Later today it will be Friday night, which means mortgage originators everywhere will have time to contemplate LO comp changes and come up with creative ways to open a few "tall cool ones": GladHe'sNotMyDentist 

"Old soldiers never die...they just...fade away." So said General Douglas MacArthur. What would he say about old mortgage executives that never die... they just form new companies! When was the last time you saw C-BASS and Thornburg mentioned in the same article? StartUps 

In a story that first broke on Mortgage News Daily's MBSonMND live chat yesterday morning, Dave Stevens has resigned from his position as FHA commissioner. Stevens is expected to end his stint as FHA commissioner by the end of April and return to "the private sector." He was nominated about two years ago and sworn in during July, 2009.

Following in the footsteps of NAMP, Monday we learned that NAIHP filed a suit focused on TILA changes, and yesterday, moments after the commentary went out, news came out that NAMB Files Lawsuit Against the Federal Reserve to prevent the April 1st implementation of the LO compensation rule. The NAMB suit seeks temporary and preliminary restraints that would enjoin the implementation of a specific section of the Federal Reserve Board's Final Rule on loan originator compensation, Regulation Z; Docket No. R-1366, Truth-in-Lending. "This section, if implemented, would prohibit mortgage brokers from paying their loan officers commissions based on fees paid by the consumer." One simple sentence leading to one huge mass of confusion. Is the borrower really better off?

Credit Suisse announced a large subprime settlement that may be of interest to investment bankers or ex-subprime lenders out there: CSFB 

Apparently ING Direct, the US internet arm of the Dutch Bank ING, is actively for sale with CIT being a potential purchaser. As one report noted, despite having a large number of customers with high satisfaction rates, raising high cost deposits and investing in low margin loans is a problematic business model.

John Stumpf, CEO of Wells Fargo, has gone on record as saying he wants to expand through acquisitions or other means. What about that "little" issue of one bank, basically, not controlling more than 10% of the deposits in the US? Stumpf said regulators could allow exemptions in the case of distressed banks, although Wells may be focusing on nonbank companies, such as investment firms.

How's this for a note? "I have a new lending experience. There was a purchase of a foreclosed property, bank-owned and under purchase contract with my client. They were great borrowers who easily qualified with 25% down. There were no appraisal problems, and the loan was done in less than 30 days, docs signed and back to the lender, ready to close. But then the escrow officer tells me the title company does not have the assignment from the original lender (that went out of business in 2008) to the lender that foreclosed. The seller (the bank that foreclosed and sold the property) has not provided the assignment, and the title company cannot record and insure the new lender without it. With no word on the assignment my client is out $1,000 in appraisal, inspection, and credit report fees, the lock is going to blow, and if the assignment arrives, we must redraw the loan docs, and there will be a redraw fee. The moral of this story for your readers is 'Don't sign a contract to purchase a foreclosed property until you know all the paperwork involved with the foreclosure is accounted for. As an originator, don't even start the process for your clients until you know the foreclosure paperwork is ALL accounted for."

Regarding the broker community, another vet wrote, "Brokers are independent originators, like independent insurance agents, who compete by shopping many banks for consumers - they do not approve loans, they do not create loan programs, or have any more influence than originators at a bank.  Brokers get paid because banks and lenders do not have to recruit, train, house, or pay benefits to additional staff, or spend any money on direct marketing for new loans. This allows banks and lenders to increase production with minimal expense, simply by soliciting brokers. The competition this creates benefits consumers and keeps retail banks honest. Should independent insurance agents or (substitute your occupation here) hold a reserve to cover losses from the policies they write (or the work they do)?  Brokers or originators in general, did not cause the housing boom or base legislation in 2011 on conditions that occurred in 2005 is simply wrong."

"I have been involved in one aspect or another in mortgages for the past 20 years. At one point I remember that in New York State, over 70% of all loans were originated by mortgage brokers. So of the millions of performing loans in that state alone most were originated by mortgage brokers. The public chose brokers because the majority of them consistently delivered better service, lower rates and costs than the big retail lenders. The large trade organizations should take this directly to the public with a television commercial - but the truth needs to be heard outside of the blogosphere."

MetLife rolled out more details of its compensation plan. "You will find details on Lender-paid and Consumer-paid Loan Originator Compensation as implemented by MetLife Home Loans" in  the bulletin. Note that there are some differences from other plans (possibly that broker employee originators must be paid a salary or hour, or that the broker's company can reduce its compensation in order to offset tolerance violations). For Consumer Paid Compensation, "Consumer-paid broker compensation is determined by agreement between the Broker and the Borrower. MLHL will accept loans with Consumer-paid broker compensation up to a maximum of 2.5% of the loan amount. The amount of broker compensation charged to the Borrower may vary from one loan transaction to another. The Borrower may only compensate one loan originator, either the Broker or the Broker's loan originator employee, but not both. Since the Broker receives no compensation from MLHL, the Broker has the option to reduce its compensation to pay some or all of the third-party fees or other Borrower loan expenses, offset consumer disclosure tolerance violations, or offer other pricing concessions. The Borrower must pay the broker compensation from Borrower's own funds or the loan proceeds. The Borrower may use its own funds or loan proceeds to fund third-party fees. The Borrower may also use interest rate credits to fund third-party fees, but not broker compensation. The Borrower may pay bona-fide discount points to MLHL to obtain a lower interest rate."

Under the MetLife Lender Paid Compensation section from MetLife Home Loans, "The amount of MLHL Lender-paid broker compensation will be based on a percentage of the principal loan amount, and will not vary from one loan transaction to another during a 60-day period. The Broker will receive its broker compensation from MLHL only and not from any other party. The Broker may not reduce its Lender-paid broker compensation by offering concessions to the Borrower or to correct consumer disclosure (e.g. RESPA, GFE, or Initial TIL) tolerance violations. The Broker may not pay third-party fees or other costs for the Borrower. Such fees and costs must be paid from the Borrower's own funds or the loan proceeds. The Borrower may also use interest rate credits to fund third-party fees, but not broker compensation. The Borrower may pay bona-fide discount points to MLHL to obtain a lower interest rate. If the Broker fails to select a compensation level, the MLHL-paid compensation level will default to 1.500%. A Broker may select a different compensation level every 60 days."

Plaza Home Mortgage out of San Diego also released more details on its plan. "The broker will negotiate compensation directly with the consumer. The consumer may pay bona fide third party costs and Plaza fees by paying cash at closing, or by financing them through the loan principal or interest rate (Lender Credit). Premium pricing (Lender Credit) cannot be used to compensate the broker partner/loan originator. The consumer may pay discount points to reduce the interest rate. The consumer must pay compensation to the broker partner from their own funds or from the principal proceeds of the new loan. No other person (other than the borrower) may provide any compensation to a loan originator, directly or indirectly, in connection with the loan transaction. The broker partner must establish compensation agreements with its loan officers that comply with the Final Rule. Compensation to the broker partner can vary from one transaction to another.  However, compensation from the broker partner to its loan officers for any particular transaction may be comprised only of a salary or hourly wage.  Other aggregate bonus related compensation from the broker partner to its loan officers cannot be based on prohibited terms and conditions."

For Plaza's Lender Paid Compensation: "Compensation is based on established terms negotiated between the broker partner and Plaza that will remain in effect for a quarterly period. The compensation will be based on a set percentage of the loan amount and cannot vary from one transaction to another. The quarterly compensation amount will be used for all loans sent to Plaza where lender paid compensation is selected and will be set up prior to registering loans. More frequently than quarterly will be considered given current market conditions. The negotiated percentage is tied to the Broker ID code issued by Plaza to each approved branch of a broker partner. You will choose the compensation percentage you want to earn on each loan, subject to the minimum/maximum in effect at the time of the agreement."

For a variety of reasons fixed-income and MBS prices improved yesterday, not the least of which is the lack of supply of MBS's in the market. Watch for this in the applications figure next week. The 30-yr bond auction went pretty well, and stock markets were down (not that bonds always go up when stocks go down!), and the yield on the 10-yr went below 3.40%. By the end of the day MBS prices had improved between 0.5-0.625.

A drunk staggers into a Catholic Church in Ireland, enters a confessional booth, sits down, but says nothing.

The Priest coughs a few times to get his attention, but the drunk continues to sit there.

Finally, the Priest pounds three times on the wall.

The drunk mumbles, 'Ain't no use knockin', there's no paper on this side either.'