Men have always wanted a manual for women. (I am sure somehow, that just like the manuals for cell phones and cameras, we'd flip through and look for the "Quick Start Up" section and only read that. And then, just like cameras and cell phones, we'd only use 10% of the available functions.) And for women, well...see the joke at the end. Where am I going with this? Yesterday the commentary noted that two separate guides, intended for use by state examiners, are out. Not to be outdone, and in spite of the nominee's confirmation being held up due to politics, the CFPB has come out with its own supervision manual that is definitely worth a gander (thank you Dan S.).

Companies are continuing to hire. Down in Northern California, California Mortgage Advisors is continuing to grow its business and is hiring a full range of production staff: underwriters, doc drawers, processors, and Territory Managers who would help continue to expand their branch network.  "Currently CMA has 10 branches and will originate over 1.6 billion this year.  For potential branches they offer a full product mix (FHA, VA, Conventional and Jumbo), one of the most aggressive compensation and profit models and a very supportive culture."  If you know of anyone who might be interested they should contact Chris Perez at

And in the South and Mid-Atlantic area, Tennessee, Alabama, and Georgia, First Community Mortgage is expanding. FCM is a full service mortgage lender with retail and wholesale operations, is growing in Tennessee, Alabama, and Georgia, and is also seeking someone to head up secondary pricing to "help develop our business and maximize pricing opportunities and efficiencies." FCM is a wholly owned subsidiary of First Community Bank of Bedford County located in Shelbyville, TN, and is expanding its wholesale operations into NC, VA and KY. FCM is also actively looking for wholesale AE's in these areas as well. For more information or to send a resume contact Keith Canter at

Huh? We have burdensome regulations in mortgage banking? For companies doing business in Florida: Florida's Office of Financial Regulation has asked MBA to inquire of its members regarding inefficient and costly regulations that can be removed.  The original deadline has been extended to this Thursday, October 20.  If your company does business in Florida, please review this letter, and send any comments or suggestions to Chelsea Crucitti at the MBA: Here is the letter.

The STRATMOR Group completed a study "to better understand loan loss reserves on current production, understand general calculation methodology, ascertain average loan loss reserves being recorded in 2011, and determine the frequency of change/adjustment." Companies know that a study like this can be complicated by factors such as extra reserves are likely be recorded on current production to cover possible legacy loan losses, differences in investor reps and warrants between companies, fraud loss insurance may be in place for some lenders but not others, early payoff  ("EPO") losses are typically "baked in" to the reserve calculation; loss exposure varies based on investor agreements, global settlements may have been negotiated; while this should not impact reserves on current production, it may decrease the component used to cover legacy losses. STRATMOR found that, among the banks and mortgage banks that participated, 75% of lenders use vintage analysis to support reserve calculations although they admit that experience with pre-2009 loans is not a good predictor of go-forward losses. "Our MBA/STRATMOR Peer Group average loan loss was 11 bps in 2010 for all groups, and Richey May & Co., a CPA firm active in mortgage banking, estimated that 2010 loan losses averaged around 13 bps for their client base." Comments by STRATMOR's respondents included, "2006 and 2007 were the big loss years for 2010.  Most of 2006 is through, and 2007 appeared to be slowly winding down.  2008 had some issues, but insignificant compared to 2006 and 2007" and "Once we achieve a reserve amount equal to 7 bps of a branch's estimated annual production we discontinue increasing the reserve for that branch." And questions about the survey can be sent to Jim Cameron at

Yesterday the commentary published a question about which investors were purchasing test cases. The responses I received included, in alphabetical order, Affiliated, Citi, Franklin American, GMAC, Plaza, SunTrust, and U.S. Bank. I am sure that there are more, but apparently the policy is alive and well.
The Mortgage Bankers Association came out with its usual weekly index: mortgage applications dropped 15% last week, with refinancing down 17% and purchases down almost 9%. Per the MBA, purchase apps are the lowest they've been since 1996, and the share of applicants refinancing slipped to about 78%. But one should know that the MBA recently expanded and enhanced its Weekly Application Survey. Expanded is right - there is quite a bit of information.  "We have a larger sample, report on more rates (including a 30-year jumbo), and collect and report more detailed information.  In addition, we are now sending to our subscribers a monthly report showing app trends by state, as well as some compositional detail nationally." This information is only available to subscribers. Here's a link to the Weekly Applications Survey page on the MBA site. On the left is a link, "Click here to view sample report," which has the July version of the Monthly Profile.  The page also contains a link to "Presentation Materials..." which describes the changes and enhancements to the weekly survey.  If anyone has questions, you can write to

Usually I don't repeat foreclosure numbers, for a variety of reasons. But the latest numbers were so bad I had to say something: the number of notices of default jumps 25.9% from the second quarter. An estimated 71,275 notices of default were filed against California properties during the three months that ended Sept. 30, with some properties receiving multiple notices because they had more than one loan, according to DataQuick. Experts say a backlog of distressed properties built up because of the numerous investigations into foreclosure and mortgage-servicing practices. And all of this in the middle of the negotiations between the state attorneys general and the large servicers. Besides California, New York, Delaware, Nevada, Massachusetts, Kentucky and Minnesota have signaled that they were unhappy with the direction of negotiations because, they say, the legal release from liability being offered to banks is too broad. New York and Delaware have been cooperating in their own probes separate from the coalition.

Federal officials have been trying to broker a settlement with the five largest mortgage servicers: Ally, BofA, Citi, Chase, and Wells. There was a flurry of GOV.REFI news yesterday in the press, mostly centered on a plan to help some "underwater" borrowers get refinancing assistance. Apparently it sprang forth from the loins of a meeting last week between government negotiators and lenders as part of an effort to settle allegations of questionable foreclosure practices. Reports noted that, "The plan under consideration would make refinancing available to some borrowers whose houses are worth less than their loans, so long as they are current on mortgage payments. The plan would apply only to mortgages owned by the banks. It isn't clear how many of those borrowers would qualify for help. Around 20% of all U.S. mortgages are owned by U.S.-chartered commercial banks; the majority is held by investors in mortgage-backed securities."

So now borrowers will become directly involved in knowing if their loan was placed into a security or not? I can just hear someone in the servicing department explaining that to an underwater borrower! One report noted that there seemed to be nothing "progressive" out of the administration yet, just more "can kicking" strategies. And another noted that the FHFA wants nothing to do with additional credit risk or a larger portfolio. That won't change until after the 2012 elections. That puts the onus on banks and investors to take a hair-cut. The WSJ has the latest mortgage-settlement trial balloon: if (a) you're underwater on your mortgage, and (b) you're current on your mortgage payments, and (c) your mortgage is owned by the bank outright, rather than having been securitized, then you would be given the opportunity to refinance your mortgage at prevailing market rates.

But of course any refinance program would be particularly costly for banks because they would be forced to give up expected interest income on loans for which borrowers are current on their loan payments and, given their payment histories, unlikely to default. Banks can't reduce rates on loans they don't own because the result would be a net loss to the investor. Under the new proposal, banks would refinance certain borrowers who are current on their loan payments, but can't qualify for a traditional refinance because they owe more than their homes are worth. And of course there are all the issues with existing reps & warrants, along with MI questions.

This morning we had the release of Housing Starts, Building Permits, and the Consumer Price Index. (Yesterday's release of the PPI report showed a surprising overall increase of +0.8% vs. estimates of a +0.2% gain. PPI, excluding food and energy, was tamer at +0.2% versus estimates of +0.1% increase.) The CPI was +.3%, year over year it was +3.9%. Housing Starts were surprisingly good, +15%! Building Permits though, were -5%. The market didn't do much of anything yesterday until rumors once again popped up that the EU had increased the bailout fund, at which point stocks rallied and bonds sold off but basically returning to levels unchanged from Monday afternoon. After this news the 10-yr is chopping around 2.19%.

Her Diary:

Tonight, I thought my husband was acting weird. We had made plans to meet at a nice restaurant for dinner. I was shopping with my friends all day long, so I thought he was upset at the fact that I was a bit late, but he made no comment on it. Conversation wasn't flowing, so I suggested that we go somewhere quiet so we could talk. He agreed, but he didn't say much. I asked him what was wrong; He said, 'Nothing.' I asked him if it was my fault that he was upset. He said he wasn't upset, that it had nothing to do with me, and not to worry about it. On the way home, I told him that I loved him. He smiled slightly, and kept driving. I can't explain his behavior I don't know why he didn't say, 'I love you, too.' When we got home, I felt as if I had lost him completely, as if he wanted nothing to do with me anymore.  He just sat there quietly, and watched TV. He continued to seem distant and absent.  Finally, with silence all around us, I decided to go to bed. About 15 minutes later, he came to bed. But I still felt that he was distracted, and his thoughts were somewhere else. He fell asleep - I cried. I don't know what to do. I'm almost sure that his thoughts are with someone else. My life is a disaster.

His Diary:

Boat wouldn't start, can't figure out why.

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at The current blog takes a look at Fannie & Freddie & the FHFA, and the changes they have in the hopper. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.