The Federal Reserve unleashed a series of rules and proposed rules aimed at mortgage bankers, one of which was the "Final Rule" on compensation practices for mortgage originators:  FULL STORY

Effective April 1, all loan originators (including brokers, brokerage companies, depository loan officers, etc.) will no longer be able to receive compensation based on loan terms, but instead be compensated based on a percentage of the loan amountHERE ARE ALL 113 PAGES OF THE FED'S GUIDANCE

The Fed also  proposed enhanced consumer protections and disclosures for home mortgage transactions.  The proposal includes significant changes to Regulation Z (Truth in Lending) and represents the second phase of the Board's comprehensive review and update of the mortgage lending rules in the regulation.  The proposed changes reflect the results of consumer testing by the Board, which will begin accepting public comment. 

The latest proposal would:

  • Improve the disclosures consumers receive for reverse mortgages and impose rules for reverse mortgage advertising to ensure advertisements contain accurate and balanced information;
  • Prohibit certain unfair practices in the sale of financial products with reverse mortgages;
  • Improve the disclosures that explain a consumer's right to rescind certain mortgage transactions and clarify the responsibilities of the creditor if a consumer exercises the right; and
  • Ensure that consumers receive new disclosures when the parties agree to modify the key terms of an existing closed-end mortgage loan.

HERE is the Federal Reserve Press Release

The Federal Reserve Board also proposed a rule to revise the escrow account requirements for higher-priced, first-lien "jumbo" mortgage loans. HERE is the presser

Last but not least the Federal Reserve Board issued an interim rule that revises the disclosure requirements for closed-end mortgage loans under Regulation Z (Truth in Lending). The interim rule implements provisions of the Mortgage Disclosure Improvement Act (MDIA) that require lenders to disclose how borrowers' regular mortgage payments can change over time. READ MORE

Are you seeing higher closing costs? Join the crowd: they are up 37% nationally this year according to Bankrate Inc. Lenders absorbed a certain portion of this increase as the government began requiring lenders to provide more accurate good faith estimates of closing costs or face penalties. Nationally, average estimated closing costs rose to $3,741 from $2,732. The most expensive state was New York, where costs averaged $5,623, and Texas, where costs averaged $4,708. It includes lenders' origination fees and title and settlement fees. It does not include property taxes, recording fees or homeowners insurance.

A few billion here, a few billion there, and pretty soon we're talking about real money. Freddie Mac announced that it will be asking for an additional $1.8 billion cash infusion from the Treasury Department after reporting a 2nd quarter loss of $6 billion. ($6 billion is better than the $8 billion lost during the 1st quarter, but still...) These numbers include stock dividends payable to the US Treasury. So I guess Freddie pays a dividend, and then basically asks for it back in order to continue functioning? There continues to be conjecture about the fate of Freddie and Fannie. The latest comes from an ex-Fed Governor, William Poole, and is worth a skim.  Ultimately, of course, if those companies leave the US mortgage market, and are replaced by private investors, it will have a huge impact on both small and lenders. READ MORE

Freddie Mac updated its requirements for qualifying borrowers, and gave its clients "greater flexibility" when originating and underwriting refinance mortgages, condominium unit mortgages, and ARMs. Effective for mortgages with settlement dates on or after December 1, 2010, Freddie will be making some extensive revisions to all loans, not only manually underwritten loans. For example, sellers must look into the borrower's credit report inquiries made in the past 120 days instead of 90 days. Best to read the changes yourself: FREDDIE BULLETIN

Fannie Mae released servicing information dealing with hardships. "The Announcement identifies situations that warrant the use of relief provisions for borrowers impacted by unusual circumstances that create financial hardship and includes guidelines that servicers must adhere to when providing this relief." FANNIE SELLER GUIDE UPDATE

Wells Fargo's brokers received a Newsflash telling brokers that the FHA Short Refinance Program is not available at this time, regardless of HUD's Mortgagee Letter, a reminder that Wells' Early Payoff Policy change is effective Sept. 1, the Super Conforming Mortgage Program is now available, a reminder of the qualifying rate change for Short-Term ARMs, and a revised Fee Details Form. Wells' Early Payoff Policy will be effective for loans paid off on or after Sept. 1, and impacts loans when a broker is paid Broker Originator Compensation and the loan is paid off for any reason within 90 days of its Wells Fargo Wholesale Lending funding date. Wells may require the "Broker Originator" to repay all or such portion of, as determined by Wells Fargo Wholesale Lending, any Broker Originator Compensation. In no event shall repayment of any Broker Originator Compensation be charged back to any Borrower by Broker Originator. Payoffs resulting from refinance by the original Broker Originator, refinanced by another broker or lender, non-brokered refinance, or sale of the mortgaged property will all be considered an Early Payoff.

Wells Fargo's correspondent channel alerted clients that the company now has the "Super Conforming Mortgage Program" available for prior approval loans using an LP option. Per Wells, it is "for borrowers with financing needs that can't be met by the existing Wells Fargo High Balance Conforming Loan Program parameters" for increased flexibility for LTV/CLTV for Primary residence ARMs, second homes and investment properties. (Wells will continue to accept Freddie Mac's Super Conforming mortgages submitted under a Seller's Delegated underwriting authority.) Wells Fargo is now accepting Essent Guaranty's MI for conventional loans, suspended its "Same Day Funding Program", and also announced that the FHA Short Refinance Program is not eligible through its Third Party Lending.

SunTrust released a series of updates for the "SunTrust Mortgage Approved Condominium Project List", "SunTrust Mortgage Approved Attached PUD Project List", "SunTrust Ineligible Settlement Agent List", and the "SunTrust Ineligible Appraiser and Appraisal Company List" (which contains the names of appraisers and appraisal companies who are not eligible to perform appraisal assignments). In addition, SunTrust's Correspondent Division will begin publishing state-specific Service Release Premium (SRP) schedules starting this Thursday.

Pinnacle Capital Mortgage Corporation has updated their Conforming Underwriting Guidelines to reflect changes in income and employment documentation (instead of 2 years of tax returns needed despite AUS findings, now the AUS findings will most likely dictate the number of years) and tax return requirements (basically the same change - it is now dependent on AUS findings at the underwriter's discretion).

PHH echoed FHA's changes, adjusting its maximum CLTV and mortgage limits for refinance transactions starting on the 7th. "For rate/term refinances (not streamlined or cash out), FHA will be limiting the maximum CLTV to 97.75% (before MIP is rolled in). For rate/term and cash out transactions, the combined loan amount of the first mortgage and any subordinate lien may not exceed the statutory limit for the area."

AmTrust notified clients that all Rate/Term refinance transactions require a Tangible Net Benefit Worksheet to be fully executed by all borrowers and the client, and be submitted with the credit package for loan approval.

Union Bank adjusted its policy for second appraisals. "In situations where only one appraisal was required at loan submission based on the loan amount and LTV, but the appraisal comes in low and a second appraisal would now be required because the LTV is greater than 60%; if the LTV based on the lower appraised value is less than or equal to 65%, a desk review ordered by Union Bank is acceptable in lieu of a second appraisal." For its "Portfolio Express" program, "only one appraisal and a desk review ordered by Union Bank is required if the loan amount is less than or equal to $4,000,000 and the balance of the borrower's existing loan (borrowers are paying all closing costs out of pocket)".

Starting today Mountain West Financial tweaked its guidelines for the pricing of FHA and VA streamline refinance transactions. "Maximum net price available to lock is 104.00 Rebate in excess of 3.00 must be used for borrower costs Total originator compensation is limited to 3 points + $900 of fees  Total MWF fees for streamline refinances is $495."

Some folks out there find the most amazing programs with, I assume, private investors. Here's one offered by Right Start Mortgage, through AE Carlos Marenco. Cell 909-728-2455, e-mail With a motto like "No Pay Stubs? No Tax Returns? No Problem", Right Start Mortgage looks like it is signing up brokers that are interested in doing loans with only a written VOE with no signed 4506. And the large investors will be interested to know, "Also, if you have a deal that is with BofA , Wells Fargo, or any other major lender that is taking too much time to get closed, we can use that appraisal." One can just shake their head...

Yesterday we learned that U.S. home builder sentiment fell for a third straight month in August to its lowest level in nearly 1-1/2 years, pointing to a weak housing market as the economic recovery loses steam, and our 10-year yield dropped to a 16-month low, closing below 2.60%. $1.8 billion in MBS's were sold, mostly 3.5's and 4%. Fannie 4's finished the day better by about .125. We have learned this morning that the Producer Price Index was +.2 in July, ex-food & energy it was +.3%, and year over year it was +4.2%. Housing Starts were +1.7% versus a revised number last month. We find the 10-yr yield up to 2.632% and mortgages about 25bps worse. . Ahead of us we have the Treasury hosting a summit on how to repair the mortgage-finance system.  Some consensus points have emerged, including that any rewrite should include an explicit government guarantee for mortgage investors against a catastrophic collapse. The press wants answers now, but hammering out the details will take months or years.

IT'S SO HOT IN GEORGIA ....... ....the birds have to use potholders to pull the worms out of the ground. ....the trees are whistling for the dogs. ....the best parking place is determined by shade instead of distance. water comes from both taps. can make sun tea instantly. learn that a seat belt buckle makes a pretty good branding iron. ....the temperature drops below 95 F and you feel a little chilly. discover that in July it only takes two fingers to steer your car. discover that you can get sunburned through your car window. actually burn your hand opening the car door. break into a sweat the instant you step outside at 7:30 A.M. ....your biggest bicycle wreck fear is, "What if I get knocked out and end up lying on the pavement and cook to death"? realize that asphalt has a liquid stage. ....the potatoes cook underground, so all you have to do is pull one out and add butter. ....the cows are giving evaporated milk. are feeding their chickens crushed ice to keep them from laying boiled eggs.

 IT'S SO DRY IN GEORGIA............ That the Baptist are starting to baptize by sprinkling, The Methodists are using wet-wipes, Presbyterians are giving rain checks, And the Catholics are praying for the wine to turn back into water!