Here we are at 11/11/11: Veterans Day. Veterans Day originated as "Armistice Day" on Nov. 11, 1919, the first anniversary of the end of World War I. Congress passed a resolution in 1926 for an annual observance, and Nov. 11 became a national holiday beginning in 1938. President Dwight D. Eisenhower signed legislation in 1954 to change the name to Veterans Day as a way to honor those who served in all American wars. Per the Census Bureau there are roughly 22 million veterans in the United States, 1.6 million of which are female. 2.4 million are black, 1.2 million are Hispanic. Age-wise, 9 million veterans are 65 years old or older, while 1.7 million are younger than 35. War-wise, 7.6 million are Vietnam-era, 4.8 served during the Gulf War (1990 to the present), 2.1 million from WW II (including my father), 2.6 million from the Korean War, and 5.5 million from peacetime only. And for more "fun with numbers," three states have 1 million or more vets: California, Florida, and Texas

Michigan has seen its share of economic ups and downs, and the resulting swings in mortgage lending. Michigan Governor Rick Snyder signed legislation providing harsher penalties to those who knowingly engage in mortgage fraud. The new Michigan laws make mortgage fraud a specific felony, which will enable courts to sentence offenders to both jail time and fines depending on the value of the fraud. Michigan sentencing guidelines were also revised to provide for new penalties, including penalties for notaries that knowingly participate in mortgage fraud. Don't do the time if you can't do the time.

Originators tend to focus on new deals, and those in process, rather than cancelling out loans that went elsewhere. And especially with so many deals in the works, and pipelines swollen, Secondary Marketing departments are trying to keep "stale" loans out of their hedged pipelines, and brokers certainly don't want their quality/pull-through rankings to be incorrectly dinged. I even saw one wholesale rep send this to brokers: "If you have any loans in pipeline that will not be moving forward due to a low appraised value, please e-mail me the name and loan number.  I need to make sure these are denied correctly, to assure they don't count against your Tier Score."

Goldman Sachs has plenty of smart people working there, but it may not be enough to smooth over $15.8 billion in mortgage lawsuits (up from $485 million three months earlier). But Reuters reported that Goldman management slightly increased the estimate of what it may lose on the litigation to $2.6 billion from $2 billion. "The bigger dollar figures come as investors in mortgage-backed bond deals have raced to take legal action or enter settlement negotiations before statutes of limitations expire, and as investors continue to worry about banks' exposure to big lawsuits. Goldman also added three European financial firms to a list of parties that have threatened to sue it, a more fulsome disclosure than some of its peers: HSH Nordbank, Norges Bank Investment Management and IKB Deutsche Industriebank AG. For the whole story:

How 'bout we dip into the mail bag for some recent reader input?

Yesterday the commentary mentioned Fannie & Freddie taking a tough stance on servicer issues, and I received, "We are a very small Fannie Mae servicer and we have already had two cases of 'compensatory fees' for not foreclosing fast enough and missing the proscribed timelines in Fannie Mae's servicing requirements. In the one case that we have paid so far, our fee was several thousand dollars! The other case is pending our appeal (wish us luck).  So, it's not just the big guys who are getting hit. I can't imagine what their 'compensatory fees' must be! Community banks are simply getting killed by the government onslaught."

Mortgage insurance: can't live with it, can't live without it? One MI industry vet wrote, "I felt compelled to comment on: 'Apparently the higher MI prices and tighter underwriting standards of the current environment are enticing.'  Actually the MI prices today are lower than when I started decades ago and are lower than at any point in those years. Regarding the tighter underwriting standards - it depends on one's point of reference. Tighter than the bubble era, yes. But tighter than any point from 1957 leading up to the bubble era, no." Both very good points.

And more on MI: "As much fun as it would be to get into a "never ending he said/she said debate", your industry vet has selective memory. With FICO-driven MI pricing there are some current MI price improvements for high FICO borrowers. These were not available decades ago. I know I was head of pricing for GEMIC decades ago. What's also missing from this vet's comments are the current high FICO floors that were a lot lower before the bust and nonexistent 'decades' ago, as in before FICO was even an accepted standard. As far as underwriting standards are concerned, today the MI's are (rightfully) underwriting with 1980s guidelines (because they were the right guidelines). Now, however, the MI's are also using 21st century AUS systems fed by state-of-the-art real time credit & income information and supported by fraud detection and property valuation systems that were only dreamed of as little as a decade ago. As they say if you say you remember the old days you probably weren't there!

"You had it right, at today's MI rates and at today's MI guidelines the insurance the MI's are writing should be solid gold! The problem is simply: 1) the privately insured market has shrunk exponentially - maybe 20% of its peak, 2) their old books are killing them, 3) they can't raise additional capital like they did in the 80s to our run the problem because their long-term viability is totally dependent upon the GSE's existence - which is anything but certain."

And on LO comp: "I've been in the mortgage business for 25 years, and it perplexes me every time I hear a broker talk about their compensation in terms of they 'had to do so much more work on a file due to , credit scores, gifts, multiple buyers or whatever!' Do they really think that mortgage bankers or bankers don't do the same amount of work? We all know this is not brain surgery to complete 1003's and collect complete documentation.  So why do they pretend it is and the brokers job is so much more deserving of higher compensation? It is clear to me, after recruiting for many years that the broker's work ethic is to fund a couple of loans each month and make the highest compensation, therefore charging the client higher fees, whereas a mortgage banker/bank consultants thrives on volume, controlled compensation, and doing the right thing for the client and the realtor. If anyone is duped on these false premises it is the uninformed realtors who refer their clients to brokers who have 'conned' them into believing that they are the only ones who can 'shop for the best price' and do all the work on the file for their client."

More on LO comp & the payment of bonuses: "How can so many of our direct competitors seemingly ignore the clear intent Dodd/Frank by paying production bonuses through so-called point banks or overage accounts?  Loan Originators seem to be willing to take significant risk and take flight to those opportunities, irrespective of the fact that they may be subject to individual accountability by the regulators, not to mention the brutal and potential door-shutting penalties that could be imposed upon their organization.  What am I missing???"

And this comment about the FHA Streamline program. "If they really want people to be able to refinance, they should keep the 5% rule in place for streamlines but if someone purchased or last refinanced at .50% on their monthly mortgage insurance then they should be able to do a streamline at that .50%.  And so on with the .90% or 1.15%. We want to help the people but we don't want it to hurt our pocketbooks so what do we do."

Darryl R. from Illinois writes, on HARP 2.0, "Do we know if there is even any thought of the date being moved that Fannie and Freddie purchased the loan?  Not sure why they believe prolonging the program would be better than moving the date.  And if you can think of prolonging the program why wouldn't you think of moving the date as well.  Aren't we talking about giving as many people as possible the opportunity to refinance?  Just doesn't make any sense. If not who can someone try to write to get this point recognized."

It is the VETERAN, not the preacher, who has given us freedom of religion.
It is the VETERAN, not the reporter, who has given us freedom of the press.
It is the VETERAN, not the poet, who has given us freedom of speech.
It is the VETERAN, not the campus organizer, who has given us freedom to assemble.
It is the VETERAN, not the lawyer, who has given us the right to a fair trial.
It is the VETERAN, not the politician, who has given us the right to vote.
It is the VETERAN who salutes the Flag.
It is the VETERAN who serves under the Flag.

Bless them all.

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.