There's a way of transferring funds that is even faster than electronic banking. It's called "marriage".

Since the dawn of the mortgage pipeline, probably during the Paleozoic Era, companies who are concerned about managing their risk have struggled with the issue of how best to keep it clean. Specifically, what is the best way to eliminate expired locked loans, or loans that have already closed somewhere else, in their pipeline? As anyone in Secondary knows, hedging a loan that won't fund makes no sense whatsoever, but it is rarely a priority for agents to cancel out loans on their own. Many wholesalers have specific policies designed to limit "excess baggage", and companies typically put in an automatic system to gradually phase out including loans that haven't moved through the pipeline in timely manner.

The latest change comes from Wells Fargo, although they mainly address lock extensions. Back on 11/9 "for all loans, if you wish to extend the expiration date on a loan, you must lock the loan in order for the commitment to be extended. Wells Fargo Wholesale Lending will no longer allow the submission of updated documentation to extend the commitment on unlocked loans. Note that a request to extend the term of the commitment may require a re-underwrite to ensure compliance with other policy requirements, including document age requirements, as addressed below." And starting this week they told clients, "Unlocked pipeline loans with expired commitments will be cancelled. Locked pipeline loans with expired commitments will be cancelled once the lock expires, unless you provide satisfactory documentation in a timely manner to extend the commitment prior to the lock expiration date." They also tweaked their age requirements for credit documents. "120 days for existing single family and 2-4 unit homes and existing condos and cooperatives (co-ops)."

MGIC is expanding their guidelines for retail originations in "Nonrestricted and Tier One Markets". In addition, MGIC moved seven markets from Tier One to Nonrestricted effective on Monday, and the underwriting summary posted on their website next week. How does MGIC define a "retail origination"? "Loans for which the following loan origination tasks are all performed by the same entity which is also the Insured: taking the loan application, processing the loan application, underwriting the loan, and funding & closing the loan." In addition, if the loan involves a Mortgage Service Provider (MSP), the MSP does not take the loan application, and is paid for its services on an arms-length negotiated fee basis and payment of fees are not contingent upon the loan's approval or closing.

While we are on the topic of mortgage insurance, Wells Fargo's wholesale clients were greeted with a long list of MI-related changes. Too long to list here, these included a maximum 80% LTV for loans with non-occupant co-borrowers, maximum LTV of 80% with property inspection waiver/property inspection alternative, MI changes for properties with more than 10 acres and LTV's greater than 80, condominium project approval requirements, MI-related maximum CLTV for LTVs greater than 80% and in a Declining Market, policies for documenting and qualifying income, etc. Please refer to the actual announcement for the many details.

For fans of non-Fannie & Freddie products this is a step in the right direction. Comerica Bank changed their "Wealth Management Relationship" criteria so that those seeking access to programs have less of a hurdle to overcome (like I said, it is a step). All one of their client's has to do is meet one of the following criteria: Comerica deposits of $250,000 or more and/or loans of $500,000 or more (excluding equity and mortgage products), current Comerica Trust or Investment Advisory relationship - no minimum dollar amount, $1 million in investable assets, including liquid assets and 401(k) balances, $500,000 in household income, employee of an individual, business or entity which meets #1 above and where the employee has a minimum of $500,000 in investable assets (including liquid or 401(k )balances) or $250,000 in household income.

Ginnie Mae came out with its buyout data for October 2009 late Wednesday, and analysts were quick to point out that buyout rates picked up for GNMA 5.5's (containing 6% loans). For higher rates the buyout rates dropped slightly, especially for buydown loans. Why is any of this important? Investors in FHA and VA loans closely follow these statistics so that it helps them forecast the performance of their pools.

Thank you to Scott from First Priority who sent me the recent HUD letters on condominiums:

There are lots of stories in the press about low mortgage rates. And they are/were low! Part of this is due to the Federal Reserve's MBS buying program, which last week was a net buyer of $16 billion agency MBS (the same as the previous week). The YTD purchases of agency MBS is now at $1,055 billion. But all rates were hit yesterday by a combination of Jobless Claims dropping and the auction announcement for next week. The US will sell $74 billion of notes and bonds. Don't be shy about bidding on $40 billion of 3-yr notes; $21 billion of 10-yr notes, and $13 billion of 30-yr bonds.

Overnight rates were relatively quiet, awaiting this morning's unemployment data. Forecasts still called for nonfarm payrolls to drop 100,000 jobs with the unemployment rate unchanged at  10.2%. However, the Labor Department said that nonfarm payroll only dropped 11,000 jobs in November, and the unemployment rate declined to 10%. In addition, October's declines were revised from -190,000 to 110,000. Average hourly earnings rose by 0.1%, or $0.01, to $18.74 and the average workweek rose by 0.2 hour to 33.2 hours. As you'd expect, after the news the equity markets were jubilant while our bond markets took it on the chin: the yield on the 10-yr hit 3.50% (as I write this it is back down to 3.47%) and 30-yr mortgage prices are worse by between .250 and .50, depending on the coupon.

An Irishman, a Mexican and a Blonde Guy were doing construction work on scaffolding on the 20th floor of a building. They were eating lunch and the Irishman said, "Corned beef and cabbage! If I get corned beef and cabbage one more time for lunch, I'm going to jump off this building."

The Mexican opened his lunch box and exclaimed, "Burritos again! If I get burritos one more time I'm going to jump off, too."

The blonde opened his lunch and said, "Bologna again! If I get a bologna sandwich one more time, I'm jumping too."

The next day, the Irishman opened his lunch box, saw corned beef and cabbage, and jumped to his death.

The Mexican opened his lunch, saw a burrito, and jumped, too.

The blonde guy opened his lunch, saw the bologna and jumped to his death as well.

At the funeral, the Irishman's wife was weeping. She said, "If I'd known how really tired he was of corned beef and cabbage, I never would have given it to him again!"

The Mexican's wife also wept and said, "I could have given him tacos or enchiladas! I didn't realize he hated burritos so much."

Everyone turned and stared at the blonde's wife. The blonde's wife said, "Don't look at me. He always made his own lunch."