The driving force behind Mother's Day was Anna Jarvis, who organized observances in Grafton, W.Va., and Philadelphia on May 10, 1908. As the annual celebration became popular around the country in 1914 Congress designated the second Sunday in May as Mother's Day.

Rates are improving, and agency MBS prices yesterday improved by .375-.50. Fannie & Freddie 4's closed yesterday about 100.375. By and large, these securities are filled with 4.25-4.625% 30-yr mortgages. Let's be conservative and add a point (1.0) for the value of servicing, and suddenly "the market" is paying nearly 101.50 (1.50 rebate) for a 4.50% 30-yr agency mortgage. Below that there will be some buy-downs, and above it will be some buy-ups, and it depends on rate lock period, but that's about the pricing. This leads into...

Rates are about the best they've been all year. Remember all those sparkly clean 5% or even 5.50% 30-yr agency loans that the originators were producing in the last 6 months? Many of them may be coming back as refi's. But keep in mind that loan-level price adjustments (LLPA's) have changed, as has the FHA MIP's, so recent prepayment speeds have been in transition over the past few months due to those, and due to servicers prioritizing loan processing for one agency over the other. And if you think components such as LLPA's, MIP's, and increased documentation impact the borrower's ability to refinance, just wait and see what comes out of the QRM public comment period.

Mortgage security traders hardly know which way to turn, and I read several divergent ideas about what is going on and where investors should place their bets - any of which can be confusing to anyone not well versed in MBS lingo. But this is more relevant for originators: "Freddie Mac reported that 30-year fixed mortgage rates averaged 4.71% this week which matches the lowest level seen this year. Refi activity is likely to have increased this week as more of the 5% coupon enters into the refi window; however, a significant pickup is not expected unless mortgage rates rally to 4.50%, said a Credit Suisse report." 

Yesterday I mentioned the latest from Freddie Mac about not requesting government funds given the quarterly results. I received a helpful note: "Thanks for earnings update. One small correction, which is that this is actually the fourth time since the government took Freddie over that it reported quarterly earnings and did not ask for a Treasury draw (not the first as you reported). Freddie's earnings are up, delinquencies down, and even its REO inventory dropped 10% in the last quarter - good things."

What is the "False Claims Act?" Besides "you look good in that dress" and "I think you look just as handsome without hair," there are other false claims, and financial services industries are often accused of them. The U.S. attorney who sued Deutsche Bank used the False Claims Act in going after the bank's alleged practice of making federally insured mortgage loans without actually checking, as it repeatedly claimed, on whether the borrowers actually had jobs or incomes or bank accounts that would allow them to repay. After being passed in 1863, the government has collected $27 billion in False Claims Act recoveries since the law was strengthened two decades ago. FalseClaimsAct

I should have listened to my mother and been a lawyer, as the legal fun never ends. Citigroup and Bank of America disclosed new lawsuits yesterday related to originating and servicing mortgages. In their reports to the SEC, both banks said the Federal Home Loan Bank of Boston sued them in state court in Massachusetts, alleging misstatements or omissions in connection with mortgage-backed securities. But they're not alone in facing the FHLB, as it is suing Ally Financial, Capital One Financial, Wells Fargo, Morgan Stanley, several foreign banks, and McGraw-Hill Co. Inc. (MHP) for losses on its $5.8 billion investment in private-label mortgage-backed securities issued by 115 securitization trusts. The FHLB, on its website, said it seeks "various forms of relief including rescission, recovery of damages, recovery of purchase consideration plus interest" and legal costs.

Citi said in its filing that the Union Central Life Insurance Co., Ameritas Life Insurance Corp. and Acacia Life Insurance Co. are suing it in federal court in Manhattan, seeking unspecified recovery of damages from losses sustained during the financial meltdown related to mortgage-backed securities. A slew of other banks are mentioned in the suit, including Wells Fargo, Goldman Sachs, Morgan Stanley, and several foreign banks. WSJ

How do the words "Deutsche Bank" and "slumlord" wind up in the same sentence in the LA Times? The Los Angeles city attorney's office filed a civil lawsuit against the world's fourth-largest bank, seeking hundreds of millions of dollars in penalties and restitution and an injunction forcing it to clean up its LA foreclosed properties saying they breed crime. LADeutsche

Perhaps the False Claims Act will apply to this: "Rob, you spoke about some firms cheating the new comp rules. I've been in this business for 20 years, and a top producer for my company, but the first two weeks of last month I had no fundings and got a check for a few hundred dollars. Last week I heard about ----- having a plan where an LO can charge overage and apply it to what sounds like a company slush fund and then use it as additional comp later or apply it to short files or retain for an annual bonus. I don't see how this is legal and conforming with the new system. But how will a regulator even catch it? Are there even resources for them to catch it? And when/if someone catches the scam, what will they do...Seems like a slap on the hand at worse, because the rules are so convoluted that most can't even process them. Another large lender is rumored to have 5 retail rates sheets with different comp levels...Choose your comp on each deal and go. How does that comply... and that's a bank!  Thank goodness I am doing Real Estate on the weekends now. I put in over twenty years, worked hard, made some money and am still waiting for my industry to figure it out - but clearly we haven't.  Sing with me... "Take this NMLS number...and Shove It!"

In the CMBS (commercial mortgage-backed security) market, a new limited partnership, International Market Centers (IMC), has been formed. This company is expected to play a key role in the resolution of a number of defaulted CMBS loans associated with the furniture showroom business. The new company is expected to have a majority market share in the marketing of the premium home furnishings, gift and home décor showrooms and exhibition space to wholesale buyers and sellers. The major IMC shareholders are Bain Capital and Oaktree Capital Management. Among the minority shareholders are Related Companies, Bassett Furniture Industries, and affiliates of Network World Market Center. The new company is expected to invest up to $1bn in its effort to combine the High Point and Las Vegas home furnishings markets and will become the owner of three complexes (International Home Furnishings Center and Market Square in High Point, and World Market Center in Las Vegas) encompassing 10.6mn sq. ft. of showroom space spread across 13 buildings. In about 60 days, additional property, Showplace International, is expected to be added to the portfolio, increasing the leasable area to 11.5 million square feet and the number of buildings to 18.

Bank of America (#2 in the 4th quarter) correspondents learned of changes to its CLUES Credit Report Inquiry Policy, credit report inquiry policy, and gave out some additional client guide updates, along with announcing updates to its Correspondent Lending Website (Internet Explorer 8.0 Compatibility). For example, "for conforming loans with CLUES decisions submitted or resubmitted on or after May 22, 2011, Clients must utilize credit reports that include at minimum a 120-day credit inquiry history." In addition, "Existing credit inquiry evaluation policy requires borrowers to provide a detailed explanation letter that addresses all credit inquiries on the credit report. Effective immediately for conforming loans, Correspondent Lending requires inquiry review based on (certain) timeframes. Clients must review and evaluate all credit inquiries which occur in these timeframes to determine whether the borrower received additional credit not reflected in the credit report or disclosed on the application. The timeframe requirements below apply per automated underwriting system (AUS), regardless of any AUS condition. As a reminder, for all automated underwriting systems, regardless of any AUS condition, borrowers must provide a detailed explanation letter that specifically addresses both the purpose and outcome of each credit inquiry. A general credit explanation letter is not acceptable."

As mentioned above, Treasuries and MBS's rallied yesterday. The 10-year note closed better by nearly .5 at a yield of 3.17%. Some of the commodities are coming off of their high levels, so perhaps we'll see some better prices at the gas pump which would tend to help the consumer's outlook. The expectations were for this morning's numbers to show that job growth slowed in April (+185k) and that the unemployment rate was unchanged (8.8%). But nonfarm payrolls came out at +244,000, and the Unemployment Rate was 9.0% for April. The 10-yr shot up to 3.21% and MBS prices are worse by roughly .250.


(Parental discretion advised.)

At the regular Saturday morning service, the rabbi announced that he was planning to leave for a larger congregation that would pay him more.

There is a hush within the congregation. No one wants him to leave because he is so popular.

Fred Shapiro, who owns several car dealerships in Newton and Brookline, stands up and proclaims "If the rabbi stays, I will provide him with a new Cadillac every year and his wife with a Honda mini-van to transport their children!"

The congregation sighs in appreciation and applauds.

Saul Cohen, a successful businessman and lawyer, stands and says, "If the rabbi will stay on here, I'll personally double his salary and establish a foundation to guarantee a free college education for his children!"

More sighs and loud applause.

Estelle Rubin, age 88, stands and announces with a smile, "If the rabbi stays, I will give him sex!"

There is total silence.

The rabbi, blushing, asks her: "Mrs. Rubin, you're a wonderful and holy lady. Whatever possessed you to say that?"

Estelle's 90-year old husband, Abe, is now trying to hide, holding his forehead with the palm of his hand and shaking his head from side to side, while his wife replies:

"Well, I just asked my husband how we could help, and he said, "Screw him."