The winner of the "pot calling the kettle black" award for this week goes to U.S. Rep. Tom Graves, who was calling for fiscal responsibility in Washington while his attorney was arguing in a lawsuit that a North Georgia bank is at fault for issuing Graves a $2.2 million loan the bank knew he could not repay: YouShouldHaveKnown.

While you cogitate on that one, you should also know that Ellie Mae both lowered its profit prediction while at the same time announcing that it had purchased Del Mar DataTrac for $17.2 million in cash, in addition to future cash payments of $8 million total over the next three years. "The goal will be integrating Del Mar's DataTrac software with Ellie's own Encompass product, resulting in significant costs, and Ellie Mae will support both DataTrac product and service offerings and existing Encompass solutions and services." The company, which went public in April, has seen its stock drop 14% since that time.

While we're discussing vendors, price engine LoanSifter is expanding and is looking for experienced sales and service professionals in response to the strong demand for its Banker PPE platform.  "LoanSifter's understanding of originator and secondary needs, intuitive and user-friendly interfaces, along with its deep integrations with leading solutions such as Compass Analytics and DelMar DataTrac, has contributed to the company's strong foothold in the banker space.  Extensive experience working with secondary managers and understanding diverse business models/workflows is required for both remote positions." If you are interested, please send your resume to Ric Stelter at

A lender is looking for wholesale reps. A wholesale lender with headquarters in California is expanding its sales force in Northern & Southern CA, CO, CT, ID, LA, MA, MD, MN, NM, NJ, NV, OH, OR, TX, VA, WA, and DC. The lender is Fannie Mae/Ginnie Mae direct lender, has fulfillment centers in the SF Bay Area, Orange County and Fairfax, VA, and is also looking for regional sales managers and area sales managers with existing teams, along with inside AE's in the SF Bay Area. "We are also open to building out local ops for large sales teams joining our company, and offer an aggressive comp structure of 20-35bps. All candidates need to have recent production reports and an active broker base." Resumes should be sent to Felix Ortiz at

The debate about government's role in the mortgage biz continues, although there was a significant story out yesterday. President Obama has concluded that the government will have to play a major role in the mortgage market going forward.  Fannie and Freddie would probably be preserved under the White House plan although with different names and under different constraints, operating more as utilities. And the government would back mortgage securities issued by the firms but not the company's themselves. The White House isn't certain whether to unveil its ideas formally ahead of the 2012 elections. (Is that how things are now - our government is frozen for over a year prior to any election???) For details go to the Washington Post at

When I was a teenager, I saw my boss hunkered down over a beer. He told me, "Yup - alcohol doesn't solve many problems. But then again, neither does milk." One problem that some lenders have, believe it or not, is with investors. I have received several inquiries, summed up by this one: "Rob, what is going on out there with Bank of America? Their conventional pricing in our market has suddenly dropped, relative to others, and although its government pricing has been steady, the amount of business going there from us has dropped. And in talking to my friends in the business, BofA doesn't seem in a great hurry to renew correspondent contracts. Maybe it seems that way to the folks I have asked, but the loss of another large investor for the mortgage market is not a good thing." [Opinion only from a reader!]

Yesterday the commentary put forth a numerical example of how a renegotiation might work possibly involving comp. It turns out that there is still confusion out there, and I received several e-mails highlighting the issues. "Just have to respond to what 'Daniel K. from NJ wrote'.  I wish I had the option to negotiate but the in new world the majority of us are not W-2 and do not have the option of 'borrower paid'.  Of course, the banks are free to do as they wish - yes, the same guys that are exempt from all the NMLS and DRE licensing."

Another wrote, "The example is not possible since MLO's cannot offer the Borrower Paid Comp unless they are paid a salary.  And, if they are paid a salary, there is no commission. So the amount they receive won't vary loan by loan and they can't lower their commission to lower a rate. In addition, they will need to choose Borrower Paid Comp on all loans since they cannot switch between these payment structures.  I believe that anyone is being disingenuous in suggesting that MLO's will be able to stay in business choosing the borrower paid compensation model.  Either that, or there is a misunderstanding about how one must pay MLO's under the new changes to Reg. Z and there will be trouble when the regulators do an exam!"

Lastly, "Or, the Borrower can go to a competitor and get the 4.125% rate for the cost of a new application fee - you might get away with the above on a purchase, but a refinance is not time sensitive. Here in NJ, the consumer refinancing a median-priced home/mortgage will gauge what his/her payment will be for $237,500 at one rate versus another.  The $891 dollar annual difference will be multiplied by the customer's time frame for continuing to reside in the home.  His/her arithmetic will tell them that paying a new $400 application fee and obtaining a new appraisal will save them a lot more money in the long run.  If the mortgage company in this hypothetical drama hedged their pipeline, there wouldn't be a conversation.  But the hypothetical firm didn't hedge, because hedges cost money, so the firm seeks to split the difference with the borrower, and in doing so, the firm makes less money on the case.  A hedge on the pipeline is a cost on some large percentage of the dollar volume of the pipeline.  If you don't hedge, a relatively small percentage of your customers will take advantage of their leverage - lower rates lead to higher volume are a good thing. Enjoy the drop in rates, split the differences with your un-hedged customers, and then move along."  So wrote Dave Lewis with Con-Serve Capital Consulting, Inc.

Regarding fraud, I received this from a short sale manager of a large investor: "I especially like that you are pointing out the fraud....realtors are upset that lenders of short sales are questioning the transactions and asking for additional paperwork in some cases on the sellers and the buyers, and even the agents themselves...And yet fraud is running wild.  Agents are bribing listing agents to present their offer as highest and best even when it is not, in hopes of being able to earn a commission, buy the property and then flip it to make even more on the same property.  This is out and out fraud, yet realtors are falling for it. It is crazy, and I feel sorry for the home owners who are taken advantage of buy the few bad apples that will continue to make things tough for all of us in this market....."

Ginnie Mae has announced that it guaranteed nearly $28 billion in mortgage-backed securities in the month of July: $18.2 billion of Ginnie Mae II single-family pools, $7.3 billion of Ginnie Mae I's, and almost a billion of Home Equity Conversion Mortgage MBS. The vast majority was single family, although there was about $1 billion of multifamily. And there is Ginnie servicing for sale - the latest pool is from Interactive Mortgage Advisors who is out with a $106 million Ginnie Mae residential loan servicing offering. The loans, mostly in the Northeast, have an average balance of $244k, 12 month average escrow at 1.03% of outstanding UPB, and the pool only has six VA loans. For more info contact Thomas M. Piercy at

In June, Housing Starts jumped by over 14%, led by a 30% increase in multifamily starts. Last time around Building Permits also had some positive signs. Given the jumps last month, this time around forecasters were looking for a little pullback, and got it: -1.5% for July. Permits were down 3.2%. We also had some import and export price information out this morning. Import prices were +.3%, and export prices were -.4%. But more importantly in the long run, overnight we learned that German GDP unexpectedly sank - and as we've seen, there are a few countries that are helping to support the economy in Europe and Germany is one of them. This problem will be with us a long time.

Looking at mortgage rates, yesterday MBS prices ended the day down/worse by about .250. Volume spiked up dramatically last week, as every lock desk can tell you, but yesterday it quieted down somewhat. 10-yr notes declined about .5 in price and closed at 2.29%. This morning it is sitting around 2.27% with MBS prices a shade better.

Here are some more "Universal Laws" to cogitate upon (part 2):

Law of the Result - When you try to prove to someone that a machine won't work, it will.

The Coffee Law - As soon as you sit down to a cup of hot coffee, your boss will ask you to do something which will last until the coffee is cold.

Murphy's Law of Lockers - If there are only two people in a locker room, they will have adjacent lockers.

Law of Physical Surfaces - The chances of an open-faced jelly sandwich landing face down on a floor are directly correlated to the newness and cost of the carpet or rug.

Law of Logical Argument - Anything is possible if you don't know what you are talking about.

Brown's Law of Physical Appearance - If the clothes fit, they're ugly.

Wilson's Law of Commercial Marketing Strategy - As soon as you find a product that you really like, they will stop making it.

Doctors' Law - If you don't feel well, make an appointment to go to the doctor, by the time you get there you'll feel better. But don't make an appointment, and you'll stay sick.