President Barack Obama signed HR 5623, the "Homebuyers Assistance and Improvement Act of 2010," a three-month extension on the closing deadline for first-time home buyers to receive the tax credit. Potential homeowners with offers currently under contract now have until September 30 to close the deal, instead of the original June 30 deadline. READ MORE

Last week I mentioned some comments from an appraiser. "I would counsel the mortgage brokers to tell the clients what their loan to value ratio is and what their loan amount is and then tell the appraiser when the borrower meets them." 

Needless to say, I received some responses...

"I am amazed at the appraiser's comments. This is exactly what got us in trouble in the first place: make value, to do the deal. Come on - have we learned nothing? I'm speechless. The value is the value no matter what the loan...that's the point of independent assessment, amazing."

"This is the nonsense that contributed mightily to the housing debacle in the first place.  Appraising a home isn't rocket science.  Find proximate comps, use them, and make the same kinds of adjustments that any rational buyer would make in their heads when they assess buying a home.  Appraisers, in their defense, will ALWAYS be pushed by the broker who wants a commission, the realtor who wants a commission and the borrower who wants the big loan.  These three are DESPERATE for money -- because humans are always desperate for money.  The appraiser, who is also desperate for money - knows that these other desperate parties will not use him if he doesn't do their bidding. HVCC has removed a great deal of that. If Fannie and Freddie were smart they'd follow FHA's lead and create a "Fannie/Freddie approved appraiser" program just like FHA has..."

It is true that the HVCC does have some fans in the mortgage industry, especially if complying with it leads to fewer buybacks. Many lenders have kept the ordering of appraisals in-house, and instead of farming out the job to AMC's these companies gave the jobs to in-house staff that might have been laid off instead. Some companies apparently didn't realize it was an option. Underwriters and other Ops staff have been moved into this role, with apparently pretty good success. Some say that AMC's, who have minimum experience requirements, are doing about 60% of all appraisal work, since many lenders like the separation of the originator and appraiser.

The FDIC didn't close any banks on Friday, but did release its list of April's state non-member banks evaluated for compliance with the Community Reinvestment Act (CRA).

By the way, are FHA loans assumable? Yes - well-versed originators know that the language involving the "assumability" is not contained in the note, but instead is contained in the application for the FHA loan. Check out the clause, "Assumption of HUD/FHA-Insured Mortgages Release of Personal Liability".

Some time back CitiMortgage upset brokers and correspondent clients by first exiting the business and then slowly bringing clients back on in a very "measured" way. As it turns out, its focus is on retail originations, and late last week the company reported that in the last two months applications at its branches are up 60% and jumbo apps are up 30%. I guess someone said, "We may-as-well use our 1,000 branches to beef up production and focus on affluent customers in metropolitan areas."

U.S. Bank Home Mortgage, currently servicing almost $200 billion in mortgages, is expanding its servicing operation in Owensboro, Kentucky. 500 new jobs over the next few years should certainly help the economy there.

Credit Unions are making a push to increase their market share of mortgage originations. To some degree, they have stepped in where private investors have exited the business. One example is Kinecta Federal Credit Union, which not only offers conventional and government programs, but also portfolio loans up to $4 million and piggyback HELOC's up to $500k. The company was originally founded in 1940, and as it turns out is one of the largest credit unions in the nation. The firm is expanding its Wholesale Lending Division, and is looking for Wholesale Account Executives for Northern California, Southern California, Arizona, Oregon, and Washington, and hiring retail Mortgage Loan Officers in California, along with FHA and conventional processors, underwriters and funders. For employment information, visit the company website: For wholesale information, visit or write to George Andrews at with questions.

Loan pricing continues to be interesting, especially as "the herd" is spooked about the impact on YSP of the Financial Reform Bill. But some pricing appears to be going the other way. For example, Stearns Lending increased its pricing on FHA Streamline Refinances, both regular and high balance loan amounts, to a rebate of 4.25%.

Did anything change over the weekend after Friday's anemic unemployment data showing a drop in NFP of 125,000 and a decline in the hourly workweek and hourly earnings? Not really: the June employment report confirmed views that the labor market is stumbling along, that any kind of recovery may be "jobless", and stock prices dropping almost 5% last week indicates that rates (including mortgage rates) will be low for quite some time. In fact, economists aren't pushing any substantive move higher in rates into 2011, since housing is relatively slow, employment is slow, and there is no inflation. (Hopefully investors don't begin worrying about the amount of debt the US has issued...) Yes, the unemployment rate dropped to 9.5%, but this was driven by a decline in "labor force participation" - people just aren't looking for jobs.

In the past any drop in rates would normally portend a pickup in prepayments and supply. But as everyone knows this is not happening - yet. Smarter minds than mine believe that in order to see another refi boom the 10-yr yield must go below 2.80%, if not all the way to 2.50%. (Remember that the Fed owns the most negatively convex MBS's - and it does not hedge!) Weak economic data from the US, Europe, and China caused investors to question the pace of the global economic recovery and slower economic growth is usually positive for mortgage rates and negative for the stock market. (And last week stocks had their worst week in over two months.)

It seems that not a week goes by without some release from the Institute of Supply Management. Today is no exception, with its Non-Manufacturing Index. Tomorrow we have the MBA's rate lock activity, Thursday Jobless Claims, and on Friday some trade numbers. It is a very, very light news week indeed. All in all, Friday rates didn't do much, with the 10-yr yield fluctuating +/- 3% and mortgage security prices unchanged. The 10-yr Treasury note yield, which Friday chopped around 2.95%, is sitting around 2.98% this morning. Mortgage prices are not doing much either, and are roughly around Friday's levels. HERE is the economic calendar in the week ahead.

(As usual, the joke does not necessarily reflect the views of the author, and equal time is attempted to be given.)

A little boy goes to his dad and asks, "What is politics?"

Dad says, "Well son, let me try to explain it this way: I'm the breadwinner of the family, so let's call me capitalism. Your Mom, she's the administrator of the money, so we'll call her the Government. We're here to take care of your needs, so we'll call you the people. The nanny, we'll consider her the Working Class. And your baby brother, we'll call him the Future. Now, think about that and see if that makes sense,"

So the little boy goes off to bed thinking about what dad had said.

Later that night, he hears his baby brother crying, so he gets up to check on him. He finds that the baby has severely soiled his diaper. So the little boy goes to his parents' room and finds his mother sound asleep. Not wanting to wake her, he goes to the nanny's room. Finding the door locked, he peeks in the keyhole and sees his father in bed with the nanny. He gives up and goes back to bed. The next morning, the little boy says to his father, "Dad, I think I understand the concept of politics now."

The father says, "Good son, tell me in your own words what you think politics is all about."

The little boy replies, "Well, while Capitalism is screwing the Working Class, the Government is sound asleep, the People are being ignored and the Future is in deep poo."