$650,000 is a lot of money for many companies. That was the amount of the latest fine levied by the FTC on a Pennsylvania home builder. Yep, one day you're riding high with the slogan "Zip, Zero, Nada," as Heritage Homes Group claimed in ads on websites, and in newspapers, flyers, and direct mail, that consumers could finance their homes without a down payment or closing costs, and the next day your name is splashed all over the press. But borrowers were actually required to pay a "good faith deposit," settlement costs, and an annual fee, according to the complaint. Yep - be careful with those ads, folks - the FTC is committed to holding mortgage advertisers accountable.

Bank management is certainly trying to stay ahead of the cost-cutting and efficiency curve, and mergers and acquisitions continue at an astounding rate. (Research firm Coalition reports large banks in Q1 saw revenue from many activities drop 37% from Q1 2010. Experts say securities firms are likely to lay off large amounts of staff in coming quarters as they cut costs to adjust to the new reality of higher capital requirements and lower profitability. UBS has already announced it will close its fixed income business and lay off 10,000 employees.) Every week there seem to be more and more. In Ohio Community Savings Bank ($43mm) will acquire The Home Building and Loan Company ($38mm). Eagle Bancorp, Inc., the parent company of EagleBank and Virginia Heritage Bank announced that they have entered into a definitive agreement where VHB will be merged into EagleBank, with EagleBank being the surviving institution. National Bank of Commerce ($751mm, AL) will acquire the four branches of United Legacy Bank ($229mm, FL). Bank of North Carolina ($3.2B, NC) will acquire Harbor National Bank ($306mm, SC).

By now everyone and their brother has seen the latest report from the MBA showing that independent mortgage bankers reported net production losses in the 1^st quarter of 2014. "The significant overall production volume decline in the first quarter hurt mortgage bankers," said Marina Walsh, MBA's Vice President of Industry Analysis. "Purchase volume did not pick-up, while refinancing volume dropped and costs continued to rise. Given these conditions, companies that managed to break even in the first quarter should consider that a reasonable outcome." Average production loss was 8.31 basis points (BP) in 1Q 2014, compared to an average net production profit of 8.72 BP in 4Q, the sixth consecutive quarterly decrease. The MBA's group had average production volume of $274 million per company in the 1Q, down from $367 million per company in the 4Q, with the volume by count per company averaged 1,238 loans in 1Q, down from 1,641 in the 4Q. Secondary marketing income increased to 277 BP in the 1Q, up from 248 BP in 4Q. Total loan production expenses - commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations - increased to $8,025 per loan, up from $6,959 in the 4Q. First quarter 2014 production expenses were the highest recorded in any quarter since the Performance Report was created in the third quarter of 2008.

And as the commentary has discussed, housing is not going through the roof either. Fannie Mae's May 2014 National Housing Survey might be of interest to those looking at nationwide trends. The share of respondents who believe the economy is headed in the wrong direction remained at 57 percent last month. The percentage of respondents who expect their personal financial situation to get better over the next 12 months fell slightly to 42 percent. Fabled economist Doug Duncan observed, "Consumers' lukewarm income expectations and reticence about the economy seem to be holding back housing demand. This year's spring and summer home buying season has gotten off to a slow start, even as mortgage rates have trended lower over the past two months. Our National Housing Survey data show that economic conditions continue to be the top concern among consumers who think it's a bad time to buy or sell a home. While recent housing activity suggests that the worst of the housing slump may be behind us, this caution among consumers supports our expectation that the rebound in home sales will likely be too modest to pull sales for all of 2014 ahead of last year."

(Read More: Survey Respondents see Home Prices, Interest Rates, and Rents Leveling)

Illinois has changed its provisions regarding consumer fraud and deceptive business practices act by modifying Section 2MM of the Consumer Fraud and Deceptive Business Practices Act with the passage of House Bill 3380. The amendment provides that a guardian of a disabled person appointed under the Guardians for Disabled Adults Article of the Probate Act of 1975 or a parent or guardian of a minor may request that a consumer reporting agency place a security freeze on the credit report of the disabled person or minor by sending a request to the consumer reporting agency. The new legislation took effect on June 1^st.

Minnesota has modified its provisions regarding mortgage foreclosures. The "mosquito state" modified its provisions relating to mortgage foreclosure by amending the definition of a "small servicer" and clarifying the Foreclosure Curative Act in House Bill 2213. Under the amended law, "small servicer" means a servicer that is either: a small servicer, as defined in Code of Federal Regulations, title 12, section 1026.41, a Housing Finance Agency, as defined in Code of Federal Regulations, title 24, section 266.5; or a servicer that has conducted 125 or fewer foreclosure sales during the preceding 12 months. The legislation is effective the day following final enactment.

Oklahoma's Department of Consumer Credit has informed NMLS that in accordance with the state's Secure and Fair Enforcement for Mortgage Licensing Act, and effective November 1, 2013, a licensed MLO in the State of Oklahoma is required to complete annual continuing education in a classroom setting at least every two years. The OK-DOCC on April 16, 2014 issued an Official Declaratory Ruling stating that "a MLO may satisfy the requirement for completing annual CE in a classroom setting at least every two (2) years by completing a classroom or classroom equivalent course as approved by NMLS." The requirement for an MLO to complete CE in a classroom or classroom equivalent setting may be met during calendar year 2014 or calendar year 2015. NMLS has posted an Education Notice explaining in detail the new education requirements.

Maryland's legislature has recently enacted provisions found in Senate Bill 1091 which creates an expedited licensing process for certain mortgage home loan originators. By adding 11-612.3 to its financial institutions article, Maryland has altered the way in which background checks may be required. As part of the application process, mortgage loan originators are required to undergo a state criminal history background check before being issued a license in Maryland. Under 11-612.3, the Commissioner of Financial Regulation must waive the state criminal history check for applicants who are employed as a registered mortgage loan originator within forty five days prior to the date on the application for a license. Additionally, the new section gives the Commissioner the power to adopt regulations in order to carry out the expedited licensing process. These provisions become effective on October 1, 2014, just in time for my Ocean City, MD trip.

Louisiana has amended and reenacted provisions relating to mortgage servicers, requiring that mortgage servicers be licensed and regulated pursuant the Louisiana Secure and Fair Enforcement of Mortgage Licensing Act of 2009. These amendments bring Louisiana mortgage servicers under the same licensing and educational requirements as mortgage lenders, brokers and originators. In this chapter, mortgage servicing refers to collecting or remitting payment for another or the right to collect or remit payments for principal, interest, tax, insurance or any other payments made in connection with a mortgage loan.

Turning to rates, it all seems pretty steady. The risk-free 10-yr T-note continues to sit in the low 2.60's (yesterday closing at 2.64% after starting off the day at 2.63%). But could rates go lower? You'd think so, especially after the World Bank lowered its global growth outlook for 2014 to +2.8% from an original projection of 3.2% at the start of the year. (2015, however, was unchanged at 3.4 %.) But is the news that the World Bank used to change its outlook already incorporated into the bond market? Apparently: on the day the 10-yr barely budged, and agency MBS prices didn't move either.

We have a little more for bond traders to chew on this morning. We've had the weekly Jobless Claims number (expected to drop by 2k, it was +4k from a revised 313k), May's Retail Sales (expected +.6%, it was only +.3% but there were some back-month revisions), and Import Prices for May (expected +.2%, they were +1.%). And just to give those traders something to talk about later today, we have a $13 billion 30-year bond auction at 10AM PST. Early on rates are down slightly with the 10-yr at 2.63% and agency MBS prices better by about .125.

Jobs

"Looking for innovation? Colorado's Mortgage Solutions Financial just announced its Certified Loan Program - removing risk for fraud and manufacturing defects from correspondent customers for only 10 basis points. This means a correspondent customer can take advantage of their incredible product offering - with no fraud or manufacturing defect risk - at a pretty minimal investment.  Mortgage Solutions is a direct seller/servicer to Fannie, Freddie, FarmerMac, and a Ginnie issuer, and offers products with zero overlays lending as FHA and VA intended it to be.  Need an IRRRL or Streamline with no score, no appraisal or AVM? MSF offers these. What's the catch?  None we have found." Check it out at MSF Correspondent Lending. And MSF continues to look for wholesale/correspondent AE's and retail branches across the country - as well as a mortgage industry recruiting specialist, who can help it continue MSF's growth.  Contact industry vet Greg Grandchamp at greg.grandchamp@msfhome. com.  "MSF is obviously doing something right over there."

On the retail side, Paramount Residential Mortgage Group, Inc. is expanding in the Northwest. Paramount is very proud to announce the recent hiring of David D. Davis to head up its newest retail branch in Washington State.  Mr. Davis comes to PRMG with 23 years of experience in the Mortgage Industry. David has been consistently ranked in the Top 10% of Originators nationally by multiple publications, and was instrumental in building three mortgage companies in the past (Qpoint Home Mortgage Loans, Homestar Lending, and Cobalt Mortgage). Mr. Davis has numerous designations and affiliations with state and nation-wide associations, is licensed by the state of Washington as a Licensed Real Estate Finance Instructor; CMPS (Certified Mortgage Planning Specialist); and a member of the CORE Training, Inc.  In his new position as Branch Manager, David will be responsible for recruiting; developing a strong presence in the northwest region; and overseeing monthly production and operations for his branch. Interested LOs can contact him at ddavis@PRMG. NET.

In an effort to reduce expenses given sluggish conditions, U.S. Bank announced they have frozen all new hiring, cut nonessential travel and told employees in a technology unit they will have to take 1 week off without pay. And the CFO of Fifth Third Bank reported at a conference that the rollout of high-tech kiosks at its branches over the past 15 months has allowed the bank to cut 1,000 jobs (about 19% of retail banking employees.

(While we're on employment, obtaining a job at Goldman Sachs is difficult...let me rephrase that. Landing a job at Goldman Sachs is statistically improbable. I've been told only the most qualified candidates are even considered for openings in their analytics groups; groups which analyze and evaluate everything from bonds to equities, from political climates to actual climates, Goldman and their people do important quantitative work. Oh, and in their spare time they run regression analysis to determine the upcoming World Cup winner too.)