Sorry the commentary is a little late this morning. My neighbor pounded on my wall at 2:30 AM this morning. Can you believe that...2:30AM?!  Luckily for him I was still up playing my bagpipes.

Playing my pipes and, of course, thinking about the latest joint venture between Bank of America, JPMorgan Chase, and Wells Fargo. Look out PayPal - they have clearXchange. It is yet another company name with strange capital and non-capital letters. Seriously, it allows their banking customers to move money using a mobile number or email address, directly from their existing checking accounts using an e-mail address or mobile number - instead of providing checking account and routing numbers. Who needs checks? The news is not directly related to mortgages, but instead points to a trend in the industry away from paper. No wonder the post office continues to lose money.

Last week the commentary questioned rumors of large investors putting a halt to buying loans from smaller investors offering a correspondent channel. That aside, the latest lender to roll out a correspondent program is Quicken, with its Quicken Loans Mortgage Services (QLMS) today announcing a correspondent lending platform for community banks and credit unions. Other, one would assume smaller, financial institutions the opportunity to close and fund loans in their own name. "The bank or credit union remains the point-of-contact for the client, while QLMS provides the support & services necessary to complete the loan and sale of the loan to Quicken Loans. Clients sign the loan closing documents at their hometown bank or credit union."

But over in New Hampshire, "Due to the challenges of the ever changing and evolving mortgage lending market Sidus Financial, LLC has decided to discontinue its wholesale and correspondent lending operations. Sidus Financial, LLC will work closely with our clients to ensure an orderly transition for customers with mortgage loans in the pipeline..." It is a subsidiary of Yadkin Valley Bank.

Acting Comptroller of the Currency weighed in on the potential cumulative impact of Dodd-Frank regulations. Joe Adler with American Banker noted that Walsh echoed what many in the business already know: "Pending mortgage-related regulations threaten to become a 'tsunami' of burdens that could unintentionally harm an already fragile mortgage industry." ""There are 15 to 20 new mortgage lending requirements in the regulatory pipeline" including registration and compensation requirements for originators and standards for the independence of appraisers, mandating risk-retention for securitized loans, new servicing guidelines from Fannie Mae and Freddie Mac, and proposals by the new Consumer Financial Protection Bureau. "Like a dangerous drug interaction, he said, the many rules could have dangerous side effects when combined, Walsh said, invoking a metaphor he has used previously." "With respect to the mortgage industry, one regulation may strengthen the quality of capital; another might fix problems with the servicing process; and yet another may ensure that compensation policies don't encourage banks to take excessive risks. All of those goals are worthy, but it is hard to predict how they may all work together." Attaboy, Mr. Walsh. "Banking is a risk taking business; banks suffer credit losses; and we cannot eliminate all risk of future crises," he said. "To do so would be misguided; in fact, counterproductive." AmericanBankerOCC

The CFPB, and its potential leadership, has been controversial from the get-go, including turning some heads (not in a bad way) last week with combining the GFE & TIL forms and then opening the new document up to industry comment. Marc Savitt, president of the NAIHP wrote to me mentioning, "While some have found fault with parts of the new disclosure, NAIHP applauds the CFPB and their efforts to develop a truly 'simplified' consumer friendly disclosure...the CFPB has taken the unprecedented step of first seeking substantial industry and consumer input, prior to a formal comment period. Combining the GFE and TIL is a common sense approach to giving consumers the information they need, without over burdening them with excessive and confusing loan disclosures." Another person attending the meeting last week opined, "I was very impressed with the CFPB - they were refreshingly open to industry. They sat there for 1 hour asking us questions - I only hope their full implementation is along the same as their initial path." The forms are available on the Bureau's "Know Before You Owe" website at CFPB, and apparently there will be five rounds of qualitative "testing" in six cities around the country. These "tests" will include one-on-one interviews with consumers, lenders and brokers.

The story in yesterday's commentary regarding Goldman's jumbo conduit plans reminded folks that there is a "Jumbo Lending Group" on LinkedIn (with its market cap greater than the S&P 500 combined for some unknown reason) which has very targeted discussions about jumbo lenders, loans, investors and programs. If you're interested in jumbo loan discussions, contact David Akre at

What has open country and areas that have a population of 10,000 or less? Rural areas! (Under certain conditions towns and cities with a population as high as 25,000 are also included.) Investors, always on the lookout for better returns with less risk, have begun to notice the Rural Housing program although it is often overlooked because it has historically contributed a very small percentage of overall Ginnie Mae issuance. However, over the past few quarters, origination of RHS loans, and their pooling in Ginnie Mae MBS, has increased. LO's who specialize in this product are always quick to point out the advantages. The United States Department of Agriculture (USDA) offers two types of loans through its Rural Housing Insurance Fund to purchase homes in rural areas: direct loans and guaranteed loans. The main difference between the programs is that the principal for the direct loans is subsidized by the government while that for the guaranteed loan is provided by a private lender but is partially insured by the government. As a result, only the guaranteed RHS loans can be securitized into Ginnie Mae MBS, and these are the loans in which investors are most interested.

The underwriting criteria for these loans are best left to underwriters. But the borrowers in some programs often receive interest rate subsidies to bring the rate as low as 1%, with the rate based on the borrower's income in some programs. "Allowable" income levels are also based on the median income of the area, but will not exceed 80% or 115%, depending on the program. Loan limits are set either by the USDA or by the market value and repayment ability, and the down payment amounts/maximum LTV are (once again) program dependent but are generally 100% or 103.5% if the guarantee fee is included. Unlike FHA loans, RHS loans currently do not have an annual guarantee fee. Purchase borrowers whose loans were originated prior to September, 2010 paid a 2% upfront guarantee fee, which is now 3.5%, while refinance borrowers paid only 50 basis points, now 1%. Apart from the upfront premiums, starting in October RHS will start charging all borrowers an annual insurance premium of 0.3%, even those applying for a streamline refinance loan which, from an investor's point of view, should reduce borrower's incentive to refinance going forward, all else being equal. First time borrowers, if they qualify, like the loans due to no down payment requirement, allowing seller concessions, buydowns and rolling in of closing costs. Currently RHS loan originations constitute close to 5% of recent GNMA issuance. 

Paramount Residential Mortgage Group weighed in on originator compensation rules for non-owner occupied rental properties. "Loans secured by Non-owner Occupied properties, and extended for the purpose of purchasing property or refinancing the purchase money loan, are treated for regulatory purposes as business-purpose loans, which are exempt from coverage under the Truth in Lending Act and Federal Regulation Z. Therefore, NOO transactions are not subject to the new Truth in Lending originator compensation and anti-steering rules when: the loan proceeds are used to purchase a NOO property or the loan is a rate-term refinance on a NOO property." (Cash out refi's don't qualify for this exemption.)

Stearns Lending spread the word to brokers of its "New lower FICO scores on FHA loans!" For a particular program, "639-620 credit score, Max. Ratios 31/43, No Gifts, 3.5% Minimum Investment, Fixed Programs Only, Purchase/ Rate Term Only, Combined ratios with non-occupant co-borrowers."

Yesterday was another quiet day, rate-wise, and stocks improved somewhat in spite of a weaker-than-expected Durable Goods number. We also had the FHFA House Price Index down 0.3% in March after declining 1.5% in February. 10-year notes, which in the old days provided a proxy for the duration of mortgages, ended the day at 3.13%. MBS prices were unchanged on the day, and traders reported that originator selling remained uneventful and held to its range of $1 to $1.5 billion.

Today is, of course, a new day, and is the last full trading day to the week. We've had the preliminary Q1 GDP number, which most view as old news. Expected to be revised higher, it was unchanged at +1.8% indicating that we're still in a slow growth environment. We also had Initial Jobless Claims, which were projected to drop but actually rose to 424k from a revised number of 414k. There are no Fed speakers scheduled for today, and the Treasury concludes its latest round of auctions with $29 billion 7-year notes at 1PM EST.

How to tell if you need to pray at work

When you hear a coworker call your name and the first thing that crosses your mind is, "What the ---- does she want now?", You need to pray at work.

If you have ever thought about choking, poisoning, punching or slapping someone you work with, you need to pray at work.

When someone comes in and announces, "Office meeting in 5 minutes," and you think, "What the ---- do they want now?" you need to pray at work.

When you finally take some vacation time and you come back only to find a mountain of paperwork sitting on your desk because no one else would do it and you think, " Sorry --- ------ ------," you need to pray at work.

You avoid saying more than "Hello" to someone at work because you know it's going to lead to their whole ------- life's story, you need to pray at work.

When a coworker comes in a little too happy singing "good morning!" to everyone and you think, "Someone needs to slap the ---- out of her!" you need to pray at work.

When you're in the elevator and it stops to pick up someone who stood for 5 minutes waiting for the darned thing only to go down 1 floor, and you say, "That lazy -----." you need to pray at work.

And if you know all the ---- words in this, you need to pray at work.