It has been quite a week, visiting mortgage and banking folks in California, Kansas, and now Texas. There are a lot of good, experienced personnel out there, and a lot of optimists - aside from all the Encompass & Mavent users out there gasping during Ellie Mae's temporary outage yesterday. And there is indeed reason for optimism in certain sectors. For example, one of every eight American households (nearly 14 million in all) rents a single-family home, and there will always be borrowers refinancing for some reason. But Wednesday we learned that the Mortgage Bankers Association Applications index fell in the Feb 21 week by -8.5% after prior -4.1%. (So we can assume that applications fell.) Refi's fell by 11% and purchases dropped by 4% with the Purchase index now at the lowest level since 1995. Refi share of applications fell to 58%, lowest since September 2013 when rates were nearing 3% on ten year notes. Sure, purchase apps are at a 19-year low, but hey, maybe half the borrowers who could have refinanced already have not yet.

(Read More: Half those Eligible have not Refinanced; Fannie Mae asks "Why?")

One never wants the New York Times to be writing of "concerns" about your company, but that is where Ocwen (and its CEO Erby) finds itself. And Bloomberg also addressed Ocwen's problems. Needless to say, every non-bank servicer (Nationstar, Stonegate, Walter immediately jump to mind) is watching this very closely, especially if they've seen tremendous growth due to venture capital funding. If their growth is halted, not only will non-bank servicer funding sources not like it, but it will negatively impact the market for servicing, which in turn negatively impacts the price to borrowers. Interestingly enough, the overall servicing industry has contracted slightly over the last few years as loans are modified or forgiven, or people pay off existing debt.

Zelman & Associates invites readers to join them for an informative conference call to discuss their outlook on the housing market and mortgage environment this Monday, March 3rd at 2:00 pm EST. Ivy Zelman and her team deliver unique and data-intensive research across housing and have been consistently recognized for their industry-leading analysis. Join Zelman on their upcoming call to gain an insightful view on what is happening in housing and the implications for the mortgage landscape, including a discussion of demographics, the outlook for new construction, home prices and much more, as well as learn how to receive their research free of charge. Notably, with the mortgage market's shift to purchase dominance, Zelman's focus on homebuilding and related sectors provides a valuable perspective for lenders. The conference call can be accessed by dialing 1-877-234-0285 with the passcode 139842. Please note that a link to the call's presentation will be provided on Monday morning before the call through this newsletter so stay tuned.

In addition to residential lending, student loans, car loans, payday lending, and for-profit universities, the CFPB has reportedly turned its gaze to real estate agents. Are consumers being steered? A quick look at Berkshire Hathaway's real estate company didn't turn up any recommended lenders, but there are plenty of conglomerates out there. A quick example is NorthStar Realty Finance Corp. which announced cash available for distribution. "During the quarter, NRF deployed $481 million of equity into $799 million of gross investments. Investments included: $337 million invested in RXR Realty, two commercial loans originated for a total of $104 million, and $345 million in manufactured housing acquisitions, financed with a $248 million of non-recourse mortgages. The company announced that it was close to executing an agreement on a $1.05 billion health care portfolio, which includes assisted living and skilled nursing facilities.... To date, NRF has raised a total of $1.4 billion in its sponsored, non-traded REITs."

And there is a class action lawsuit for $11.2 million against Long & Foster, a large real estate company, for RESPA violations. Long & Foster Real Estate is reportedly involved with another company sharing settlement fees and they are facing a lawsuit over it all.

I am sure NAR is watching developments closely, and it opens up many questions for lenders and originators. Some believe that the RE companies and builders that own and operate mortgage companies were out of compliance with RESPA. Folks who have been in the business for a while remember that it was not allowed prior to 2002.  There were affiliate business arrangements, but they were scrutinized and approved up front by HUD. In many states, title companies and other settlement agents have arrangements with the RE companies. All of them do it, often sharing a building and, I imagine, various costs, and it is certainly "easy" to refer a client next-door. RESPA, of course, allows the buyer to have a choice of escrow company - but how many buyers have a preference? Banks, lenders, real estate companies, builders, and so on are certainly known to steer borrowers toward using certain title/escrow/settlement services. And thus many originators believe that RE companies and builders should not be allowed to own & operate mortgage companies and/or T & E companies under the belief that it is a conflict of interest, and more costly for the consumer. As one LO from Nevada wrote me, "We don't need more regulations and layers of paper. We just need the old established rules enforced."

Let's take a quick look at some recent aggregator changes.

Per the recent revision to the Texas Supreme Court ruling, Chase is now considering per diem interest and discount points as "interest" for the purposes of calculating the 3% fee cap on 50(a)(6) transactions.

Wells Fargo has amended the bulletin it had previously released that aligned its PUD and condo project flood insurance requirements with those of FNMA, e.g. that all projects have a gap dwelling policy if the replacement cost is less than 100% but more than 80%.  This applies only to condos, not PUDs.

Wells has made multiple changes to its adverse credit history guidelines for Conventional Conforming loans and has aligned its delegated requirements with those of Fannie and Freddie.  In cases where a borrower has filed for Chapter 13 bankruptcy, at least 24 months must have elapsed since the discharge date or at least 48 months from the dismissal date, while borrowers with multiple bankruptcy filings within the last seven years will be subject to a 60-month waiting period.  Foreclosures due to financial mismanagement will be subject to an 84-month waiting period.  With regard to deeds-in-lieu, foreclosures, and short sales, loans with a DU certificate are allowed with a 24-month period of re-established credit with a maximum LTV/CLTV/TLTV of 80%.  Cash-out refinances on LP or manually underwritten loans will not be permitted within 84 months, while rate/term refinances are allowed for primary residences, second homes, and investment properties.  Only primary residences are allowed for purchase transactions.  The updated guidelines will take effect for locks, re-locks, re-negotiations, and commitments on or after March 17^th.

PennyMac has released its new AOT interface, which allows sellers to submit trades into AOT commitment online via the Correspondent Portal, available immediately to users with Correspondent Admin or Secondary Marketing access.

Green Tree correspondent has rolled out a new 5/1 Conforming ARM product with a 2/2/5 cap structure and 2.25% margin, available for the 30-year FNMA, LPMI, Texas Equity Refinance, 30-year Homepath, DU Refi Plus, and Texas Equity DU Refi Plus programs.  The existing Conforming 5/1 products are still eligible for the 5/2/5 cap structure.

While mortgage banks look for smaller shops to bring on board, banks are busy merging. The reasons banks merge differ. A study by Deloitte finds the primary M&A objective of directors is to pursue cost or scale efficiencies (56%) vs. only 32% for CFOs. Meanwhile, 64% of CFOs say the primary M&A objective should be product or service differentiation vs. only 45% of directors. SNL Financial reports the number of healthy bank acquisitions was 285 in 2007, 109 in 2009, 224 in 2012 and 225 in 2013. (Meanwhile, it has been several years since any new banks were created from scratch - de novo.) Recent announcements include...Cache Valley Bank ($683mm, UT) will acquire The Village Bank ($123mm, UT) for an undisclosed sum. Security Financial Bank ($292mm, WI) will acquire Peoples State Bank of Bloomer ($115mm, WI) for an undisclosed sum. And Banner Bank ($4.3B, WA) will buy 6 branches with $226mm in deposits and $95mm in loans from Sterling Savings Bank ($9.9B, WA) for an undisclosed sum. (The purchase is contingent on consummation of the previously announced merger between Sterling and Umpqua Bank).

Turning to the markets and interest rates, it is hard to believe that we began the year with the 10-yr. yield at 3.00% and yesterday it closed at 2.64%. Refi territory? Not really - but we'll take it! Yesterday analysts attributed the move toward lower yield to a flight to safety related to Russia and Ukraine. And Fed Chair Yellen's testimony before the Senate Banking Committee went just fine - nothing groundbreaking. Initial Jobless Claims increased more than expected. By the end of the day agency MBS prices were better by .125-.250. And as long as the Fed continues to buy $2.2 billion of MBS, it seems to be soaking up fixed-income agency supply.

I'll be on an airplane so will miss lots of the fun this morning. We will have the preliminary Q4 GDP which is expected to show lower growth from the advanced read at +2.5 percent from +3.2 percent, February's Chicago PMI (projected lower), final February Consumer Sentiment (predicted unchanged), and Pending Home Sales Index for January. In the very early going the 10-yr is sitting around 2.66%, and MBS prices are worse about .125-.250 from Thursday's close.