"Help a man when he is in trouble and he will remember you when he is in trouble again."

The Consumer Finance Protection Bureau is not in trouble, but we do have one week until it springs into action - but still without a nominated leader. What the heck? Phil Hall wrote, "Next week is the premiere of two highly anticipated endeavors: the Hollywood blockbuster 'Captain America: The First Avenger' and the Consumer Financial Protection Bureau (CFPB). One of these is a ridiculously expensive production that traffics in a juvenile fantasy about an over-the-top crime fighter going to wild extremes in the pursuit of justice. The other is a movie."

JPMorgan Chase weighed in with 2nd quarter results, the first of the "big boys" that smaller mortgage banks tend to have interest in, given its position in mortgage banking. The company had net income of $5.4 billion on revenue of $27.4 billion, up 7% from the prior year. "With respect to our mortgage portfolio, delinquency and net charge-off trends improved modestly compared with the prior quarter; however, net charge-offs remained high, and we expect credit losses to remain elevated...While delinquency trends and net charge-offs have modestly improved compared with both prior periods, the current-quarter provision continued to reflect elevated losses in the mortgage and home equity portfolios. Mortgage Banking net revenue was $1.3 billion, compared with net revenue of $1.2 billion in the prior year."

Chase continues: "Mortgage Banking net revenue included $1.1 billion for mortgage fees and related income, $124 million of net interest income and $106 million of other noninterest revenue. Mortgage fees and related income comprised $544 million of net production revenue, $533 million of servicing operating revenue and $23 million of MSR risk management revenue. Production revenue, excluding repurchase losses, was $767 million, an increase of $91 million, reflecting wider margins. Total production revenue was reduced by $223 million of repurchase losses, compared with repurchase losses of $667 million in the prior year. Servicing operating revenue declined 6% from the prior year, due to run-off of the servicing portfolio, and increased 9% from the prior quarter, reflecting lower amortization of the MSR asset. MSR risk management revenue declined by $288 million from the prior year."

For Chase "Mortgage loan originations were $34.0 billion, up 6% from the prior year and down 6% from the prior quarter. Total third-party mortgage loans serviced were $940.8 billion, down 11% from the prior year and 1% from the prior quarter."

Over at Bank of America, maybe this conversation took place. Boss: "Whew! I am glad we got that $8.5 billion settlement thing out of the way. Now, let's move on to new business." Minion: "Uh, sir, not so fast. I'm afraid the issue is not over..." (Nervous glances around room.) Six federal home loan banks sought to join a case in which a New York judge will decide whether to approve an $8.5 billion settlement by Bank of America Corp. with Bank of New York Mellon Corp. over mortgage-securitization trusts. "The FHLBs have not made decisions whether to oppose the settlement," the Federal Home Loan Banks of Boston, Chicago, Indianapolis, Pittsburgh, San Francisco and Seattle said in a filing. They are seeking to intervene because "the procedures that BNYM has established for approval of the proposed settlement will not provide them enough information on which to make careful and informed decisions." BofAsettlementwoes

Wells Fargo's (aka "The Coach") clients learned that "The Uniform Collateral Data Portal is Now Available!" Ops folks know that the UCDP provides a common pathway for electronic submission of appraisal data files to the GSE's. Wells reminds them that, "Lenders and/or their agents can submit appraisals through UCDP. A lender agent is an entity that a lender authorizes to perform functions within the UCDP, such as uploading appraisals and evaluating results." After December 1, for conventional conforming loan applications, "Wells Fargo will require successful submission of appraisal report forms to the UCDP, prior to Wells Fargo Funding Loan purchase. This requirement only applies to conventional Conforming Loans which require an appraisal report. There are two ways in which lenders and their delegated agents may access the UCDP: An easy-to-use Web-based interface that allows users to browse and upload XML or first generation PDF files to the portal, or Vendor-provided solutions that offer an integrated system interface to the UCDP. Both GSEs have published a list of technology vendors who plan to provide a vendor solution that offers an integrated system interface to the UCDP. Wells Fargo will require our Sellers to submit appraisal data files to both GSEs. If you have not done so already, we encourage Sellers to complete the UCDP registration process within your organization's set-up - for each GSE. Fannie Mae and Freddie Mac have separate multi-step registration processes for users of the UCDP. The primary lender administrator must be the same individual for both GSEs. Refer to Fannie Mae's UCDP Page and Freddie Mac's UCDP Page for complete registration instruction and support."

Any FHA & VA originators, along with Ginnie issuers, should know that Ginnie Mae is revising the language originally introduced for "Determining Loan Eligibility for Issuance of Ginnie Mae Securities." All loans pooled in Ginnie Mae single family securities, except for loans backing bond consolidation pools, must meet the following criteria: As of the pooling date, no more than one monthly payment on the pooled mortgages can be due and unpaid - usually the one for the current month.

News came out that Prospect Mortgage will pay HUD $3.1 million to settle claims of kickbacks to mortgage professionals from the company's alleged "sham joint ventures" on FHA loans, which is similar to Fidelity National Financial agreeing to pay HUD $4.5 million to settle kickback claims. Reports indicate that Prospect created hundreds of these joint ventures to share profits with lenders, servicers, real estate agents and brokers for the referral of these services. Don't mess with RESPA! Prospect denied the allegations and claimed it disclosed the business structure to HUD in a previous audit. Prospect said it assumed the business structure did not violate RESPA because of this disclosure. HUD countered and said these companies had little to no employees, capital or offices. Prospect agreed to dissolve these ventures immediately along with paying the settlement.

Some lock desks are seeing a slight pickup in flow, which may appear in next week's MBA application numbers. Rates have come down, but originators are reporting from Q4 of '10 to Q1 '11 lender expenses per-loan have risen by nearly $1,000/loan. Investors were somewhat less risk averse yesterday with equities rallying on remarks from Chairman Bernanke saying that additional stimulus was possible if conditions warranted. The Fed "remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate." I am safe in saying that everybody and their brother knows that the economy is not improving dramatically - and rate-wise we may not want it to. But a little more improvement would be helpful.

The new 10-year notes closed around 2.89%, and we saw numerous intra-day price improvements from lenders. Traders saw, "buying from hedge funds and real money investors, such as pension funds, along with servicers with spreads at mid-day at 5-6 ticks tighter versus 10-year notes across the stack..." MBS prices were up/better nearly 3/8 of a point on 30-year 3.5s and by over 1/4 point on 4's (with 4.25-4.625% mortgages). Chrysler announced a recall of 244,000 pickups, which one trader noted, "The only group having trouble trying to recall that many pickups are the doormen in Derek Jeter's building." (Get it?)

This morning we've already seen the Producer Price Index numbers: PPI was -.4% for June. Initial Jobless Claims dropped 22k to 405k, above 400k for the 14th week in row although the 4-week moving average is dropping. And Retail Sales were +.1%, better than expected. We have a $13 billion 30-yr auction later on, along with a 10AM EST Business Inventories number. Other thrilling events include a repeat of Chairman Bernanke's Monetary Policy Report to the Senate Banking Committee at 7AM PST. The yield on the 10-yr is around 2.92% and MBS prices are worse by a shade.

(This sums up my life.)
A wife asks her husband, "Could you please go shopping for me and buy one carton of milk, and if they have eggs, get 6."

A short time later the husband comes back with 6 cartons of milk.

The wife asks him, "Why the heck did you buy 6 cartons of milk?"

He replied, "They had eggs."