It is interesting to note some of the high-level quotes this year regarding the crisis in Europe...
- "Spain is not Greece." (Elena Salgado, Spanish Finance minister, Feb. 2010)
- "Portugal is not Greece." (The Economist, 22nd April 2010)
- "Ireland is not in 'Greek Territory.'" (Irish Finance Minister Brian Lenihan)
- "Greece is not Ireland." (George Papaconstantinou, Greek Finance minister, 8th November, 2010)
- "Spain is neither Ireland nor Portugal." (Elena Salgado, Spanish Finance minister, 16 November 2010)
- "Neither Spain nor Portugal is Ireland." (Angel Gurria, Secretary-general OECD, 18th November, 2010.)
As the above suggests, everyone says or does things that they later regret, including mortgage companies. HUD has agreed to a settlement with North Texas lender WR Starkey Mortgage, with Starkey accused of violating HUD/Federal Housing Administration lending guidelines. WR Starkey had several loan origination and underwriting deficiencies, failed to remit upfront mortgage insurance premiums in a timely manner, allowed a terminated third-party branch to originate loans, and violated property flipping guidelines.
And they were not alone. Viewpoint Bank (TX) is to pay HUD a $505k administrative payment for numerous origination and underwriting deficiencies, including failure to ensure that it its employees worked for Viewpoint exclusively, and 1st Alliance Mortgage (TX) will pay HUD $150k for engaging in prohibited branch arrangements, making false certifications on HUD loan applications, and failing to disclose certain employee compensations, among other violations. Lastly, Birmingham Bancorp Mortgage Corp. of West Bloomfield, Mich., is to pay HUD $816k in a settlement for violating the terms of six indemnification agreements after the bank failed to remit payment. MORE DETAILS HERE
In other settlement news, Ally Financial's Residential Capital (ResCap) and certain ResCap subsidiaries have reached an agreement with Fannie Mae to resolve potential repurchase exposure for breaches of selling reps & warrants. "The agreement covers loans serviced by GMAC Mortgage on behalf of Fannie Mae prior to June 30, 2010 and all mortgaged-backed securities that Fannie Mae purchased at various times prior to the settlement, including private label securities. The company had already reserved nearly this amount, but the settlement was for approximately $462 million and releases ResCap and its subsidiaries from liability related to approximately $292 billion of original unpaid principal balance ($84 billion of current UPB) on these loans." ResCap's CEO Marano stated, in part, "With our de-risking initiatives largely complete, the mortgage business will focus predominantly on the origination and servicing of conforming mortgages, which is where the company holds leadership positions." (I like that - "de-risking" with New Year's resolutions coming up.) For more details: HERE IS THE PRESSER
In other corporate news, U.S. Bank Home Mortgage Wholesale Division followed Freddie & Fannie's price increases in their non-HASP fixed rate and ARM FICO/LTV and subordinate financing delivery fees. The risk-based changes will be implemented by USB this Friday. "Loans already locked with the current delivery fees must be closed, disbursed and be delivered to or purchased by USBHM no later than the original lock expiration date. Lock extensions, for loans locked under the current delivery fees, cannot have expiration dates extended beyond January 28, 2011. Any other change to the original loan terms including, LTVs/CTLVs and or FICO score changes will be assessed the new grid pricing fees."
In the state of Massachusetts (unofficial motto: "Our Taxes Are Lower than Sweden's (For Most Tax Brackets)") starting this weekend all refinance transactions must include the revised Massachusetts Borrower's Interest Worksheet. MORE INFO
Mountain West Financial notified brokers that in California, after January 1st, "the Loan Originator must have their Mortgage Loan Originator (MLO) endorsement showing on the California Department of Real Estate Website, with a status of approved and sponsored by a MLO endorsed mortgage company, in order for Mountain West Financial to accept the loan." As an interesting side note, a few folks wrote to me in California saying that this "system" is backed up to the point where it could take months to process all of the loan agent applications.
In terms of the markets, financial news was pretty much dominated by the heavy snowfall reducing the commuter workforce into Manhattan. It was certainly good for testing back-up policies and procedures! We had a good $35 billion 2-yr Treasury note auction despite a lack of players. The yield on the 2-yr, prior to the auction, was at its highest level since June, but afterward the market "caught a flattening rally" according to one trader, and yields improved with the 10-yr better by about .5 in price (3.35%). Mortgage securities tried to improve as well, but only ended the day better by about .125 on very light volume.
There are many creative folks out there, and some of them are not even in mortgage banking: This Machine Fills Up Beer from the Bottom of the Glass