Saturday night, while you were pleasantly dreaming of presents, the cookies for Santa had a different experience.

FHA lenders had reason for cheer and mirth at the end of last week. "In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting FHA Commissioner Carol Galante will extend FHA's temporary waiver of the anti-flipping regulations." With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days, but this rule is waived through December 31, 2012, unless otherwise extended or withdrawn by FHA.  "All other terms of the existing Waiver will remain the same.  The Waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers.  The Waiver continues to be limited to sales meeting the following conditions: All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the Waiver will only apply if the lender meets specific conditions and documents the justification for the increase in value. The Waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program. For FHA technical support, please contact the FHA Resource Center."

Various lenders and investors have fairly specific overlays or restrictions. For example, wholesaler Mountain West Financial states, "It is important to recognize the property as a flip prior to issuing the initial GFE due to the additional appraisal cost and inspections which must be disclosed up-front. If there is a possibility that the transaction involves a property being flipped, MWF recommends that the fees for the two full appraisals, the two 1004D's, and a home inspection be disclosed up-front on the initial GFE to the borrower. Realizing the property is a flip at a later date is not a valid changed circumstance, making it non-allowable to redisclose with the additional fees. All cases in which the sales price of the property is 20 percent or more over and above the seller's acquisition cost will require (2) full appraisals. The appraisals must be ordered through MWF's Appraisal Department via the company's approved FHA appraiser roster."

As we found out last week, g-fees for new agency loans will be going up to pay for the two-month payroll tax cut. Under the "unintended consequences" banner analysts were quick to point out that, given the increase is scheduled for ten years, Fannie Mae and Freddie Mac are not going away any time soon unless the government comes up with the money elsewhere. F&F will not absorb this increase, nor will lenders; it will, of course, be passed on to borrowers. (The bill also will raise the annual insurance premium borrowers pay on FHA loans by one-tenth of a percent.) The increased g-fee, which makes it difficult for Congress to work on efforts to shut down Fannie and Freddie, based on current rates and a $200,000 loan, will cost the agency borrower about $11 per month. "These institutions, which have been so costly to Americans and are so necessary to the housing recovery, should not be the piggy bank for future arbitrary tax policy," Dave Stevens (MBA) said. Due to their government ownership, investors still view their (and FHA/VA) MBS's as safer investments than those offered by private firms. The law allows FHFA to phase in the fee over two years.

Who wouldn't want to spend three days in Arizona in February, lounging around the pool, spending a little time on the golf course sipping a few tall cool ones? What if you could combine that with a NMLS conference? Here's your big chance.

Last week the commentary repeated a note from a reader asking, "How many non-depository mortgage bankers are still giving partial lender credits to borrowers?" and he suggested that, "I think you will find that depository lenders do not allow this practice as it is a violation of Fair Lending and Desperate Impact.  Loan Originators are not allowed to provide anything to one borrower that is not equally available to another, yet loan originators continually increase interest rates and give lender credits as a means to compete." A reader responded, "Perhaps the tide is beginning to change back to the favor of non-depository lending. Depository lenders have one set of rules and one price sheet, and it is not possible to change the credit to the borrower for all are treated equal because there is only one price option. The same holds true with compensation and hence I am sure this is where the real issue is with our fellow bankers." Another wrote, "In the non-depository model, in the open market, all wholesalers have different pricing and adjustments for each given loan.  The only reasonable way to ensure the borrower has the best opportunity at the best price and terms on a given day is to be able to have the ability to adjust borrower credit accordingly.  If I can get my client .25-.375 more going to lender B, C, or D, that's where I am headed."

Followers of the Treasury Department's HAMP program will need to update their shortcuts to the latest version of the HAMP Handbook, Version 3.4. Treasury issued the latest HAMP Handbook, the consolidated guidance related to HAMP for non-GSE mortgage loans, on 12/15. Version 3.4 of the Handbook includes all of the prior Supplemental Directives, including those with effective dates after the publication of Version 3.3. In addition to these updates, Treasury announced that Version 3.4 includes certain clarifications addressing: (1) ARM loan eligibility (to qualify for HAMP, the borrower's monthly mortgage payment ratio prior to the modification must be greater than 31%); (2) Timing of response to initial packages (the servicer must acknowledge receipt of the Initial Package within 10 business days, for example); and (3) "Escalated Cases" and pending litigation. It is best to read it.

For lenders and investors, the news continues. PHH employees may have had a somewhat worrisome weekend. S&P downgraded PHH's ratings, and its new debt yielded 9.5%. Industry vet Joe Garrett noted, "It wouldn't surprise us if you see PHH get out of the correspondent business, or maybe just scale it back." Its stock has certainly taken a tumble.

United Guarantee reminded the industry that, "MI tax deductibility is scheduled to lapse at midnight, December 31. If you have mortgage loans in process that would qualify for MI tax deductibility, now's the time expedite them to retain this benefit for your borrowers who qualify! MI tax deductibility will also lapse for FHA and VA loans, which were extended under the same law as private MI."

Home Savings of America reminds its brokers that, "The Dodd-Frank LO compensation requirements prohibit an originator/broker from receiving dual compensation, i.e. compensation from both the lender and the borrower. Under Lender Paid Broker Compensation, fees paid in advance by the broker, e.g., credit report, appraisal fee, VOE fee, HOA certification, cannot be paid for by the borrower to the originator/broker at closing.  If the borrower is to pay Third party fees, they must be paid by the borrower directly to the vendor at closing through the closing agent. Under Borrower Paid Broker Compensation, fees paid in advance by the broker, e.g. credit report, appraisal fee, VOE fee, HOA cert, can be paid by the borrower to the originator/broker at closing."

Interbank Mortgage Company now allows reduced appraisals for owner occupied condos. Interbank is also changing its Lender Paid Comp settings, and starting 1/1 will allow these options: a floor, a ceiling, a percentage, and a percentage plus flat fee option. A processing fee will not be allowed. "This means, regardless of the lock date, or the date the application is signed by the borrower, the comp plan is effective when Interbank receives the loan."

Texas-based Supreme Lending is expanding its reach, with the recent announcement that the company added five branches in Alabama doing "nearly $500 million in mortgages per year." (Editor's note: See how it is easier to talk about volume than it is profit margins?)

Last week we had a slew of housing news, capped off by learning that New Home Sales for November were up 1.6%, with a median sales price of $214,100 and an average sales price was $242,900. But look at these regional differences: sales in the Northeast fell 26%, the West was -17%, but the Midwest improved by 7.5% and the South by 13%. But there was no holiday cheer for bonds, as 10-yr T-notes moved up to close at 2.03%. But remember it was an early close for the bond market, and trading desks were half-staffed to begin with.

For economic news on this holiday-shortened, lightly-staffed, last week of the year, we don't have much. Today is a Case-Shiller number and Consumer Confidence, Thursday is Jobless Claims and Pending Home Sales, and then on Friday is the Chicago PMI numbers. And so far things seem pretty quiet out there, rate-wise, with prices little changed from Friday's close.

A Missouri farmer in his pickup, drove to a neighbor's, and knocked at the door. A boy, about 9, opened the door.
"Is your Dad home?"
"No sir, he isn't; he went to town."
"Well, is your Mother here?"
"No sir, she went to town with Dad."
"How about your brother, Howard? Is he here?"
"No sir, He went with Mom and Dad."
The rancher stood there for a few minutes, shifting from one foot to the other, and mumbling to himself.
"Is there anything I can do for you? I know where all the tools are, if you want to borrow one, or I can give dad a message."
"Well," said the rancher uncomfortably, "I really wanted to talk to your Dad. It's about your brother Howard getting my daughter, Suzie, pregnant."'
The boy thought for a moment. "You would have to talk to Dad about that. I know he charges $500 for the bull and $50 for the hog, but I don't know how much he charges for Howard."

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at The current blog discusses the time frames for borrowers returning to A-paper status after a short sale or foreclosure. 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.