With the passing of Columbus Day, there are only three days left in 2010 that don't count in the rescission period: Thursday, November 11, Veteran's Day, Thursday, November 25, Thanksgiving Day, and Saturday, December 25, Christmas Day.

Some feedback from the trenches in regard to placing loans based on lender turn times rather than pricing....

"Managing to turn times is a good policy and a sign of the times. But any lender doing it had better remember that they need to make sure their back office is tight - just because the investor isn't reviewing a lender's loans as thorough as they should be doesn't relieve the lender of their reps and warrants." That from a savvy broker.

"I also manage turn times along with price. Many of the big investors are on 15 business day turn time for refi's and we are only sending minimum volume to them to either make sure we meet minimum tier volumes or because they have some niche product." So wrote an industry vet. "We gladly trade .125 or .250 for pumping 'em out in 5 days or less."

"One of our other major concerns with long turn times is 'file erosion' where new credit is needed or other docs that potentially hurts the approval, so speed is critical. I constantly remind my LO's to remember that once they run credit the countdown begins. We would be more challenged with the turn time issue if rates were not in an improving mode."

Aren't you glad that you don't head up the servicing division of a large bank who has not published a moratorium? How many times do you think they're asked by the CEO, "Are you sure everything's fine?" The latest news comes from Washington DC, where President Barack Obama vetoed a foreclosure-related bill, thus making it make it more difficult for banks to complete paperwork and speed the foreclosure process, and could give homeowners more time to rework loans. And news broke last Friday that Bank of America would immediately halt foreclosure sales in all 50 states, a development that for the first time impacts California (CA has a nonjudicial foreclosure process). Other large servicers have frozen foreclosures "only" in the 23 states that have a "judicial foreclosure'' process, citing concerns about how legal documents were processed. And in Houston, Litton Loan Servicing, owned by Goldman Sachs, halted some foreclosures and evictions so it can review its process for handling foreclosures. FULL STORY

One reader wrote, "The borrowers were either making their payments or they weren't. What difference does a form, or a signature, make?" (One could answer that it makes a difference whether or not the bank actually owns the mortgage!) What if there was a nationwide freeze on foreclosure sales and new evictions by all servicers? Most believe that this only delays the inevitable sale of these foreclosed properties, giving the press and the markets something to talk about in the mean time. Whether the servicers clear this up in a few weeks, or a few months, ultimately these foreclosed properties will hit the market some six to twelve months from now and further add to the inventory of unsold homes.

The foreclosure moratorium headlines have taken the publicity away from buybacks - but they're still out there. Opinions vary on the actual cost to lenders, but the time and energy spent in combating them are certainly increasing. Before 2006, most buyback requests involved an early payment default within the first 90 days of the loan being sold. Defaults after 90 days were minimal, and the cost was priced into the loan pool at the time of sale. Even though the industry had years of historical data available, newer loans with stated incomes above 80% LTV, loose documentation guidelines, and pricing models that enticed lenders to place borrowers in loans not in the borrower's best interest made buyback models outdated. In the first quarter of this year, the GSEs forced lenders to repurchase $3.1 billion of mortgages, up 64% from the first quarter of 2009. Additionally, Ginnie Mae pushed back $15.5 billion of loans in the first quarter of 2010 versus $4.9 billion in the first quarter of 2009. And no one expects this to end soon: any loan originated in the last five years that is seriously delinquent or has been foreclosed could come back to the lender in the form of a repurchase demand. The GSEs and MI companies are pushing back to the aggregators - Wells Fargo, Citigroup, Chase, Bank of America, etc. which, in turn are pushing back to the originators - assuming they are still in business.

Here's something that one doesn't see every day. Flagstar told its clients that properties located in Wrightwood, California, "Due to the increased risk of soil liquefaction resulting from shallow soils and steep slopes and the close proximity to the San Andreas, Punch Bowl and Cajon Valley earthquake faults, FHA returns the following case number assignment warning for properties located in Wrightwood, California: Warning: Appraisal problem (unstable soil) for 92397 Wrightwood areas: property specific approval required due to liquefaction." FHA will insure the loan only if the lender obtains a "geotechnical" survey prepared by an engineer or geologist with competency in the field." There are other requirements as well, applying to all clients of Flagstar. In addition, for Flagstar FHA loans on 3-4 unit properties being sold by HUD are ineligible for Flagstar financing.

Clients of Fannie Mae received a notice regarding the revised Home Affordable Modification Program (HAMP) borrower documents on eFannieMae.com: Updated Home Affordable Modification Trial Period Plan Notice, Updated Home Affordable Modification Agreement Cover Letter, Updated Home Affordable Modification Agreement, and Updated Home Affordable Modification Agreement (Form 3157) -- Document Summary.

SunTrust, who like clockwork releases its updates on Friday's, announced that any locks dealing with "Visa Guidelines" after this upcoming Friday will have new requirements for conventional, FHA, and VA loans. And in response to Fannie Mae's recently announced revised guidance addressing when lenders are required to re-underwrite a mortgage loan after the initial underwriting decision has been made, SunTrust announced the revision of its current "no tolerance" policy for Agency DU processed loans. Starting today, SunTrust will implement new DTI tolerance guidelines for DU-processed Agency, Agency Affordable, Agency Plus and DU Refi Plus loan transactions.

Congrats to CMG Mortgage for being the "first non-depository mortgage lender to complete an eNote mortgage transaction on an independent warehouse line and sell the loan directly to a GSE." READ MORE

Correspondent clients of GMAC Bank were given an early Halloween present in the form of lower extension fees.

PMI reminded its patrons that its maximum LTV is now 97%. Anyone looking for 97% had better have a minimum 720 credit score, non-distressed markets only, owner-occupied, # 1 unit, attached and detached, PUDS and condominiums, purchase only, conforming loan amounts, retail only, and fully amortizing fixed-rate and Hybrid ARMs (5/1, 7/1, 10/1).

Bank of America correspondents doing business in Texas took note recently. "The payoff of a Home Improvement junior lien is no longer eligible as a rate/term refinance in Texas. However, loan proceeds used to pay off a legitimate purchase money (a) (5) home improvement loan are acceptable to originate as a rate/term refinance. Additionally, Correspondent Lending clarifies Texas (a) (6) policies to state that DU® Refi Plus, high balance, government loans and agricultural properties used for farms, ranches, orchards, or land-development properties are ineligible for purchase. The Texas Mortgage Loans section of the Representations, Warranties and Covenants guidelines are also updated with requirements for originating Texas (a)(6) loans. Finally, as a reminder, full documentation and full appraisals are always required."

Pinnacle Capital sent out a long list of conforming underwriting guideline changes, covering everything from added bathrooms, business funds documentation, bankruptcy, etc., conforming high balance changes, FHA changes, and so forth. Most are reflective of recent investor changes.

I have never been good at repeatedly and precisely forecasting rates, but there is little reason to believe that rates are going higher in the near future. Minds smarter than mine believe that the relevant question is no longer if or when the Fed is going to launch QE2, but rather what it will look like and what will be the effect on the economy and markets. The FOMC doesn't meet until late November, but the press will be full of news on what traders and economists think. The Fed has made clear that the current level of inflation is not consistent with their mandate, and so the inflation news will be one of the key themes of this week's data docket.

For less conjecture and something more concrete, the bond markets were closed yesterday, leading one to wonder how investors set their prices, besides conservatively. That aside, going back to Friday, $3.4 billion in MBS's crossed the wires, and the supply, combined with bonds selling off, resulted in numerous investor price changes and pushed current coupon mortgages worse about .625 in price as the day came to a close. There were no scheduled economic announcements yesterday and none today of much consequence. Tomorrow we have some import and export price data, but Thursday things heat up with the Producer Price Index, Jobless Claims, and some trade figures. Friday we have the Consumer Price Index, Retail Sales, and one of the University of Michigan surveys. And let's not forget the Treasury auctions today, tomorrow, and Thursday. With things pretty quiet, we find the 10-yr down at 2.35% and rate sheet mortgage prices expected  better by .125-.250.


(Parental discretion advised.)

Paddy has broken his leg and his buddy Mick comes over to see him.

Mick says, "How you doin'?"

Paddy says, "Okay, but do me a favor mate, run upstairs and get me slippers, me feet are freezing."

Mick goes upstairs and sees Paddy's gorgeous 19-year-old twin daughters lying on the bed.

He says, "Your dad's sent me up here to make love to both of you."

They say, "Get away with ya.... prove it."

Mick shouts downstairs, "Paddy, both of 'em?"

Paddy shouts back, "Of course both of 'em, what's the point of just one?"