Sometimes in the financial markets there is just too much going on to comprehend. For example, yesterday the Fed (the U.S. Central Bank),  in conjunction with the European, Canadian, England, Japan, and the Swiss National Banks arranged for a dollar Swap agreement lasting  through the middle of 2013 to make it easier for the European banks to get dollars by borrowing from their Central Bank,  the ECB.  This removes the liquidity fear that when a European bank needed to borrow dollars in the overnight market, the international reserve currency, they could do so through their Central Bank at reasonable rates. The lack of liquidity in 2008 is what precipitated the collapse of Lehman Bros. and that triggered the panic banking crisis in our country. But remember that liquidity is different than credit!

So what happened? The DOW rallied nearly 500 points, mortgage prices barely budged, and in fact some lenders/investors had rate improvements! Treasury rates went up very slightly but it is easy to see how financial news like this can jar markets, often more so than weekly or many of the monthly numbers that are released here in the United States. No doubt about it: MBS prices are benefitting from solid demand and limited supply - just ask any originator.

In fact, Ginnie Mae's president Ted Tozer, who I was fortunate to meet at an MBA conference a few weeks ago, noted that Ginnie Mae bonds may be near a peak in price relative to Fannie Mae and Freddie Mac MBS's but foreign investors and others demanding an explicit government guarantee will continue to bolster demand. Per Mr. Tozer, Investors that buy Ginnie Mae bonds are beginning to find that the favorable capital treatment on the federally backed securities may be fully offset by the higher prices that they must pay.

With that in mind, companies continue to expand: 42-yr old retail lender Mission Hills Mortgage Bankers is seeking a National Operations Manager. MHMB, with its HQ in Orange County, is currently in the process of being acquired by Pacific Trust Bank and future plans call for aggressive expansion throughout the Western United States. The position is responsible for driving critical technology and process flow initiatives in addition to the oversight of operations processing/credit risk management functions throughout the company's retail network. Interested parties should forward a resume (with salary history) to

Other news turned some heads this month. The CEO of Home Savings of America sent out a note saying, in part, "Even though many of you have worked very hard on planning the integration with Cornerstone over the past six months, we were informed that Moelis decided to pull out of the proposed capital raise and merger with Cornerstone due to concerns about the general economy.  So your management team will focus all of its efforts on other capital raising options in our ongoing effort to strengthen our balance sheet and meet our regulatory obligations. While this is a temporary setback, this does not impact the direction in which we are heading. Even after the announcement of the signing of definitive agreements with Moelis and Cornerstone earlier this year, your management team continued to search out other capital raising opportunities, and in fact, is currently in discussions with several other investor groups who want to explore putting additional capital into our institution. We will also continue a dialogue with Cornerstone to try to find a way the two organizations can work together in the future."

Today is December 1 which means that Uniform Collateral Data Portal is upon us. It requires investors to deliver appraisals to GSEs in a format (xml) where the data can be read and stored in a database. All conventional applications taken after December 1st are required to be UCDP compliant and bankers will be held responsible for the appraisal conversion by the GSE's. Ops departments everywhere had better have created a policy or protocol to ensure the UCDP provisions are understood and met. As Frank Fiore with MatchBox LLC wrote, "The marketplace is requiring appraisals be UCDP compliant and converting these files should not be difficult for the large AMCs thanks to updated software and technology.  There are also conversion tools offered by a few independent vendors should a lender decide to handle the conversion in-house.  Some LOS's are even converting the appraisal into the compliant format upon upload into the system."

Not only is today a big day for UCDP, but also for HARP 2.0. But exactly who is rolling out any changes? Fifth Third Mortgage posted this information for its brokers but stated, "product guidelines will not be changing at this time":

Bank of Oklahoma, however, including Bank of Texas, Colorado State Bank and Trust, Bank of Arizona, Bank of Albuquerque, Bank of Kansas City and Bank of Arkansas will be rolling out the HARP 2.0 program to their customers today. (I can't imagine the effort that this took, given they only had 15 days to react from the GSE's announcement on Nov 15th to meet the Dec 1st deadline.)

The same with Flagstar: "In response to the Federal Housing Finance Agency's (FHFA's) announcement regarding enhancements to the Home Affordable Refinance Program, Flagstar Bank is pleased to introduce two new programs. The new HARP II programs, which will soon be added to our Sellers Guide, Freddie Mac Relief Refinance II and Freddie Mac Relief Open Access II will be enhanced versions of the current Freddie Mac Relief Refinance and Freddie Mac Relief Open Access. The Fannie Mae DU Refi Plus program will remain unchanged until Desktop Underwriter is updated in March of 2012."

"US Bank Bloomington EZD has posted an update to its guidelines which applies to its DU Refi Plus / FHLMC Open Access product line(s)" per pricing engine Optimal Blue.

Wells Fargo's wholesale group focused on the FHA changes and told its brokers that, "The overall high-cost limit for FHA loans will revert to $729,750 and the limits in certain counties will be increased from 115% to 125% of the median home price in the area. The floor will remain at $271,050. The high-cost loan limits for FHA are expected to expire Dec. 31, 2013. The following things MUST happen before Wells Fargo can accept applications for FHA loans at the higher loan limits: FHA must communicate the higher loan limits by county and any other requirements to mortgage lenders. And Wells Fargo must identify impacts caused by FHA's requirements and implement the changes." "Until further notice, continue using the existing FHA loan limits."

Chase spread the word to clients that it's, "Extended Rate Lock Program has been enhanced to include the Non-Agency Fixed product.  Chase now requires all underwriting and funding suspense conditions be delivered using ChaseLoanManager Imaged Document Delivery. Conditions submitted through iSentry Secure Email, email, or fax after January 2, 2012 will not be processed."

GMAC told clients that "the Client Guide has been updated to clarify that the CLTV/HCLTV must be calculated using the amount designated on the recorded lien (mortgage/deed of trust) and may not be based on any modified amount designated by the lender in writing. The investor updated the resubmission policy for its FHA Program saying that any changes to the property that negatively affect value must be resubmitted to TOTAL Mortgage Scorecard." In addition, GMACB will be extending the existing Jumbo Fixed and ARM incentives through December 2011. These incentives are purchase loans with LTV <=75 for +.250 for both Fixed and ARM. FICO >=720 and LTV <=70% for +.250 for Jumbo Fixed. FICO >=720 and LTV <=70 for +.500 and FICO >=720 and LTV >70 & <=75% +.250 for Jumbo ARMs.

Plaza Home Mortgage said, "Due to the requirements for UCDP compliance, Plaza will temporarily suspend the acceptance of transferred appraisals for all loans submitted on or after December 1. Conventional loans in Plaza's pipeline that have a transferred appraisal prior to December 1 will still be permitted subject to Plaza's review and acceptance of the transferred appraisal. Plaza will continue to allow appraisals to be transferred to other lenders. Plaza will continue to accept transferred appraisals for all government loans. For additional information regarding Plaza's appraisal transfer policy, contact your Account Executive." Please link here to read Plaza's policy in its entirety:

As mentioned in the opening paragraphs, yesterday was quite a day for stocks, but relatively quiet in the bond market - which of course includes mortgage-backed securities. The coordinated moves by 5 Central Banks to reduce interest rates on dollar swaps, along with China's reduction on reserve ratios for bank lending by 50bps, and of course the expansion of EFSFs capacity had the market feeling very bulled up. Mortgage prices did very well relative to Treasury prices as dealers reported buying from money managers, the Fed, and some month-end buying. But the big news was the bank actions to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity. (Oh, and don't forget that NAR's Pending Home Sales took a big jump in October, surging over 10% above October figures and ending 9% higher than one year earlier.)

Today we have more gyrations from Europe, of course, which were basically the same as the gyrations months ago and will probably be the same as months from now. Liquidity was helped yesterday, but nothing is done to help solve the basic problems. Here in the U.S we've had Initial Jobless Claims/Continuing Claims (up to 402k from a revised 396k, higher than expected). And later today we'll see Construction Spending and an ISM Manufacturing number, and tomorrow the big unemployment data. In the early going the 10-yr is up to 2.13% and MBS prices could be worse by as much as .250.

Paddy says to Mick, "Christmas is on a Friday this year".
Mick says, "Let's hope it's not the 13th."

Paddy & Mick find three hand grenades, so they take them to a police station.
Mick: "What if one explodes before we get there?"

Paddy: "We'll lie and say we only found two."

Paddy's in the bathroom and Murphy shouts to him, "Did you find the shampoo?"

Paddy says, "Yes but it's for dry hair and I've just wet mine."

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at The current blog reminds everyone about how government intervention in the housing market is nothing new. If we forget history, we are doomed to repeat it, and it is important to know the last 15 years of the history of the agencies. 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.