (sometimes) receives from non-affiliated lenders, who seem to view prequalification as a marketing tool. In the end, it's not about the modest profits earned at the affiliated mortgage company, it's about closing the home with the original buyer, on time and with the gross profit margin that the builder expected when the sales contract was initially written.

As to legislation, QM has some interesting restrictions about affiliate relationships that could potentially cripple the captive model.  Right now, many builders don't seek out spot business, but if QM comes about as written, I fully expect builders will reposition themselves and aggressively pursue spot business. I respect any LO's desire to make inroads into the affiliated business world, and I hope if the regulations ultimately neuter the affiliate model the LO will respect my desire to make inroads in their world." Thank you very much for the note.

It is becoming harder and harder to argue with the improvement in housing prices. This week has been a big week for real estate-related news, including yesterday's January Pending Home Sales from NAR saying that sales were up in all regions and up 4.5% nationwide and 9.5% from a year ago. Lawrence Yun, NAR chief economist, said inventory is the key to this year's housing market. "Favorable affordability conditions and job growth have unleashed a pent-up demand. Most areas are drawing down housing inventory, which has shifted the supply/demand balance to sellers in much of the country. It's also why we're experiencing the strongest price growth in more than seven years," he said. "Over the near term, rising contract activity means higher home sales, but total sales for the year are expected to rise less than in 2012, while home prices are projected to rise more strongly because of inventory shortages." But remember, when prices go up, we can expect to see more inventory hitting the market!

Rates go up, rates go down, and the yield on the 10-yr seems pretty content between 1.83% and 2.05%). Yesterday it was their turn to go up, evidenced by the increase in selling MBS by those hedging pipelines (over $3 billion for the second straight day) and the number of prices changes from investors filled e-mails. For those invested in stocks, the Dow is about 75 points from its all-time high, which seems directly to fly in the face of the spending cuts called for by "sequestration." The smart money thinks Congress will kick the can down the road - after all, it made the rules in the first place.

Besides, how high can home loan rates really go with the Fed saying it would continue its asset purchases until it sees substantial improvement in the outlook for the labor market? Yesterday, though, we did see some better-than-expected economic data (durable goods ex-transportation, nondefense capital goods orders ex-aircraft, and Pending Home Sales Index) that helped fuel the risk trade and steepen the curve. The 10-year note worsened by about .250 in price with the yield moving up to 1.90%, and current coupon MBS prices changing about .125.

For today, rates had improved heading into the 6:30AM MST GDP and Jobless Claims numbers. This is our second look at the 4th quarter GDP data. The first time it showed a decline of .1%, and this was revised to +.1% (less than expected). Weekly Jobless Claims were -22k to 344k from a revised 366k - perhaps the labor market is on the mend? Later we have the February Chicago PMI. Here, early, the 10-yr, which closed Wednesday at 1.90%, is now at 1.87%, and MBS prices are a shade better.

Sex at 79: I just took a leaflet out of my mailbox, informing me that I can have sex at 79. I'm so happy, because I live at Number 73. So it's not too far to walk home afterwards. And it's the same side of the street. I don't have to cross the road! Life is good!!!!