Given the confusion over compliance issues, I received notes yesterday from a few third party vendors.  One producer wrote, "Encompass appears to be one of the best originating software tools that I have seen to give alerts to avoid falling out of compliance." A few others wrote to tell me that PCLender created a resource document as a matrix that lists 20 known compliance issues, forms affected, and solutions. One picture is worth a thousand words: TAKE A LOOK. And I am sure there are many others.

AmTrust Mortgage Banking didn't take long in working with New York Community Bank in cranking up their production machine. Starting today "AmTrust Mortgage Banking will resume accepting new loan registrations and rate-lock commitments, operating as a service provided by New York Community Bank." Apparently NYCB is entering the single family finance business.

Is your company making more or less than $902 on each loan? The MBAA reports that independent mortgage bankers made about 50 basis points, or $902, on average, during the third quarter. This is down from the $1,358 profit during the second quarter. The lenders which make up the MBAA's study also report that their volumes dropped 33%, so not only did they make less money per loan, but they were doing fewer of them. Of special note to secondary marketing staff was the average pull-through: 72% (basically unchanged from the second quarter's 73%). The net cost to originate (which includes all production operating expenses and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread) rose to $1,950 per loan in the third quarter 2009, from $1,295 per loan in the second quarter. For more tidbits to throw at your staff: READ THIS.

New York just enacted a new law that expands on the governor's subprime lending reform law enacted last year in an attempt to assist homeowners on the verge of foreclosure and minimize the impacts foreclosures have on communities. It expands the 90-day foreclosure notice currently sent for subprime loans (however one defines those these days) to all home loans. It also requires the lenders who serve the notice to make a regulatory filing with the Banking Department within three days with specified information to allow it and the Division of Housing and Community Renewal (DHCR) to provide assistance to homeowners. The law expands the mandatory settlement conference to include borrowers of all home loans - not just subprime. The law requires that tenants receive written notice of the change in ownership of the property after foreclosure and allows them to stay for 90 days or the remainder of the lease. Under the law, plaintiffs in a foreclosure action who obtain judgment of foreclosure and sale must keep the foreclosed property. The law also prohibits distressed property consulting services from accepting upfront fees.

Here in California, the CMBA has been following California's DOC (Dept. of Corporations) release of a step-by-step outline of the implementation of SB 36 (CA's implementation of the federal SAFE Act) that includes this 'pre-requisite for license application':  "Demonstrate financial responsibility, character and general fitness such as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly and efficiently."  The CMBA feels, with good reason, that this is pretty subjective. They will look at whether the applicant has been a defendant in a criminal or civil case, look at the status of their DRE license (if applicable), any bankruptcies, were they refused any bonds, and yes, run their credit.  But at this point they are feeling their way along on this subject, and this is not a pass/fail type of thing - it seems like they will look at all this stuff like a resume and make a judgment based on the whole picture, not just one particular piece of it.  HERE is the link to the DOC implementation plan.

When I get really, really bored, and don't have enough to say in the commentary, I know that I can always just cut and paste Fannie's new DU 8.0 guidelines, like the latest stand on bankruptcies: "Loan case files where DU identifies a Chapter 13 bankruptcy that was discharged within the last 24 months; dismissed within the last 48 months; or filed but neither discharged nor dismissed within the last 48 months, will receive a Refer with Caution/IV recommendation. Loan case files where DU identifies a non-Chapter 13 bankruptcy that was filed, discharged, or dismissed within the last 48 months will receive a Refer with Caution/IV recommendation. DU is not able to determine if multiple bankruptcy filings have occurred, due to the manner in which bankruptcies are reported in the credit report. As a result, DU will issue a message when it appears that there may have been multiple bankruptcy filings. This message will list each of the bankruptcies seen on the credit report, and will instruct customers to ensure the loan case file meets the criteria for underwriting loan case files with multiple bankruptcies specified in the Selling Guide." Clear about that?

Are you up to speed on the VA loan limits? Based on county, they are effective for loans closing on or after 1/1 through 12/31/10. Remember that this is based on the closing date and not the funding date, even if the loan is a refinance transaction with a rescission period. The loan limit for any county not appearing on VA's high cost county list remains $417,000. You can see for yourself at the VA SITE  Many investors will not purchase loans closed after December 31, 2009 that exceeds the 2010 loan limits and/or does not provide the 25% guaranty required by the investor.

And while we are talking government loan programs, remember that HUD announced that "FHA-approved lenders are now prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender's staff who is compensated on a commission basis tied to the successful completion of a loan." Unlike the HVCC for conventional loans, FHA does not differentiate between broker and correspondent lenders on the appraiser independence requirement, so everyone (except for DE delegated correspondents) are using appraisal management companies. Darn - I should have listened to my parents because when I was a kid they told me that I should go into the appraisal management business!

Rates had a good day yesterday, as volatility continues to increase and Lock Desks get whipsawed. Jobless Claims were moved rates one way, but then Leading Economic Indicators rose 0.9% in November (more than forecast pushed them another way, and the Philly Fed survey rose to its highest level since April of 2005! The Fed purchased their now-weekly allotment of $16 billion in agency mortgage-backed securities over the past week, and now stands at $1.087 trillion dollars. If the supply of new mortgages is down, and the Fed continues this pace, the logical conclusion is that they're buying older production. From a technical trading aspect, traders were pleased that the 3.62% level has "held" for the yield on the 10-yr Treasury note. Speaking of which, in the absence of any economic news today, the 10-yr yield currently stands at 3.50% and mortgage prices are roughly unchanged.

Big John, a cattle rancher in Texas, has a prize winning bull named Alamo. Every year Alamo wins another blue ribbon.

One year a rancher friend named Luke says "Big John, that bull of yours is so special he ought to be bred so you could have more prize winning bulls."

John thinks this over and decides Luke is right. He consults with his vet, other ranchers, bull breeders, and goes online to find out where the best mate for Alamo might be. Big John determines that the best cow for his bull is in Argentina. He makes arrangements and flies to Argentina, surveys the best breeding cows there, picks one, and has the animal shipped to the ranch in Texas. Then he plans a barbecue to witness the mating of the Argentinean cow with Alamo. He invites Luke and his other ranching friends. The day arrives and all the ranchers have their steaks and beers before gathering for the main event.

Big John lets the new cow out into the pasture near Alamo's pen and then opens the pen gate. Alamo sees the cow and snorts. The cow is grazing peacefully. Alamo makes his was over to the cow and becomes excited.

The cow continues to graze peacefully. Alamo snorts again and tries to mount the cow. The cow sidesteps to the left. Alamo snorts louder, moves toward the cow, and tries to mount her a second time. The cow sidesteps to the right. Alamo snorts louder still, backs up, takes a running start, and attempts to jump on the cow to mate. Sensing the leaping bull, the cow quickly runs off leaving Alamo behind and frustrated. There's a great murmur from the crowd. The host rancher shakes his head.

Luke shouts to his friend, "Say Big John! Did you get that cow from Argentina?"

"How did you know?" replies the prize bull rancher.

"Shucks," says Luke. "My wife is from Argentina."