There are some darned clever folks out there. Although this has nothing to do with mortgages, making a Mercedes "invisible" is noteworthy (scroll down for the video).

Before we launch into FHA news, you should know that Carrington Mortgage Service, LLC is seeking a Sr. Vice President of Mortgage Retail Lending to help them continue to grow their branch network nationwide. The lender, headquartered in Southern California, is a "dynamic and entrepreneurial, privately held company specializing in the full suite of services required for the residential loan and real estate market." Anyone interested in learning more please contact Linda Blakemore at

And up in Michigan, John Adams Mortgage is searching for a General Sales Manager to oversee its Loan Officers. Based in Southfield, John Adams is "Southeast Michigan's #1 FHA/VA purchase Lender" but also focuses on conventional and USDA lending. The company needs a General Sales Manager to be able to focus on growth, quality and maintaining & improving its already-strong purchase business. For more information on the company, visit, and for more information on opportunities contact Larry Bsharah at 

"U.S. stocks took a hit today amid fears of a Greek default and amid economic growth concerns." That's news? Because you could practically use that financial news headline at any time in the last year or two, and will probably be able to do so well into the future. Stocks and bonds don't always move in opposite directions, but the Dow was off around 200 points while 10-year notes closed up/better by .5 in price (1.95%). As Tradeweb reported, the rally limited originator supply and it was adequately absorbed by the Fed, but, as usual, MBS prices lagged a little and current coupons improved about .250.

First we take the streamlined FHA refi's out of the compare ratio. And now...the Ginnie market (made up of mostly FHA & VA loans) knew a streamlined refi change was coming following last week's remarks from Acting FHA Commissioner Galante and HUD Secretary Donovan. President Obama announced that for loans originated prior to June 1, 2009, the up-front premium for streamlined refinancings would decline to 0.1% from 1.0% and the annual fee would be 55 basis points compared to 115 basis points. No one seems to care about what investors think, of course. Prepayment speeds will pick up as a result, hurting premium coupon investors' returns. Morgan Stanley estimates the increased refinancings could add $1 billion in monthly supply but the Fed is expected to keep buying MBS's, right?

Is one website worth a thousand words? Probably - here is the press release for the new & improved refinance program. For a little Q&A that is directed to borrowers, here you go. As best I can tell, the lower monthly MIP for the FHA Streamlines is only for FHA loans closed before May 31st, 2009 and will be in effect for all case numbers issued on, or after, June 11th, 2012.

Why the dates? The FHA has backed a sizeable share of mortgages since then, and those borrowers won't be able to take advantage of the reduced fees, which will limit the reach of this program. According to estimates from CSFB, about two thirds of all FHA-backed 30-year mortgages were originated after the cutoff date and therefore wouldn't be able to benefit from the reduced premium. Of course, some of those more recent loans carry lower rates and wouldn't necessarily benefit from refinancing. And remember that streamline refinances are available only to borrowers who have made all of their last 12 payments. Because the FHA already guarantees these loans and are on the hook for any losses, officials see little downside to letting these borrowers take advantage of low rates.

Karl T. writes, "As it relates to the new MIP amounts on FHA Streamlines, what about all the people who have already 'streamlined' this year?  I think this change is great but it is late. Once again people who were savvy to their financial situation and who acted quickly to make life better get the short end of the stick as they appear to be stuck with the 1.15% factor.  Those who procrastinated, had low FICOs that are improving, or those who already have a decent rate are the ones left to benefit. Hopefully all those who streamlined this year will eventually have their MIP reduced."

There are underwriting changes afoot at HUD, and recently HUD published a "Revised Proposal for Limiting Seller Concessions" that is open for comments. This supplants its initial July 15, 2010 issuance. In its previous issuance, HUD had proposed, as one of its initiatives to reduce risk to its insurance fund, reducing the cap on seller conditions from six percent of the lesser of the sales price or appraised value to three percent. In response to the significant public comment on its July proposal, HUD is now proposing to reduce the amount of seller concessions permitted as offsets to three percent or $6,000, whichever is greater, although the offsets would not be permitted to exceed the borrower's actual costs. To address future increases to closing costs, the $6,000 cap would be indexed to increase at the same rate as the FHA national loan limit floor. HUD also proposes limiting acceptable uses of seller concession to payments toward borrower closing costs, prepaid items, discount points, the FHA Up Front Mortgage Insurance Premium, and an Interest Rate Buydown. Comments on this revised proposal are due March 26, 2012.

FHA's mortgagee letter 2012-3 and the new collection policy is raising some eyebrows. (In fact, one person thought this would cut his production by 50%.) If a borrower has collections over $1,000 they must be paid off or make payment arrangements with all of them and then show 3 months history and count the payments in the DTI. Some believe that this will put a large dent in FHA production, and the details can be found here. Page 3 of this letter outlines the changed stance on collections (which includes medical) starting 4/1. Are investors re-tooling in preparation for this?

The commentary has mentioned this before, but it bears repeating. For all the lenders out there, the FHA has amended the requirements for receiving approval to participate in the Lender Insurance process.  To qualify, lenders must maintain a two-year seriously delinquent and claim rate of less than 150% of the aggregate rate for the states in which they do business, and the FHA plans to keep a close eye on lenders to make sure that rate is sustained. Responding the organizational change the mortgage industry has recently experienced, the FHA has provided a process by which lenders without a two-year compare ratio can now be granted LI authority. Also offered is a new definition of "serious and material violation" of origination, which, if committed, will require indemnification from LI mortgagees. Current levels of seller concessions on single family mortgages are exposing borrowers to risk by creating incentives to inflate appraised value, the FHA has deemed.  In an effort to diminish that risk, a revised rule that would reduce maximum allowable concessions is in the on seller concessions, and is "in the works."

As you know, all of the rules have changed with regard to net worth, whom and who cannot be approved for FHA and what your responsibility is as a lender. As a Full Eagle Lender, one has earned the authority (through HUD) as a Lender Insurance Lender, meaning you can insure your own loans and are only required to send a file to HUD when asked on a random basis and not in order to approve the loan. But to be in this category, the compare ratio must stay below 150%.

Finishing with the HUD theme, what do you call a teacher who refuses to pass gas in public? A private "tooter." In training news, FHA-HUD will be offering a number of webinars and tutorials over the next couple of months. In brief, the FHA's National Servicing Center is offering free courses on loss mitigation in Oklahoma City on May 16-17 and August 15-16. Register here. A loss mitigation training series for FHA-approved servicing lenders offered by HUD-FHA will be available every Wednesday throughout February, March and early April.  A full list of specific webinar topics and registration links can be found on the HUD website, going through the above site.

The MBA reported what lock desks everywhere knew: last week's mortgage applications dropped about 1%, with refinance activity falling 2% but purchases increasing about 2%. Mortgage activity has fallen for four straight weeks as low interest rates seem to be wearing off a little on new borrowers - those darned underwriting, documentation, and appraisal issues! The share of applications filed to refinance an existing mortgage decreased to 77% of total applications - but something to note is that the ARM percentage crept up to 5.4% of activity last week, from 5% a week earlier.

Today's ADP number came out, always of questionable validity for the actual government jobs numbers Friday but it is hard to ignore the fact that the ADP number showed an increase in private-sector jobs for the 25th straight month. Economists predicted +208k, and it came out +216k. We also saw some other minor numbers (Productivity - +.9%, Unit Labor Costs rose significantly) but for now the rate markets are nearly unchanged with the 10-yr. at 1.96% MBS prices better or worse by less than .125, depending on coupon.

(Part 3 of 3)
Paddy is just getting over the shock of losing two friends when Sean appears.
He's also been to the pet shop and is carrying a cardboard box out of which he pulls a chicken.
Sean then takes the chicken by its legs and hurls himself off the cliff and disappears down and down until he hits a rock and breaks his spine.
Once more Paddy shakes his head.
"Sod dat, lads. First dere was Gerry with his budgie jumping, den Seamus parrotshooting... And now Sean and his sod'n hengliding!"

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at The current blog discusses the possible future roll of Freddie Mac and Fannie Mae as the FHFA might model it. 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.