Here is some good news! Lock desks were busy last week, with mortgage applications hitting an eight-month high according to the MBA numbers. Apps were up almost 9%, with purchases down about 3% (to 1997 levels) but refi's were up 13% to where they were a year ago. Refi's accounted for almost 77% of applications.

How is housing holding up out there? It is a mixed bag. U.S. existing home sales unexpectedly fell last month and purchases of new houses tumbled to a record low. Until last week applications for mortgage refinancing are off almost 57% from last year's peak reached in January, in spite of 30-yr mortgage rates being in the mid-high 4% range. But yesterday's S&P/Case-Shiller HPI for April increased 4.6% from a year ago for the 10-City Composite and +3.8% for the 20-City. Sure, it was helped by the expiration of the tax credit, but it was good to see.

There are two commercial banks out there looking to add a few branches in the California, Oregon and Washington markets.  Both are well capitalized with strong management and have an "excellent mortgage banking platform" to help originators be successful.  These two companies (who are federally chartered and therefore can lend in 50 states) are supposedly focused on loan officers. If you are interested in joining a bank owned mortgage operation, e-mail Corky Watts (of Garrett Watts) .

Just when title companies had enough on their hands to worry about, word is coming out about counterfeit checks. In this case, Mechanics & Farmers Bank (NC) has reported that counterfeit cashier's checks bearing the institution's name are in circulation. "The counterfeit items display the routing number 053100452, which is assigned to Mechanics & Farmers Bank. The items are similar to authentic cashier's checks. A security feature statement is embedded in a darkened top border and along the bottom border between two padlocks. A box contains the dollar amount. Authentic cashier's checks are light gray with burgundy overtones and have a four-sided design border..." Personally, I don't run across many cashier checks, but if you see this, give Harold G. Sellars a call at Mechanics & Farmers Bank, (919) 687-7800.

Why wouldn't Congress vote to pass extending the First Time Home Buyer's credit? (Remember - they would be considering the 6/30 funding date only, not extending the April cut-off date.)

Critics say the three-month extension is an invitation for fraud, providing prospective home buyers time to back date contracts to a date before April 30 and subsequently closing on those contracts by the new September 30 deadline. I guess my mind is not "clever" enough to think that way, but back-logged investors, and first time buyers who jumped through the right hoops, are sure hoping something happens fast. Yesterday the U.S. House of Representatives overwhelmingly approved an extension to 9/30. Of course, however, the Senate must still approve the measure before President Barack Obama can sign it into law. Thousands of settlements may not be completed by Wednesday because settlement offices are slammed with buyers trying to close on transactions by the end of this month in order to receive the funds. FULL STORY

A man in Houston, TX just pled guilty in a mortgage fraud scheme. So these days, just what does using a child's Social Security number to secure funds for mortgages and committing wire fraud get you? The sentencing of 39-year-old Adrian Levale Cole isn't until September, but he faces 20 years in prison for his 2003-2006 handiwork.

Are your SAFE Act and NMLS registry & licensing ducks in a row? Some states are exempt (for now), and loans secured by properties located in those states will be exempt until the states mandate the regulation. There is no registration requirement in effect for national banks at this time - bank employees point out their stringent existing requirements are adequate. But speaking of banks, one mortgage broker wrote, "Funny that they're writing all of this reform, yet brokers already (and only brokers-a good selling point) provide a transparent transaction.  Lenders and banks still don't disclose the SRP.  If the government would simply level the playing field and require all mortgage lenders to disclose back end monies, there would be a lot less need for this piece of the legislation."

203(K) information/lenders continue to come in....

Mountain West does 203(K)'s, for example. And to continue, this is from a reader. "I am a staunch supporter of the 203K Streamline, and it is a very underutilized and misunderstood program."

"I am a wholesale AE for First Guaranty Mortgage Corporation and we offer the 203K streamline in 40 states. I spend much of my time educating brokers and realtors about how to use this program to allow buyers to purchase homes with deficiencies preventing them from meeting HUD's minimum property standards. From replacing stripped out copper piping on REOs to simply purchasing all new appliances, this program can help tremendously in moving distressed properties and getting neighborhoods back into a condition that invites new homeowners. It is also a great solution when a borrower wants to refinance into today's rates but the appraisal for their rate/term comes back with appraiser comments about needing new siding, or peeling paint, or the need for a new roof or new windows. The borrower can get the money to make the needed repairs and refinance their property as a rate/term all is one transaction. Rather than being limited to HUD's max 85% LTV for cash-out, they are now able to take advantage of HUDs maximum 97.75% LTV for rate/term transactions and get the money they need to fund their improvements and upgrades."

 First Guaranty is in the rumor mill for another reason: sending cell phones to its customers in the mail which automatically dial the lender's loss mitigation department who offered the caller lower rates. Shades of genius or "Big Brother"? One report said that more traditional measures (like hand-addressed letters to borrowers sent out by Fifth Third Bank) also had decent results.

There are several reasons for the difference in price between Fannie and Freddie in the secondary markets. How about at the borrower level though? I am sure that there are many, but here's a quick one: Freddie Mac will combine ratios with a non-occupant co-borrower (even on agency jumbos), but Fannie Mae won't.  So if a borrower has 20% down and is tight on ratios, perhaps they can add a non-occupant co-borrower and qualify resulting in a better option than FHA if they have the down payment.

Yesterday the 10-yr Treasury note was up almost .625 in price - and current coupon mortgage-backed securities were better by .125, at most, and many lenders improved whole loan prices by less than that. Liquidity with lower mortgage rates (near 4%) can only get better, right? Wall Street MBS traders are still very hesitant about doing any buying or selling of Fannie/Freddie 3.5's (containing 3.75-4.125% mortgages), with one trader saying, "If you were to sell one you probably won't even be able to roll it, much less buy it back later if the loans don't deliver." So any originators looking for 30-yr rates below par are going to have to wait a bit longer. READ MORE

Yesterday the 2-year yield did, however, hit an all-time low, and the 10-year note yield hit 2.956% before closing at 2.97%. Mortgages lagged, apparently due to investors saying, "Hmmm... maybe there IS a chance that recent production can refi..." Not that 10-yr yields and mortgage rates are directly linked, but many think that if the 10-yr yield drops below 2.80%, it will spur another set of refi's for borrowers who can qualify and who own properties with equity. Selling increased from mortgage bankers and investors, which didn't help mortgage rates relative to Treasuries.

This Friday we will have our "first Friday of the month" unemployment data. Is it as good an indicator as, say, income tax receipts? If unemployment creeps higher, does it matter if the remaining employed are paying more in taxes?  Many believe that the income trend is more important than the hiring trend, because the particular source of the income is less relevant than the fact that it is actually being generated. In fact, some analysts are seeing an expanding economy due to acceleration in household employment income. But the uptrend in tax receipts has faltered over the past month after peaking at the end of May, pointing, as other indicators have, to a potential renewed slowdown in the economy.

This morning on the last day of the first half of 2010, we saw the ADP numbers, related to, but of questionable correlation to, Friday's unemployment data. (ADP does not include government workers - a big chunk.) ADP was up only 13,000 - not a good sign for the economy. Later we will have the Chicago Purchasing Manager's Survey and some ISM numbers. Tomorrow we have Initial Jobless Claims and Construction Spending. But Friday we have traders & hedging company's nightmare: unemployment data ahead of a holiday weekend. (Not only are many folks on vacation, but those that aren't will want to be leaving early Friday.) Ahead of that the 10-yr yield is currently at 2.96% and mortgage prices are slightly better.

A hooded robber burst into a Round Rock, Texas bank and forced the tellers to load a sack full of cash. On his way out the door a brave Texas customer grabbed the hood and pulled it off revealing the robber's face.
The robber shot the customer without a moment's hesitation.

He then looked around the bank and noticed one of the tellers looking straight at him. The robber instantly shot him also.

Everyone else, by now very scared, looked intently down at the floor in silence.

The robber yelled, "Well, did anyone else see my face?"

There are a few moments of utter silence, in which everyone was plainly afraid to speak.

Then one old man tentatively raised his hand and said,

"My wife got a good look at you."

(Speaking of the Great State of Texas, a reader wrote, "We have two seasons in Texas: summer and hell. Well, summer's over.")