Today is "Take Your Kids to Work Day". Everywhere kids with parents who work from home are angling for a day off from school.

I am continuing to see signs that the mortgage market is coming back somewhat. Not so much that guidelines are loosening, which they aren't, and in fact documentation requirements continue to increase, but more in the secondary markets.

This was demonstrated yesterday with the news that Redwood Trust will be coming out with a $222 million private-label mortgage security. (The loans are not guaranteed by Fannie Mae, Freddie Mac or any other government-related entity.) Recent deals sold older loans; these are new creampuff loans, arguably exactly what we need, with the offering's lead manager being Citigroup and the co-manager being JPMorgan. The bonds are backed by 225 loans, mostly jumbo 5/1 ARM's, originated by Citigroup Inc. over the past 11 months. CLTV's are about 60% (none are above 80%), and average credit scores hover around 768 (none have FICO's below 700). 85% of the loans came through Citi's retail channel, 10% correspondent, 5% wholesale. Many of them have 10-yr IO periods, almost half are from California, most of them are R&T refi's, and almost all of them are owner-occupied. The issuer gives a detailed accounting of the extent of verification of income and assets. A REIT is issuing the securities, offering a senior AAA piece but not offering (e.g., retaining) the subordinated tranches - like a covered bond. Here is the link to term sheet.

HUD released two new Mortgagee Letters. The first letter addresses "FHA Case Number and FHA Roster Appraiser Assignments" and provides guidance on ordering FHA case numbers and selecting FHA Roster appraisers in FHA Connection. The second letter, titled "Introduction of the M&M III Mortgagee Compliance Manager (MCM) and the P260 Internet Portal", describes the centralization of the mortgagee compliance process under the Management and Marketing (M&M III) contracting period, and introduce HUD's new on-line, web-based internet portal for mortgagees, P260. I won't steal the fun of reading both of them in their entirety at

What does HUD mean by the term "small business" when it announced the rule for FHA that no longer requires loan correspondents (mortgage brokers) to obtain FHA-approval to participate in FHA loan programs, but instead will need to be sponsored by FHA-approved mortgagees and also increases net worth requirements from $250,000 to $1 million ($500,000 for "small businesses")? It is a relevant question. I received an e-mail yesterday from the East Coast saying, "I am at the NRMLA Reverse mortgage conference in Philadelphia and per HUD who spoke here 'small businesses' is any company with gross sales revenues of less than $7MM." I am sure that HUD will clarify this further, but anyone curious can go to HUD's small business site. Remember that "gross revenue" is the entire amount of income before any deductions are made, and/or the money that a company brings in before subtracting costs to calculate profit.

How is your volume of FHA refinancing? Recently released statistics, as seen through the eyes of prepayments on GNMA securities, show a precipitous decline in voluntary refinancings (as opposed to servicer buyouts, which have decreased as well) starting in December. Originators know that FHA changed certain income and asset verification guidelines for refinancing, specifically for streamlined refi's, back in November, along with maximum mortgage size which kept the borrower from rolling closing costs and other expenses into the new loan. HUD changed the maximum cash-out rules for the closing costs for FHA streamlined refi's, and this, along with the increase in minimum credit scores due to poor loan performance and servicers demanding that existing loans be current, apparently has whacked the volume of FHA refinancing. If you're interested in digging into the numbers, here are two sites that display the statistics for FHA loans: and

Times are tough in the mortgage business, and the last time I saw a $100 bill was a few years back. The U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System and the United States Secret Service unveiled the new design for the $100 note which will be issued on February 10, 2011. The old bills, like the ones my father keeps in his shoeboxes in his closet, are still fine. The new bills will have a "3-D Security Ribbon" and the "Bell in the Inkwell". ("The blue 3-D Security Ribbon on the front of the new $100 note contains images of bells and 100s that move and change from one to the other as you tilt the note. The Bell in the Inkwell on the front of the note is another new security feature. The bell changes color from copper to green when the note is tilted, an effect that makes it seem to appear and disappear within the copper inkwell.")

Bank of America Wholesale Lending addressed the FHA's rule change. Bank of America "acknowledges that FHA approved mortgagees assume full responsibility to ensure that a sponsored mortgage broker adheres to FHA's loan origination and processing requirements. These rule changes are under review to determine the impacts to Bank of America Wholesale Lending and our brokers. Bank of America Wholesale Lending will continue to accept submissions from brokers sponsored by Bank of America and recertified by FHA for 2010. FHA approval for these brokers will be valid until December 31, 2010. Brokers who have not previously been approved by the FHA or who did not recertify with FHA for 2010 will require further review by Bank of America Wholesale Lending prior to originating new FHA business."

Chase followed Fannie Mae's announced updates to the DU Refi Plus borrower eligibility parameters. Chase DU Refi Plus borrower eligibility guidelines for Chase-to-Chase DU Refi Plus transactions will "permit the removal of borrowers for any reason, not solely due to death or divorce, require the remaining borrower(s) demonstrate that they have been making the payments on the existing mortgage from their own funds for the prior 12 months, require the borrower being removed is also removed from the deed (or provide evidence of death, as applicable), and provide additional flexibility through DU Refi Plus for borrowers being removed due to death (12-month payment history no longer required)." Chase reminds clients that there is no change to Non-Chase to Chase DU Refi Plus eligible borrower policies.

For anyone looking for a job, Nationstar Mortgage is expanding out west and Rick Cardillo ( is looking for two regional managers (one in WA, OR, and Northern CA, one for Southern CA) to manage 10-12 account executives.  Nationstar is also looking to build a small operations team in Orange County to support both regions. Speaking of Nationstar's Wholesale Lending group, it announced that it will allow DU Refi Plus® loans with > 80% LTV and existing borrower paid Mortgage Insurance (MI) if the loan is serviced by Nationstar.

We saw some investors improve prices yesterday, although the stock and bond markets did not see too much volatility. Today we have had the Producer Price Index, Initial Jobless Claims, and will see housing data for existing homes. PPI was up .7%, slightly stronger than expected, with the core rate +.1%. Year-over-year the PPI was up 6.0% which is very strong. Initial Jobless Claims dropped to 456,000, and continuing claims dropped slightly. Later today the Treasury will announce the amount of securities to be auctioned off next week: 2-yr, 5-yr, 7-yr, and 5-yr TIPS. After the inflation and jobs' news, the 10-yr yield is 3.74% and mortgage prices are roughly unchanged.

A barber kisses his wife goodbye and heads into work. Later that morning, a guy stuck his head into a barbershop and asked, "How long before I can get a haircut?"

The barber looked around the shop full of customers and said, "About 2 hours."

The guy left.

A few days later, the same guy stuck his head in the door and asked, "How long before I can get a haircut?"

The barber looked around at the shop and said, "About 3 hours." The guy left.

A week later, the same guy stuck his head in the shop and asked, "How long before I can get a haircut?"

The barber looked around the shop and said, "About an hour and a half." The guy left.

The barber turned to his friend and said, "Hey, Bob, do me a favor. Follow that guy and see where he goes. He keeps asking how long he has to wait for a haircut, but then he doesn't ever come back."

A little while later, Bob returned to the shop, laughing hysterically.

The barber asked, "So, where does that guy go when he leaves?"

Bob looked up and said, "Your house!"