"Talk to the wrist because the hand is pissed." That is what one loan broker wrote to me about the recent Financial Reform Bill's impact on mortgage lending. 

To my untrained eye, it appears that, in the mortgage section, most of the details are left to either regulators or investors.

HERE is a comprehensive summary provided by the House Financial Services Committee.

HERE is the mortgage reform and anti-predatory lending act

The bill requires lenders to have "skin in the game" on riskier types of loans-such as option ARMs or loans that don't require full documentation of income-that are bundled and sold to investors as securities. Don't look for these loans to come back, unless the investor wants to keep 5% of the loan amounts around as capital.

The bill sets stricter limits on prepayment penalties.

The legislation also forces lenders to ensure that borrowers have the ability to repay loans and gives borrowers greater scope to seek damages or contest a foreclosure if they are given a loan that they can't afford. Provisions that require stricter checks on a borrowers' ability to pay could make it harder or more expensive for self-employed borrowers or those who rely on commission or seasonal income to qualify for loans.
The bill tries to make compensation of mortgage brokers and loan officers more transparent, and bans any sort of payment based on steering the consumer to a particular type of loan or rate. It stipulates that lenders must compensate appraisers "at a rate that is customary and reasonable" and mandates regulation of AMC's. Regulators "may" issue regulations on the "portability" of appraisals from one lender to another.

The legislation is not guaranteed to make it to President Obama's desk, if you're unhappy about the rule changes, keep calling your representatives! The Mortgage Bankers Association weighed in HERE

Leaders from the Group of 20 nations agreed during the weekend to reduce their deficits and take action to make their banking systems safer and more stable, but they'll likely take different paths to reach those goals. The countries will strive to cut their deficits by at least half by 2013, according to a statement released by the G-20. The group also said banks will need to significantly raise their capital.

The Federal Reserve Bank of New York said it will begin using "a limited amount" of coupon swap operations to aid the settlement of its purchases of mortgage-backed securities - less than $10 billion. So it will replace outstanding contracts to purchase Fannie Mae 30-year, 5.5% coupon securities with other so-called agency mortgage-backed debt that is "more readily available for settlement," the bank said today in a statement. A "coupon swap" is a trade in which an investor enters into a contract to buy mortgage bonds with one coupon and sell mortgage bonds with a different coupon. So what? The Fed will be selling Fannie 5.5% securities and buying current coupon 4% and 4.5% coupons - helping those prices. READ MORE

Are you off work next Monday for the holiday? It appears that the majority of companies' staffs have next Monday off in honor of Sunday's July 4th holiday.

Interest rates have declined for four weeks now. Officially, mortgage rates are as low as 4.69%. Are pipelines bursting at the seams? Probably not. But look at this 10-yr yield, down near 3%, and mortgage rates could drop into the low 4's before too long. But there is a reason. Unfortunately the housing statistics point to slow sales, still-high inventories, and more foreclosures and short sales on the horizon. Unemployment is still high, which obviously doesn't help the economy, and Europe will be a cause for worry for quite some time. In many areas, however, home prices are rising, albeit gradually - nice to see.
Any company servicing Fannie Mae loans should be aware of that Fannie has published the Implementation Guide for Loan Delivery Data, detailing the data points that will be required, beginning September 1, 2011, for single-family loans delivered to Fannie Mae. Fannie Mae and Freddie Mac recently published the Uniform Loan Delivery Data Specification, defining the Uniform Loan Delivery Dataset (ULDD) and the common GSE approach to single-family loan delivery data requirements for all mortgages delivered to either GSE on or after September 1, 2011. Publishing the Delivery Specification was the first key milestone of the Uniform Mortgage Data Program announced on May 24, 2010.  HERE is the bulletin

Flagstar Bank told brokers that it will be updating the Fannie Mae Multiple Property Program to exclude 3- and 4-unit properties as eligible property types. The Fannie Mae HomePath Appliance Incentive is due to expire, with any loans that include borrowers receiving appliances from Fannie Mae as part of the purchase contract are required to be closed with a note dated no later than June 30.
Yesterday 10-yr Treasury notes rose 24/32 in price, and got down to a yield of 3.02%, their lowest since April 2009. But mortgage traders reported low volumes. After the NY Fed announcement (see above), Fannie 5.5's dropped .5 in price, but then closed unchanged on the day; Fannie 4 & 4.5's did very well. Personal Income was +.4% and Personal Consumption (spending) rose .2% - perhaps the consumer is becoming more confident...? The Chicago Fed Survey fell slightly. But critics say that the billions of dollars of stimulus have only moved the problems with our economy from the private to the public sector.
There was a Scottish painter named Smokey Macgregor who was very interested in making a penny where he could, so he often thinned down his paint to make it go a wee bit further.

As it happened, he got away with this for some time, but eventually the Baptist Church decided to do a big restoration job on the outside of one of their biggest buildings...

Smokey put in a bid, and, because his price was so low, he got the job. So he set about erecting the scaffolding and setting up the planks, and buying the paint and, yes, I am sorry to say, thinning it down with turpentine.

Well, Smokey was up on the scaffolding, painting away, the job nearly completed, when suddenly there was a horrendous clap of thunder, the sky opened, and the rain poured down washing the thinned paint from all over the church and knocking Smokey clear off the scaffold to land on the lawn among the gravestones, surrounded by telltale puddles of the thinned and useless paint.

Smokey was no fool.  He knew this was a judgment from the Almighty, so he got down on his knees and cried: "Oh, God, Oh God, forgive me; what should I do?"

And from the thunder, a mighty voice spoke:

"Repaint!  Repaint!