Greetings from Washington State, and...Oops! Did I have the wrong headline in the subject line? (Those files are really thick, you know.) Incorrect headlines happen - just like yesterday after the PHH earnings call when a publication noted that PHH will reduce Correspondent Lending. Those on the call wonder how the reporter walked away with this message, which apparently was not what was delivered. The investor spread the word, "PHH Corporation has announced financial results for the second quarter of 2012. I encourage you to view our earnings release, which is available on our website at We at PHH maintain our commitment to serving a select group of Correspondents that we believe will deliver consistently high-quality loans, and our Correspondent strategy is unchanged from what we articulated earlier this year. Our Correspondent channel represented 14% of our total closings in the second quarter of 2012, and we expect it to represent approximately 15 to 20% of our total closings for the full year." It seems that PHH is following the personnel changes announced many months ago - I think most would agree that the last thing the biz needs is another exit.

The industry did, however, have another Top wholesale investor (SunTrust - #10 in the 1st quarter) restrict broker comp along the lines of FAMC a few weeks ago, and fortunately not a complete Wells Fargo style withdrawal. (See recent investor and lender news section below.) I hope that regulators and politicians are keeping track of the unintended consequences with which the industry is grappling.

Expanding companies continue to hire. In Scottsdale, AZ, imortgage is growing and is seeking an experienced senior professional to lead the QC and Compliance organization. Founded in 1999, imortgage has experienced rapid growth in their retail origination platform which is driven largely by purchase money business. Licensed in 8 states and expanding, imortgage funded over $3 billion in 2011 and is projected to originate over $4 billion this year. The individual sought will lead the strategy and execution of contemporary and comprehensive compliance management on behalf of the Company. Relocation compensation will be considered for the right candidate. Interested individuals should submit their resume in confidence to Kathi Winter, VP of HR at kathi.winter@imortgage .com. imortgage is also always looking for qualified underwriters, processors and closers in the Scottsdale area.

And up in Chicago, BMO Harris Bank N.A., a part of BMO Financial Group, a North American financial organization with 1,600 branches and retail deposit base of approximately $180 billion plans to hire approximately 100 mortgage loan originators in IL, WI, IN, KS, MO, MN, AZ, and FL to support customers looking for a new loan or refinance an existing loan. The bank has launched several product and marketing initiatives targeting the home purchase marketplace in response to consumer demand.  "Consumer reaction to our most recent Purchase Campaign offering which provides an interest rate discount to new and existing customers for their home purchase has been tremendous," said Brad Chapin, Executive Vice President, Personal Banking, BMO Harris Bank. For more information on the mortgage loan originator career opportunities, candidates should visit the BMO Harris Bank website

Regarding the commentary mentioning that noted that closing costs are falling, I received several astute e-mails. "Someone needs to poll this year's refi borrowers and do a survey regarding their experience in getting that loan since they've had the experience before.  Appraisals, QM, regulations and a myriad of items will reflect dissatisfaction in the consumer regarding their experience, but no-one is addressing that." And another from a Wall Street MBS trader: "So, I am getting a mortgage.  The disclosure document is a 113 page book; an actual bound book!  I don't even know how to respond to this."

And attorney Brian Levy with Katten Temple observed, "The first line of the CNN story about average closing costs says the decline this year is due to federal regulations.  Really? I am not sure how Bankrate reached that conclusion.  In my questioning of the premise, I asked my fellow attorney Marx Sterbcow of New Orleans if he was seeing the same decline in pricing and he pointed out that here's how the data looks over time in relation to RESPA reform and LO Compensation rule implementation dates: 2008: $2,732, 2009: $2,739, 2010: $3,741 (RESPA Reform) 37% increase from '09, 2011: $4,070 (LO Comp) 8.8% increase from '10, 2012: $3,754 (no major regs implemented), a 7.7% decrease. As a result, I see a completely different story in this data that should be cause for not just sympathy on regulatory burden, but also consumer frustration at the supposed benefits of regulation." 

And in response to the mention in the commentary about Realtors, their lobbying, and their commissions ("Rob, folks wonder about Realtors charging 5-6% commissions, regardless of transaction amount, whether that is fair, and whether or not the National Association of Realtors has any clout."), I received, "As a Realtor, I don't ever recall a lender or mortgage broker ever, taking customers around, dealing with their children and families during showings, constantly printing out info for customer, gas for showings, insurance for auto and business, giving Buyers and Sellers many hours of research on comp property, setting listing and showing appointments, scheduling, photography, putting up signs my costs and lockboxes, my costs too, having Broker Open houses, ALL advertising expenses and the Brochure Flyers costs, mailings and postage for listings and buyer leads, online flyers and time involved to get listings online across the board, follow up showings 'cause Buyers want to go back, negotiating the offer through to a successful closing, including inspections, following up with the LENDERS, making sure the buyer is qualified by following up with LENDERS, making sure they have the required down money and following up with LENDERS, etc., etc., etc...Roughly, if this listing is on market for 16 weeks, it has cost me between $4000 & $5,000...AND typically, most listings are SPLIT between a broker and salesperson and another broker involved means only 1/2 the fee. I take the risks and I work hard to earn our fee." Thank you to Linda J. from Florida.

The transfer of servicing and mortgage assets either away from depositories or to firms specializing in REO rentals, or both, continues. This latest move comes from Citi:

On to some recent investor and lender news. It is best to read the actual bulletin, but these will give you a flavor for what is happening - and there are indeed things happening!

MetLife Inc., the insurer seeking an exit from banking to limit U.S. regulation, was penalized $3.2 million by the Federal Reserve for lapses tied to the servicing of loans and handling of foreclosures. MetLife is also reportedly "scrutinized" by other agencies, including the DOJ. MetLife was not included in the $25 billion settlement deal this year - reviews continue for smaller lenders. But $3 point 2 million? Pocket change! Here's the story:

"As a result of recent industry events, SunTrust Mortgage will be implementing the following amendments to our Broker Compensation Policy. These revisions will be effective for all new loan registrations starting September 1: The compensation rate will be set at a state level by SunTrust Mortgage with the maximum state rate not to exceed 2.5% of the loan amount. Each client's rate will be based on the state where they primarily do business. We are finalizing our state compensation rates. SunTrust Mortgage will begin setting both Borrower Paid and Lender Paid transactions to the same compensation rate. For Borrower Paid transactions, an adjustment to compensation will be allowed only under the following circumstances that benefits the borrower: Lock extensions or pricing errors paid by Broker, and RESPA cures paid by Broker."

Speaking of SunTrust, we were reminded that it is under investigation by HUD for FHA origination practices:

Great American Bank ($58mm, KS) will purchase Lone Summit Bank ($26mm, MO) for an undisclosed sum. Lone Summit is under a consent order and had critically low capital. And in the Virginia's, City Holdings ($2.9B, WV) will purchase Community Financial ($504mm, VA) in an all-stock deal worth an estimated $26.1mm, or approx. 55% of book.

Congrats to American Eagle Mortgage which has made the "2012 Inc. 500/5000" list of the fastest-growing companies in the US. It will be honored at the 31st annual Inc. 500/5000 awards ceremony in Phoenix, AZ this October.

REMN Preferred Brokers now have access to the Preferred Broker rate sheet and are permitted to submit loans of any transaction type without additional restrictions.  Brokers of Standard status may submit purchase loans only, and their borrowers are required to have a minimum credit score of 680. For the time being, REMN has ceased to accept lock-in requests for loans that have not been submitted either as a full file or a Litefile.  Once submitted, loans are eligible to be locked without restriction. As of July 13th, all FHA Streamline refinances are now subject to REMN's add-on of 100bp, while all other FHA refinances are subject to a 50bp add-on.  All FHA 203(k) products are subject to an add-on of 300bp above standard FHA (203b) pricing.  Loans submitted and locked before the 13th are not affected.

Flagstar has announced that FHA Streamline refinances that are serviced by another lender are subject to a requirement for a FICO score of at least 700.  DU Refi Plus loans on primary residences will require a minimum credit score of 700 as well, regardless of DU response; second homes and investment properties will require a score of at least 720 in addition to an "Approve/Eligible" response from DU.  Borrowers must have a minimum credit score of 640 to be eligible for all Fannie products (including Fixed Rate, MyCommunityMortgage, HomePath, HomePath Renovation, Cooperative Property, and agency 3/1, 5/1, 7/1, and 10/1 ARM loans).  This replaces the previous minimum score of 620.  The changes go into effect for all loans that lock after August 9th; loans that don't meet the new guidelines should be locked on or before this date.

Franklin American announced last month that it would be making a 50 basis point pricing adjustment on all FHA Streamline refinance transactions.  Owing to marketplace factors, this adjustment was increased to 75 basis points, effective with all best effort locks taken and loans assigned to mandatory trades on July 27th and after.  This applies to all FHA Conforming, Jumbo fixed rate, and adjustable rate products.

Well, rates are creeping higher. What's going on out there - certainly no one thinks that the U.S. economy is doing well enough to support higher rates, right? For starters, yesterday the Treasury's 10-yr auction didn't go so well - it seems that there was little interest from "direct bidders" (those who will actually own the bonds) which forced Primary Dealers to buy the bulk of the notes, as required of Dealers. For residential mortgages, traders reported that volume picked up slightly, and it was met with fine demand by the usual suspects (REIT's, the Fed, etc.). In fact, while Treasury prices were lower (the 10-yr closed at a yield of 1.64%), MBS prices were mostly higher (very slightly).

Overnight we learned that the Chinese economy is growing at its slowest rate in years, assuming one can trust the numbers. For stateside economic news, today we've had Initial Jobless Claims (expected to nudge higher, it came out at -6k at 361k - better than expected). We also had the Trade Balance figures (narrowing to $42.9 billion). Finally, at 1:00 pm Treasury winds up its Refunding with $16 billion in 30-year bonds. In the early going the 10-yr has hit 1.70%, and MBS prices are worse by about .125.

Things we know because of TV! (Part 1 of 3.)
- If staying in a haunted house, women should investigate any strange noises wearing their most revealing underwear.
- If being chased through town, you can usually take cover in a passing St. Patrick's Day any time of the year.
- All grocery shopping bags contain at least one loaf of French bread.
- The ventilation system of any building is a perfect hiding place. No one will ever think of looking for you in there and you can travel to any other part of the building without difficulty.
- Should you wish to pass yourself off as a German officer, it will not be necessary to speak the language. A German accent will do.
- A man will show no pain while taking the most ferocious beating, but will wince when a pretty nurse cleans his wounds.