The scene: a town in Europe in 1350 devastated by the Black Plague, a man walking along crying, "Bring out your dead, bring out your dead..." Scene shows one person being carried out by another, and he straightens up and exclaims, "But I'm not dead yet!" Yes, this is a scene from Monty Python & the Holy Grail (and the person is eventually knocked over the head), but proponents of extending the higher loan limits hope it doesn't play out that way for them. NAR is asking its members to contact their Senators asking them to approve the higher loan limit amendment that is up for debate this week.

The hiring continues with some companies. For example, Texas-based ServiceFirst Mortgage is looking for underwriters and processors with conventional and FHA experience, along with compliance and post-closing staff. ServiceFirst has a book of business that many companies would admire: 90% of it is purchase-based, 100% retail. The company is entirely paperless, and many of its team members work from home, so geographic location is not an obstacle. Resumes should be sent to

With GMAC "scaling back," GMAC reps are trying to hold onto clients. One sent out, "You may or may not have heard rumors over the past few days that GMAC-Ally Bank is exiting the mortgage business.  NOT TRUE. We did realign a segment of our Consumer Financial Channel with our correspondent channel.  Yes, some positions in the sales division of that channel were eliminated.  Approximately 16 individuals were affected, not "the hundreds" as reported in the media. The wholesale channel is very committed to growth. We have confirmation that we will be participating in HARP by month end AND we are looking into providing you lead sources for those loans currently serviced by GMAC. We have a major initiative to streamline our web based system targeted for the first quarter of 2012. I am aware that competitors will gladly try to exploit the news and create 'the fear factor' but I want to be clear that GMAC is staying in the mortgage business."

As lenders exit correspondent channels, or scale back, others are only too willing to enter the biz. One example is Weststar, who recently announced a correspondent channel buying One Time Close FHA loans, 620-639 FHA FICO loans, Manufactured homes (Conv & FHA), and limited/no overlay FNMA loans. This month it began offering "Delegation Exemptions" "allowing our delegated correspondent customers to get WMC underwriters to preview elements of their files and remove rep & warrant liability stemming from those elements in the event of repurchase." Like other correspondents, Weststar offers it's pricing through Optimal Blue (although NYLX and Marksman releases are forthcoming). More information is available at or write to Matt Teskey at

Another company being watched is MGIC after hedge fund manager Kyle Bass, here in Dallas bought a 4.9% stake in MGIC Investment Corp, according to federal filings. He said on Monday the bet reflected his view that the housing market's losses had largely been absorbed. "You can see that the pig has moved through the python in terms of U.S. housing losses," he said.

Remember when borrowers would refinance and actually take cash out? In the third quarter, per Freddie Mac's numbers, 82% did not. In fact, of those who refinanced, 44% maintained approximately the same loan amount and 37% reduced the principal balance - only 18% increased their loan by more than 5%, Freddie Mac's definition of cash out.

No risk, no reward. "A proposal floated by the Obama administration and Freddie Mac to induce private mortgage investors back into the single-family loan industry likely would need to offer double-digit yields to entice buyers, analysts say. The approach, which is still in the conceptual study phase, would have Fannie & Freddie sell single family mortgage securitizations of which a small slice (5-10%) would be sold without a government guarantee. Investors buying the subordinated security would be the first to take a loss if mortgages in the package default. To attract these investors, Freddie and Fannie would need to offer a higher yield." No kidding! - More

HARP 2.0 input continues ahead of the 11/15 agency guideline release. "The suggested changes to HARP contained in the FHFA press release are a start but contain flaws. These flaws can easily be remedied. 1) The plan calls for only loans purchased by FNMA and FHLMC before May 31, 2009 to be eligible. Why leave behind those who purchased since then and now have what may be 85% loan to value ratios? It is not the case that the effects of the mortgage mess ended on May 31, 2009. 2) The offering of better LLPA (loan level price adjustments) for 15 year mortgages than for 30 year mortgages is a macroeconomic mistake. Unless we can increase GDP we will continue to have large deficits and high unemployment. Why induce people to 15 year mortgages? Allowing the same reduced LLPA's for 30 year as for 15 year gives people a lower mortgage payment (because of the longer amortization) and that translates into more disposable income. More disposable income is a necessary condition for GDP growth. GDP will grow only when the consumer starts spending more."

But for loan officers, HARP 2.0 is a bit of a mystery. One wrote, "Now for a little realty check, just because the government bequeaths it does not mean it is going to happen. Currently the plan says we can go to 125% LTV, however if you call around you will find very few lenders going to 125%. Most are at 105% some as low as 95%, so we are a bit skeptical at this point. A big stumbling block for lenders is right now they may be sitting on a potential bomb of a loan that is underwater, yet paying. They would love to pass that potential bomb off to another lender; HOWEVER they do not want to take in a bigger bomb (or a higher LTV loan) without some assurances from the GSE's that they are going to eat it if the new bomb explodes on them. Like the proverbial hot potatoes: just pass them around. And think of what a brilliant idea it would be if the plan somehow included borrowers who, on a limited basis, hadn't been making all their payments?" And one Wall Street researcher wrote, "The changes should increase the HARP response rate, but we believe that prepayments will remain contained by capacity constraints and lack of competition."

WF's correspondent group, Wells Fargo Funding, sent a reminder out to its correspondent clients that it will require its sellers to use the Uniform Collateral Data Portal (UCDP: a Web-based portal which allows lenders and their designated agents to electronically submit appraisal reports for conventional loans). Turn it on for loans on or after December 1, but remember that this requirement is not applicable for conventional Conforming Loans that do not require an appraisal report.

Wells also reminded correspondents that its Servicing Released Premium (SRP) schedules are provided directly to Sellers. "In instances where a Seller has a relationship with a vendor(s) who provides product eligibility and pricing engine support, Sellers are responsible for working directly with their vendors to incorporate Service Release Premiums into impacted systems and processes for best execution." In other words, don't call John Stumpf if your pricing engine messes up the SRP grid.

Franklin American recently sent out a series of announcements. For example, for VA products it relaxed credit requirements to state that "only a 3 year waiting period is required for
borrowers who have previously completed a short sale, short refinance or restructured loan. The FAMC requirement for the Broker Fee Agreement on all third party originated loans will no longer be a required document. FAMC also echoed the changes to the flood disclosure starting 12/1 for the RESPA Servicing Disclosure Statement and the Notice of Special Flood Hazard. "Notice of Special Flood Hazards and Availability of Federal Disaster Relief Assistance" which advises borrower(s) that upon transfer, assignment or sale of their loan a servicer may require an increased amount of flood coverage. These two disclosures must be provided to the borrower(s) at or before loan settlement for ALL loans, regardless of whether the property is located in a special flood hazard area or not.

Citi spread the word to its broker clients that it "is no longer posting the current Approved Settlement Agent list on the Citi Broker Website, with the exception of the New York Settlement Agent List which continues to be posted for NY transactions only...If you are using a new settlement agent (one that you have not used before) you must ensure that the settlement agent is approved by submitting a completed Settlement Agent Approval Request Form."

Bank of America issued an update on their Correspondent Lending Channel Closures. They also released a product update on the Installment Land Contracts for Conventional Loans

GMAC Bank Correspondent Funding (GMACB) Approved issued a note saying that the VA has recently expanded the information that is listed on the VA Certificate of Eligibility (COE). A valid COE is required for all VA purchase, rate and term, and Cash-out Refinance loans to verify veteran eligibility for the VA Home Loan program

And SunTrust declared Minnesota properties are eligible for the Key Loan Program. They also issued a bulletin concerning the VA modifying the COE, and announced possible VA Funding Fee changes for veterans. SunTrust announced the release of their Uniform Collateral Data Portal. UCDP is a new web portal designed to accept the electronic submission of appraisal data.

Yesterday was a very quiet day in the markets with no economic news here, and MBS prices were nearly unchanged although the 10-yr improved nearly .5 in price and dropped to a 1.99% yield. Mortgage banker selling was relatively light. Today is another day of no significant economic reports, although we do have the first chunk of this week's $72 billion refunding (a sale of $32 billion 3-yr notes). So once again we have European events nudging rates here: the 10-yr yield is slightly higher at 2.03% and MBS prices are worse by .125. - Current MBS Prices

She's sitting at the table with her gourmet coffee.
Her son is on the cover of the Wheaties box.
Her daughter is on the cover of Business Week.
Her boyfriend is on the cover of Playgirl.
And her ex-husband is on the back of the milk carton.

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 the impact of HARP 2.0 and the differences in the agency's programs. 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.