Lawmakers Solicit Consumer Comments On 7 Financial & Housing Reform Topics
Do you want some input in financial reform? There are many ways to do this, and here is another. The public will have the opportunity to submit written responses to seven questions that will be published in the federal register online at www.regulations.gov. The administration also plans a series of public forums across the country on housing finance reform. The questions are:

1. How should federal housing finance objectives be prioritized in the context of the broader objectives of housing policy?

2. What role should the federal government play in supporting a stable, well-functioning housing finance system and what risks, if any, should the federal government bear in meeting its housing finance objectives?

3. Should the government approach differ across different segments of the market, and if so, how?

4. How should the current organization of the housing finance system be improved?

5. How should the housing finance system support sound market practices?

6. What is the best way for the housing finance system to help ensure consumers are protected from unfair, abusive or deceptive practices?

7. Do housing finance systems in other countries offer insights that can help inform US reform choices?

Top U.S. Loan Agents
“A husband is someone who, after taking the trash out, gives the impression that he just cleaned the whole house.” I think that quote is pretty funny, but it does have a correlation with the mortgage industry. I have heard repeatedly that in the current environment, brokers are doing three times the work for one third the pay compared to past years. Say what you want about this being justified or not, but you might see some names that you recognize on a nationally published list of top originators. The Scotsman Guide has ranked the nation’s top-producing mortgage professionals: Yournamehere?

Organized Bank Protesters
Who says that protesters aren’t organized? Protestors at Syracuse are planning on greeting JPMorgan Chase’s Jamie Dimon, who is speaking there. And protesters have an actual website for activities at the Wells Fargo shareholders meeting, complete with entertainment, food, the groups involved, etc.

Bank of America Earnings
At Bank of America, just like at JPMorgan Chase, credit and income is improving! Bank of America Corporation reported first-quarter net income of $3.2 billion compared with a net loss of $194 million in the fourth quarter and net income of $4.2 billion a year earlier. The company earned $0.28 per diluted share in the first quarter, up from a loss of $0.60 per share in the fourth quarter and earnings of $0.44 per share in the first quarter of 2009. All in all, analysts were pleased with the results, and the stock has improved on the news in pre-market trading. Interestingly, according to BofA’s president, core loan demand from consumers is slow – smaller companies are not hiring yet. Banks have money to lend, and are willing to do so, but certainly are not loosening up their underwriting criteria.

China Is Largest U.S. Debt Holder At $877b
The Treasury released its “International Capital” report yesterday, nicknamed TIC. China continues to be the largest owner of debt of the United States, although their holdings fell by over $11 billion to $877 billion. Overall, foreigners were net buyers of long-term U.S. financial assets in February.

Does Anyone Believe Rates Are Going To Drop?
If an agent or company is having trouble originating loans in this interest rate environment, the rest of the year might not be much better. We’ve been in a 45 basis point range in the 10-year Treasury for nearly 4 months (3.54-3.99%), and mortgage prices have also been in a narrow range. It seems that a 4% yield on the 10-yr gets us about a 5.25% 30-yr mortgage rate. Does anyone believe that rates are going to drop? The Fed, however, certainly has no reason to raise short term rates, given the current job, housing, and inflation situation here in the US – so don’t look for too much of a move toward the upside.

Philly Fed & Capacity Utilization
Thursday we had the Philly Fed (up from 18.9 to 20.2), Industrial Production (+.9%) and Capacity Utilization after the Initial Jobless Claims number. The reports were mixed, though the back months saw nice upward revisions and Capacity Utilization, a traditional Fed barometer, did well at +.2% to 73.2%.

Housing Starts Better Than Expected
Today had New Home Construction and will have the University of Michigan Sentiment Survey. Housing Starts for March were better than expected, up 1.6%. March Building Permits were up 7.5% from 637,000 to 685,000 on an annualized rate. It is nice to see the economic activity associated with housing, but don’t we already have a pretty good inventory of existing housing stock in many locales? After these housing stats the 10-yr is at 3.80% and mortgage prices are better by .125-.250.

Appraisal Rules For Fannie Mae & HUD
Here’s a quiz: “Lender B originates a loan using an appraisal transferred from Lender A, who provided Lender B with written assurances that the appraisal was obtained in a manner consistent with the Code. Will Fannie Mae hold Lender B liable for remedies if it is discovered after the transfer that Lender A committed a Code violation?” You may not care about the answer, but the HVCC topic is still critical for lenders. Recently Fannie released a revised set of “Frequently Asked Questions” on the subject: Fannie Appraisal FAQ

There are a new set of HUD Frequently Asked Questions (FAQs) that address issues surrounding Appraisal Management Companies, reasonable and customary fees and appraisal turnaround times posted on FHA’s Lenders webpage and Roster Appraisers page. To read the new FAQs please visit: HUD FAQ Lenders or HUD FAQ Appraisers

Government Loan Modification Program Slow Going
Investors, and housing market analysts, are concerned about the numbers for the Making Home Affordable Program (HAMP). HAMP numbers improved substantially during March according to the Treasury Department. Designed to decrease the foreclosure rate by HUD and the Treasury Department, HAMP has not been the huge success for which some had hoped. During March, however, over 60,000 homeowners enrolled in the three month trial period required by the program were converted into permanent modifications. This brings the cumulative total of permanent loan modifications to 230,801, a 3.5-fold rise in permanent modifications since the first of the year. Analysts believe, however, that HAMP “trials started” continue to slump due to a shift in program requirements that require more paperwork to get a trial started and the fact that servicers have already run through the most likely mod candidates.

Reports show that the average LTV in HAMP modifications actually increases, from 135% to 143%, due to capitalization of arrears and escrow requirements. According to Congressional testimony, in only 28% of cases is this mitigated by principal forbearance; for these, the average principal forborne was $67 K. On top of that, average post-modification DTI’s for borrowers range from 61% to 70%, so these borrowers are already struggling with debt levels that are above current guidelines.

Wells Fargo, for example, has modified 523,336 mortgages as of March 31st, and has made modifications of about 380,000 under its own private programs since the beginning of 2009. Wells, like other lenders, use HAMP as the starting point, but also implement other workout options when a customer is not eligible for HAMP.

Daily Humor
A young monk arrives at the monastery. He is assigned to helping the other monks in copying the old canons and laws of the church by hand. He notices, however, that all of the monks are copying from copies, not from the original manuscript.

So, the new monk goes to the head abbot to question this, pointing out that if someone made even a small error in the first copy, it would never be picked up! In fact, that error would be continued in all the subsequent copies.

The head monk, says, “We have been copying from the copies for centuries, but you make a good point, my son.”

He goes down into the dark caves underneath the monastery where the original manuscripts are held as archives in a locked vault that hasn’t been opened for hundreds of years.

Hours and hours pass and nobody sees the old abbot.

So, the young monk gets worried and goes down to look for him. He sees him banging his head against the wall and wailing!!!

“We missed the R. We missed the R!!! We missed the R!!!!!!!!!”

His forehead is bloody and bruised and he is crying uncontrollably.

The young monk asks the abbot, “What’s wrong, father?”

With a choking voice, the old abbot replies, “The word was ‘CELEBRATE’!!!!”

My clock radio went dead, so I was faced with the usual question, “Do I pay to have it repaired, or do I buy a new one?” I went to a local repair shop, and on the door was a sign that said, “WE CAN REPAIR ANYTHING. (PLEASE KNOCK – THE BELL DOESN’T WORK!)” Needless to say, I have a new clock radio.

$1.1t 2nd Mortgage Problem
It is also going to be hard to fix the potential problem with 2nd mortgages. There are roughly $1.1 trillion in second-lien mortgages out there. A research firm in New York believes that Bank of America, Chase, and Wells, who combined own about 40% of them, may have to set aside an additional $30 billion (matching their expected profits for all of 2010!) to cover possible losses on home-equity loans. (Home equity loans are often open-ended, as opposed to closed-end 2nds.) But of course banks have already set aside billions to cover bad loans – will it be enough? Of course second-lien loans are a hurdle when modifying first loans since first mortgages usually can’t be modified or written down because lien priority dictates that junior loans be erased first. As mentioned above, analysts are arguing whether or not the billions held in reserves will be enough. Bank of America holds $138 billion of home-equity loans with $112 billion of second liens. Wells Fargo holds $123 billion of home-equity loans, with about $103.7 billion in a junior-lien position, while CitiGroup’s portfolio is “only” about $49 billion. For the complete story.

Distressed Sales One-Third of Home Market
Distressed home sales are once again approaching a one third share of the real estate market for existing homes, depressing home price trends and indicating that the housing market is not yet out of the woods. According to a report issued by First American CoreLogic, the sale of homes that could be considered distressed accounted for 29% of all home re-sales in January. This was the second highest share recorded for these sales, exceeded only by the peak of 32% reached a year ago, and compared to periods prior to the fourth quarter of 2007 when distressed sales constituted less than 5% of the resale market.

Fannie/Freddie Buyout Program
The Fannie & Freddie buyout program continues to give investors (not so much originators) something to talk about. Of course the delinquent buyouts are increasing prepayment speeds for older pools of mortgages, but limited, if any, impact on the projections on prepayments for new pools of mortgages. I was informed by one of the folks at MIAC that SATO (“Spread at the Time of Origination”) is often useful in estimating credit risk: a higher SATO normally meant that the borrower was more credit impaired or at a higher risk of default. Of course, subprime loans always had a higher spread, due to the higher risk, but loans that qualify under Freddie & Fannie guidelines do so for a variety of reasons. In the past built into the prepayment projections on premium TBA’s would be some degree of additive default/buyout speed estimates resulting from the fact of higher buyout probabilities and thus higher baseline speeds baked into the prepayment projections: weaker borrowers lead to higher delinquencies and default probabilities. “The market has since moved more towards looking at current LTV’s in combination with such collateral attributes as FICO, documentation, and product type with SATO becoming more of a lagging indicator.”

Stocks and Bonds Both Rally
Both the stock and bond markets improved yesterday, especially mortgages. Treasury securities, like the 5-yr note, would improve slightly, and mortgages would not only follow but improve more. With low volatility, tighter spreads, and supply (origination) heading down, no wonder! Remember predictions of mortgage Armageddon when the Fed stopped buying after 15 months? Of course, with stocks over 11,000, a $50 billion Greek rescue plan in place, and continued positive economic information one would think the bond market wouldn’t be rallying… but it is. (Speaking of Greece, the country’s cost of financing is heading higher. Any investor that bought Grecian debt lately is sitting on a loss – rates are higher – and we know that throwing money at a debt crisis simply turns a short-term crisis into a long-term deficit. Greece just sold $1.6 billion of short term bills, adding to the deficit, and may lead to more uncertainty in domestic banks and may hasten the intervention plan announced March 26th.)

Banks & Hedge Funds Are 40% Of Mortgage Bond Volume
Originators and investors who sold mortgage pools, but didn’t have them yet, are buying back their hedge positions, and outright buying by hedge funds, money managers, and investors is pushing mortgage rates lower. According to TradeWeb, banks and hedge funds currently account for over 40% of the MBS trading volume, a recent peak. It appears, through antidotal evidence, that locks are picking up: investors’ phones are ringing, and the move in rates appears to have pushed some fence-sitting borrowers into locking. The upcoming economic data for March should show decent growth and low inflation. Retail Sales are expected +1.1%, Industrial Production 0.7% higher, the CPI should be flat overall and up 0.1% for the core. Fed Chairman Bernanke may not have much new to say, but testifies before the Joint Economic Committee, and the Fed releases its beige book. Today’s Trade figures ($39.7 billion deficit) don’t normally push rates too much and after the 5:30AM number the 10-yr is at 3.83% and mortgage prices are better by about .250.

Daily Humor
“It’s just too hot to wear clothes today,” Jack says as he stepped out of the shower. “Honey, what do you think the neighbors would think if I mowed the lawn like this?”

“Probably that I married you for your money,” she replied.

How Does an ARM Adjust?
Holders of adjustable-rate mortgages across the country are demonstrating to complain that the rate used to calculate their loans has actually gone up. In some cases loan payments went up by 9%. “What is this ‘COFI’?” asked one borrower in California. “Next thing you’ll tell me is that the value of my home could actually go down – no way!” On December 31, the Federal Home Loan Bank of San Francisco, which oversees COFI, first published in 1981, announced without explanation that the rate had jumped 0.835 percentage point to 2.094% from 1.259%. The index is called the 11th District Monthly Weighted Average Cost of Funds Index, or COFI for short. The 11th district covers California, Arizona and Nevada. Click to scroll to our data section to see current and historical COFI data.

When an ARM adjusts, it adjusts to the sum of COFI or whatever index the loan is tied to plus a base rate that’s set at the time the loan is set up. At the time of the adjustment, the base rate (or Margin) is set and the index is taken at whatever the market rate of that index is at the time. So for example, if a loan with a 2.25% Margin and a COFI index was adjusting today, it would be 2.25% + 1.786% for a total rate of 4.036%. Depending on the adjustment intervals of one’s loan contract, this formula would be used at each adjustment.

Wells Fargo Changes Name
In a surprise move, Wells Fargo announced that it will be changing its name back to Norwest Funding. Industry veterans remember that Norwest actually bought Wells Fargo Bank in the late ’90′s, but kept the Wells Fargo name for brand recognition. Wells observed the success that smaller lenders were having going out of business and then changing their names to avoid contract and liability issues. A low-placed spokesman (are there really any highly placed spokesman?) told clients that Wells would be putting all of their assets into Norwest, providing it with “oodles” of capital, and leaving all of its current liabilities in the old company, telling creditors to “have at it – and good luck.” Changing its systems to the new name is straightforward, and should be complete by Monday morning.

RESPA Repeals
After almost four months of nothing but problems, errors, wrangling, and overall confusion, several government agencies announced that they would be lobbying HUD about having revisions to RESPA repealed. It is rumored that the final straw that broke the proverbial camel’s back was when the Secretary of HUD’s neighbor contacted the Secretary to complain, “I didn’t even know how or where to sign the damned form, and does Good Friday count as a rescission day?!” Representatives from Fannie & Freddie were called into a closed-door meeting with Secretary Donovan.

Credit Suisse FU2 Bond
Credit Suisse gave the credit markets something to talk about this morning with the creation of the “F-U-2″ bond. The bonds will be backed by mortgages originated at the retail level only, and the mortgages will allow principal reductions in the event that the property value goes down, and interest rate reductions in the event that mortgage rates decline during the life the loan. Therefore investors will have two ways (increased odds) of experiencing market fluctuations. As one trader put it, “Sometimes the market flucs up, sometimes it flucs down, but why should us poor investment bankers bear all the risk?”

US Bank Resumes Operations After Divine Intermission
US Bank’s Operations Center in North Dakota has returned to normal operations after an image of Jesus Christ was seen in a stack of trailing loan docs. “It brought the place to a standstill,” said one shipper. “It was almost as bad as when the new RESPA stuff started up.” Reporters from The Globe, National Inquirer, and Us rushed to the USB’s ops center in Fargo, which is easier said than done. The image, however, turned out to look more like Christopher Walken, and the stack of documents were soon sent off to their destinations.

BofA’s New Option ARMs
Bank of America’s New Product Development Group, many of whom were with Countrywide, apparently have grown tired of the “constant feet dragging” at BofA’s corporate and compliance levels, and rolled out Option ARM’s. BofA was encouraged by the response last week to its “HAMP-lite” program, helping with principal reduction plans. “The Option ARM market is wide open for plunder,” said one of their agents, “It’s time has come – everyone’s already forgotten about the batch from 4 years ago. And besides, now we have the backing of all those BofA deposits. And if they go bad, some company will buy the loans!” The company has not announced whether or not the program will be available in correspondent or wholesale channels.

BB&T To Only Buy Loans From States Beginning With Letters B and T
BB&T told its clients that beginning April 5th, it will only purchase mortgages from states, cities, and town that begin with the letters “B” and “T”. This had been expected for quite some time, since tracking state, county, and city compliance issues, along with licensing in various states, has become ineffective from a cost perspective.

Puerto Rico’s New Loan Regs
Puerto Rico announced its interpretation of the SAFE Act. Many states have already come out with their rules for conforming to the law, restricting agents and brokers with low credit scores, etc. Puerto Rico’s measures may be the toughest yet to meet: brokers will not be approved if they have “car payments of any amount, possession of more than one TV, computer or I-Pod, annual vacation or travel expenses exceeding 5% of gross income, any remodel projects involving granite, excess body fat over 105% of recommended BMI, possession of a “Kindle” or any other type of e-reader, use of Twitter, Facebook or other type of soul-emptying social networking, ownership of any make of vehicle except Honda/Toyota or Nissan, intentional consumption of nicotine, transfats or high fructose corn syrup.”

Jake’s House of Hard Money Merges With Louie’s Pay Day Loans
Jake’s House of Hard Money Lending announced a merger with Louie’s Pay Day Loans. Jake Bianchi has taken the role of president of the new firm, and Louie Pomilia will become the COO. Both were optimistic about the prospects of the new firm, citing the obvious compatibility in business channels, being able to eliminate overlapping departments, and matching infrastructure requirements. The new rate sheet will be published today.

JP Morgan Chase Focuses On Bath Count
JPMorgan Chase rolled out a new program that focused on homes with more bathrooms than bedrooms. Skeptics pointed out that many of the underwriting criteria match Thornburg’s super-high balance program from five years ago, since many houses of the super-wealthy have more bathrooms than bedrooms.

Second Chance Lending Program Uses Realtor Commissions
As reported in American Banker, Prospect Mortgage, a growing lender managed by former Indymac and American Home executives, will be rolling out a program named, “Second Chance” in order to provide loans to borrowers who couldn’t pay them back in the first place. The program will not be funded by taxpayer dollars, but instead by redistributing the 6% Realtor commissions: 4.5% goes to both Realtors (2% for listing agent and 2.5% for selling agent), 0.5% towards consumer counseling and credit repair services, and 1% toward program/transaction facilitation. “All consumers who lose their primary residence as part of the Home Affordable Foreclosure Alternatives (HAFA) initiative because although they are generally eligible, they either do not qualify for or fail an attempted loan modification” will benefit, as will families that were foreclosed on before the government’s MHA loan modification and/or foreclosure alternatives programs were available, got defrauded by a loan modification scam operation who took their money but failed to get them a loan modification, etc. will qualify for the program. Borrowers who were foreclosed upon will be able to borrow money in two years instead of waiting the traditional period, and will be counseled and trained during that period.

Franklin American Cost Cutting Measures
Franklin American, after an extensive study on phone usage, has asked that their clients call them only during off-peak hours, between the hours of 11PM and 7AM EST. In addition, all faxes should be sent to the same fax number, with one fax machine. “Everyone wins in this plan, said the VP of Capital Markets.”Working the graveyard shift will save our employees commute time, lower their food costs by necessitating bag lunches, and lowers our phone bill. And by doing away with the fax machines, we save space, phone bills, and paper.” FAMC explains that it will pass the savings on to its clients, who in turn will definitely pass the savings on to their borrowers. FAMC’s servicing group will be instituting a similar measure, and borrowers will be notified via, uh, fax.

CitiMortgage Bake Sale
CitiMortgage will be holding a bake sale and blood drive. The mortgage unit of Citi has been under increasing pressure to contribute to the bottom line, and this will be the first step. Some analysts believe that TARP funds will quickly be returned to the government, depending on how much blood is given, and if there is consumer acceptance of the lemon meringue pies (which usually have the highest profit margins). Contact your regional vice president for details. In a further cost-saving move, Citi notified correspondent, wholesale, and retail clients that they would be limiting business to fifty clients in each channel, or one per state.

Fed’s Yellen: Money Is Meaningless
In market news, the U.S. economy ceased to function this week after unexpected remarks by Fed Vice Chairman nominee Yellen shocked Americans into realizing that money is, in fact, meaningless. Yellen told the House Ways and Means Committee that cash is “basically no more than five rectangular strips of paper.” What began as a routine nomination Q&A period before the Committee ended with Yellen telling congressmen that when US citizens travel abroad, foreign currencies don’t mean much anyway, so why should ours? With Yellen questioning the entire concept of currency, M-1 volatility increased, and the Fed recommended that banks remain calm before recommending that customers switch to an economy based on the barter system. After the Jobless Claims news this morning (-6,000) suggesting that the economy is continuing to recover, the 10-yr yield is at 3.85% and mortgage prices are worse between .250-.375.

There is no daily joke on this day April 1. One of the stories above, however, is serious.

Does A Loan Originator Have To Buy Back A Bad Loan Even After It’s Modified?
Yesterday I mentioned the question about whether or not modified loans could still be forced back to the seller for buybacks. Freddie Mac does indeed say that the seller would still need to buy it back after a modification. At the current time, however, there is the belief that sellers continue to be successful in challenging these because most contracts don’t specifically allow the servicers to modify the loans. And in fact several national law firms are making a run at challenging the large servicers, who find themselves caught between not being able to modify a loan and being forced to modify it by the GSE’s and HAMP. Servicers claim that the reps and warrants stay with the seller, and especially if the loan is modified due to fraud or material misrepresentation then the seller may have to indemnify the loan with some deposit of money to the investor.

BofA To Select Certain Loans To Modify
Bank of America will soon begin offering, by invitation only, loan modifications based on a reduction of the mortgage principal to some of its borrowers. Borrowers with principal balances of 120% or more of the home’s market value or who are confronted with endlessly increasing balances on negative amortization loans will be the target (they must meet the basic qualifications of HAMP), and stories reported that BofA will forgive up to 30% of the mortgage loan balance in two stages: the bank will offer an interest-free forbearance of up to 30% of the principal balance for five years, and if the homeowner stays current on mortgage payments for the period of time, then the amount will be forgiven. Urged by the US Government to do more, we may see that other banks are willing to take some losses now to avoid much greater losses later if the housing markets begin to drop again. Industry observers say that it is a variation on the implementation of HAMP, rather than a new alt-HAMP or HAMP-light program. Say what you want, HAMP volumes have been disappointing, especially for Pay-Option ARMs. Bank of America estimates that 45,000 loans will be affected for about $3 billion in principal reductions ($67,000 per loan).

ACORN To Shut Down, Or Change It’s Name
Come April 1st, ACORN will be closing state chapters across the country. Several chapters across the country have formed similar groups with new names. ACORN began to falter after an alleged embezzlement scandal and cover-up involving the brother of ACORN founder Wade Rathke was revealed in 2008, and then received more bad press when employees were filmed giving advice on how to evade taxes and police. Critics say that they’ve merely changed names; proponents say that things are evolving and that what will remain will be an effective advocate for low- and moderate-income members.

MBS Markets May Be OK Without Fed
We have less than a week until the end of the Federal Reserve’s purchase program of mortgage-related debt. Eyes are on the difference between mortgage and Treasury rates – remember that yesterday ALL rates rose. But there appears to be a continued belief that even without the Fed there will be enough investors in mortgage-backed securities that a big jump is very unlikely. A jump of .1-.25% perhaps, but not the .5% or worse that some were forecasting a month ago. Less supply (40% less in 2010 versus 2009 by some estimates), and solid interest in owning mortgages should come into play by mutual funds, pension funds, foreign entities, and private investors. In late 2008, the average 30-year fixed mortgage rate topped 6.30%, and is now around 5.05%. Of course, during that time the Fed has purchased $1.25 trillion in MBS’s, along with $175 billion in agency debt. Besides, are rates really the reason for lower mortgage production? Unemployment, appraisal values, and stricter guidelines obviously are an issue.

Portugal, Greece Woes Hurting All Rates
What happened to the entire fixed-income, and stock, markets yesterday? In the middle of the usual weekly auction, the $42 billion 5-yr Treasury sale went poorly (“sloppy”), and suddenly investors realized that yes indeed, our deficit is growing, and demand may drop for our securities. Volatility increased, and the yield on the 10-yr broke through a key level of 3.80% and into the low 3.80′s. Mortgage prices worsened by up to a point, hitting levels that we haven’t seen in a month. In addition, dealers say that they are seeing “money center” banks doing some selling to recognize gains prior to the end of the quarter, and in fact mortgage selling was estimated at three times the average daily volume over the last few weeks. There is continued nervousness about Greece and Portugal impacting the entire credit market. Portugal’s budget deficit is over three times the European’s limit of 3 percent at 9.3 percent of GDP.

Stat Roundup: Durable Goods, New Home Sales, Jobless Claims
In our country, Durable Goods rose for the third month in a row, but February’s New Home Sales, although the median sales price climbed noticeably, showed a 2.2% decrease – perhaps due to poor weather and unemployment. (Who is going to buy a new house if they don’t have a job, and especially if there are so many existing homes from which to choose…?) Purchases fell 20% in the Northeast, 18% in the Midwest and 4.6% in the South, but demand climbed 21% in the West.

Today we had Initial Jobless Claims and Continuing Jobless Claims, but still have a $32 billion 7-yr Treasury auction to muddle through. Last week there were 442,000 initial claims, down from 456,000 for the previous week, and the four-week moving average dropped by 11,000. Continuing claims also dropped slightly. After these numbers the 10-yr is sitting around 3.84%, stocks appear to be bouncing, and mortgage prices, depending on coupon, are worse by .125-.250.

Daily Humor
Chutzpah is a Yiddish word meaning gall, brazen nerve, effrontery, sheer guts plus arrogance…

A little old lady sold pretzels on a street corner for 25 cents each. Every day a young man would leave his office building at lunch time and as he passed the pretzel stand he would leave her a quarter, but never take a pretzel.

This went on for more than 3 years. The two of them never spoke. One day as the young man passed the old lady’s stand and left his quarter as usual, the pretzel lady spoke to him.

Without blinking an eye she said, “They’re 35 cents now.”

Daylight Savings Time Reminder
Don’t forget to “Spring ahead” this Sunday morning. We lose an hour of sleep.

Another Bank Closure
The FDIC made a rare Thursday move and shut down LibertyPointe Bank This bank catered to the Orthodox Jewish community in Manhattan and Brooklyn, and will be taken over by Valley National.

BofA’s Mistaken Foreclosure
Did you hear the one about the parrot and Bank of America? A nun and a parrot walked into a branch… never mind. Seriously, last October BofA erroneously believed a house in Pennsylvania (state motto: Cook with Coal) was vacant when the borrower defaulted and sent a contractor there with instructions to install a new lock and otherwise “secure” the property” although it turned out that the owner wasn’t in default and the house wasn’t vacant. Regardless, BofA has apologized for its contractor entering the home of a mortgage borrower when she was away, cutting off utilities, padlocking the door, and confiscating her 11-yr old pet parrot, Luke, for over a week. The result is a lawsuit against BofA for emotional distress and a prescription medication for anxiety.

Yellen Now #2 At Fed
Janet Yellen, ex-Cal teacher, apparently is expected to be accept President Obama’s offer to replace Donald Kohn as Vice Chairman of the Federal Reserve.

Can A Realtor Also Be an FHA Lender?
Aristotle once wrote in “Politics”, “It remains true that the greatest injustices proceed from those who pursue excess, not from those who are driven by necessity.” “Can a real estate broker who sells homes also do FHA loans?” This question came up yesterday. “I would imagine it would not work when the broker is selling a home and doing the loan in the same transaction, but would it be possible to sell homes and do FHA loans as long as they are not in the same transaction?” As it turns out, HUD does not allow it. A veteran government compliance expert told me, “To do an FHA loan you must be an employee of the lender. As an employee doing FHA loans you cannot have a second job that is in a real estate related field. This is spelled out in the HUD mortgagee approval handbook. Brokers have disregarded this for years but I would not in today’s world. Punishment could be swift and painful.”

Rates After March 31
Although my personal opinion is that mortgage rates won’t skyrocket relative to other rates during that first week in April when the Fed’s purchase program goes away, there are many that believe that mortgage rates will indeed increase relative to Treasury rates. One argument, of course, is that the market has become complacent around the artificially low rates and low spread volatility. The bulk of its purchases have been in 4.5% securities, containing current coupon mortgages, roughly matching current production. Obviously traders have had to take this into account during their daily activities, and when it goes away, “the smartest guys in the room” will have to adjust to a new dynamic. In addition, the spreads between mortgages and Treasuries is the tightest/best/lowest it has ever been – is there any where to go but up? And there is some anticipation, already, that the first Friday of April’s Non-farm Payroll will show some strength, possibly leading to higher rates in general.

But heck, origination isn’t exactly setting records, and mortgage investors who have their delinquent loans bought back by Fannie/Freddie will be buying more in future months. Traders are seeing buying at every dip in price, in spite of spreads being tight. Insurance companies, traditional buyers of some of this stuff, have been creeping back in. The current production of loans is arguably the best in credit quality, most likely to stay on the books, and least likely to give investors problems down the road.

Treasury Auction Results
Yesterday’s $13 billion 30-yr (theoretically, 29 year and 11 month, since they “re-opened” last month’s issue) bond sale went pretty well. Almost 24% went to indirect bidders, the bid-to-cover was 2.89:1, and the yield was 4.68%. How ’bout the ol’ yield curve? Prior to the auction, the difference between the 2-yr note and the 30-yr bond was 378 basis points (3.78%), close to the all-time high. And the 2-10-year spread was 280 basis points.

Rates Up On Stronger Retail Sales
This morning’s Retail Sales figure, expected to show a slight decrease, was up .3%, ex-autos were up .8%. Overall, these were strong numbers for a market that hasn’t had much news lately, and should push the equity markets higher. Interest rates, however, as you would expect were not helped by this, and the yield curve has once again steepened – a sign of future strength in the economy. The yield on the 10-yr moved to 3.77%, and mortgage prices are worse, depending on coupon, between .250 and .50.

Daily Humor
As a bagpiper, I play many gigs. (Just go along with this, ok?) Recently I was asked by a funeral director to play at a grave side service for a homeless man. He had no family or friends, so the service was to be at a pauper’s cemetery in the Kentucky back-country.

As I was not familiar with the backwoods, I got lost; and being a typical man I didn’t stop for directions. I finally arrived an hour late and saw the funeral guy had evidently gone and the hearse was nowhere in sight.
There were only the diggers and crew left and they were eating lunch .I felt badly and apologized to the men for being late. I went to the side of the grave and looked down and the vault lid was already in place. I didn’t know what else to do, so I started to play.

The workers put down their lunches and began to gather around. I played out my heart and soul for this man with no family and friends. I played like I’ve never played before for this homeless man.

And as I played “Amazing Grace,” the workers began to weep. They wept, I wept, we all wept together. When I finished I packed up my bagpipes and started for my car. Though my head hung low my heart was full.

As I was opened the door to my car, I heard one of the workers say, ” I never seen nothin’ like that before and I’ve been putting in septic tanks for twenty years.”

State of Mortgage Industry
Let’s start off with two basic premises. First, there has always been a range of borrowers (credit & risk-wise) that need home loans at rates that match the risk. Second, there have always been investors out there with varying degrees of appetite for risk, and demand more return for higher risk. For prime borrowers, the end of the Fed’s MBS program is in sight: 5 weeks, $55 billion, that’s $11 billion a week. After which, of course, mortgage rates zoom out of reach, everyone still left in the business will have nothing to do, all refi’s and purchases will end, and I will fill the commentary every day with the worst puns and one-liners imaginable. Seriously, what is going to happen?

Based on anecdotal evidence, it appears that many mortgage companies had great Decembers, then January volumes of about half of December’s, and expect February to be somewhere between January and December’s volume levels. And although 2009 profits tended to make up for 2008 losses, profit margins also appear to be coming down as the realization sinks in that companies will want the production to support staffs.

Credit Suisse on Mortgage Industry
Credit Suisse came out with a very interesting public report that stated, “Private label Residential Mortgage Backed Securities (RMBS) have seen a fairly consistent rally since March, 2009. We believe the worst is behind us and there is room for further price appreciation, particularly for lower quality, higher yielding assets.” The study points out that for lower quality assets, such as subprime RMBS bonds, have rallied from yields in the mid 20′s% to yields in the low 10′s%. Subprime pools from 3-4 years ago have roughly 50% of the borrowers seriously delinquent, compared to typical pre-crisis delinquency rate of 4% to 5%. But it also means that half the “subprime” borrowers are making their payments! Credit Suisse believes that this optimistic news is not yet fully priced into the market, and is looking for further gains. In addition, the company believes that “the government will continue its heavy involvement with loan modification programs designed, in part, to stabilize house prices”, also beneficial to mortgage security prices and rates.

Merrill/BofA on Mortgage Industry
Merrill Lynch/Bank of America also released research which focused on “the glass half full”: which borrowers are safer, and more likely to make payments, than others. Their analysts used data from Equifax3, incorporating newly available information on borrower second liens and the history of distress on their other debts besides the first mortgage. It turns out that roughly half of prime and Alt-A borrowers have 2nds on their homes (most HELOC’s), whereas only about 25% of subprime borrowers have 2nds (mostly closed-end 2nds). As you would expect, 45% of prime borrowers have a combined LTV below 100%, while only 19% of option ARM borrowers do, and the propensity of a borrower to default on his mortgage rises accordingly. When other types of debt enter the equation, the propensity to have been delinquent on one’s other debt rises as we move to poorer credit sectors. “For poorer credit borrowers, going delinquent on other debts may be a way of life, but for prime borrowers, it is more indicative of distress.” “We find 65%, 30%, 17%, and 11% of the outstanding balance of prime, alt-A, option ARM, and subprime borrowers, respectively, will not default over 5 years.” Bank of America/Merrill Lynch Global research did a fine job on it, and anyone wanting to see it should contact your BofA rep rather than me.

Getting Involved in Mortgage Regulation
If anything, in the last few years folks still in the mortgage biz have learned that, at least for now, government regulation is playing an increasingly important role. And although they can’t influence rates or investor programs directly, they can become involved in the political process. You can join MORPAC, which is the MBAA’s political action committee, or attend the MBAA’s National Policy Conference held in April in Washington DC. One active originator wrote and suggested membership in the Mortgage Action Alliance (MAA). “It does not cost anything, you do not have to be a member of the MBAA, it is non-partisan and they allow you to edit the letters they generate if you want to change something in the content.” You can sign up for MAA here.

Denver Mortgage Wholesaler Closes
Brokers learned yesterday that 8-year old Assurity Financial, a wholesaler located in Denver, is shutting down. “Due to circumstances beyond our control, including a rapid, precipitous drop in production below levels necessary to sustain the company’s operations, combined with the recent inability of the company to obtain the long term financing necessary to fund its loan production… the winding down of Assurity Financial Services, LLC. The majority of Assurity’s employees will be let go at the close of business on February 26th, with a small crew remaining behind to assist in an orderly wind down of the company to satisfy the obligations to its various stakeholders.”

What Mortgage Traders Are Saying
Mortgage traders reported that Monday was another quiet day, with very light origination. In fact, much of what traders are seeing is a) the usual Fed buying, b) the usual money manager and hedge fund interest, and c) various investor accounts swapping either coupons or type of security (Fannie for Freddie, or conventional for government Ginnie Mae’s). With origination down, the natural spread between Treasury securities and MBS’s is narrowing, which is helping mortgage rates. And since the Freddie & Fannie delinquent loan buyback announcement came out on February 10th, although the higher coupon products sold off much more than the lower coupons, it appears that the price erosion has stopped.

Discount Rate Projections
And the discount rate hike last week is old news, and the Fed made it clear that the increase should not be viewed as a tightening. In 2007 the spread between the discount rate and fed funds was 100 basis points (6.25% vs. 5.25%) whereas now it just went from 25B basis points to 50. So many are expecting the discount rate to be bumped up another 25-50BP at some point in the not too distant future, while the FF target stays put 0.25%. Most believe that inflation is not a big concern for the US at this point, which is why many think the Fed plans on keeping the Fed Funds rate low for an extended period of time.

Today’s Economic News
Today we have the Case Shiller Index and Consumer Confidence numbers, along with a $44 billion auction of 2-yr notes. We find the 10-year yield back into the 3.70′s (3.77 as I type this) and mortgage prices better by between .125 and .250.

Daily Humor
A widow from New York wanted to get out of the big city. She decided to go visit a Dude Ranch in Texas. She spent a week there and had a fantastic time.

When she returned to New York she was at lunch with her friends showing them the pictures of all the good lookin’ cowboys.

As the girls were all discussing all of the cowboys one of her friends asked if she “had any ‘special’ fun” on her trip.

She answered, “No.”

Another friend chimes in asking, “Why not, since they are so good looking and there are so many of them?”

She replied, “Are you kidding? You can’t see them in the pictures but you should have seen the size of the condoms in their back pockets!”

Economic Worries
Yesterday’s stock market drop dominated the financial news. And a slowing economy helps rates and mortgage loan agents, right? (It’s a two-edged sword.) So the markets did not pay much attention to Non-Farm Productivity increasing over 6% during the fourth quarter of 2009. Efficiency in the last nine months of 2009 soared at the fastest pace since 1966 as companies cut worker hours even after sales stabilized. Factory Orders for November were up 1%, better than expected. And 4Q09 GDP was 5.7% at the first reading last week. But the focus, and one of the reasons given for stocks taking a beating, was on Jobless Claims which hit a 7-week high.

There is certainly a lot to be nervous about. There is the concern that around-the-world budget deficits will need to be financed by issuing more debt. California, with the 8th largest economy in the world, is continuing to have budget problems. On top of all that, oil prices declined over 5% while gold prices also fell, down over 4%. The dollar was weaker to the yen, but firmer to the euro as the risk aversion trade returned, and this helped Treasuries and mortgage security prices, dropping rates to December levels.

20k Jobs Lost, 9.7% Unemployment
Forecasts for today’s Non-Farm Payroll number centered on a gain of 15,000, although the ADP number from Wednesday showed that the private sector lost 22,000 jobs, so the difference will be in the government arena. As it turned out, Non-Farm Payrolls fell 20,000 in January, and the December numbers were revised downward from -85k to -150k (Nov’s went from +4 to +64k). Conversely the Unemployment Rate dropped to 9.7%, once again highlighting the fact that a sharp increase in the number of people giving up looking for work helped to depress the jobless rate. Immediately after this news, stocks were higher and the 10-yr hit 3.64% and mortgage prices (and the 5-yr Treasury) were worse by about .125.

But then this trend reversed: stocks went into red and bonds recovered.

Is Volatility Good Or Bad?
Does this kind of volatility in bonds or stocks help or hurt the markets? Although volatility has little lasting impact on markets, in the long run volatility makes ordinary investors less inclined to trust markets. And aversion to risk makes capital more expensive, as we are seeing now, and in turn the economy can become less dynamic. On the flip side, traders love volatility, although they tend to overestimate their knowledge of finance and the accuracy of their predictions. And overconfidence can encourage excess trading, and in a down market this can lead to “chasing losses” – if you’ve lost some, it is tempting to make big bets in an attempt to get your money back.

Next Big Bank Problem: Loan Buybacks
Ever had to buy back a loan? You’re not alone, nor will you be in the future.

Fed Buys $12b in MBS
Steady as she goes. For the week ending yesterday, the Federal Reserve’s MBS program was a net buyer of $12 billion agency MBS ($17.6 billion gross), which was the same as the previous week. The bulk of the purchases were 4.5% securities, which are mostly comprised of 4.75-5.125% 30-yr conventional mortgages. Program-to-date now stands at $1.173 trillion.

BofA Settles With SEC on Merrill Suit
New York Attorney General Andrew Cuomo, who encouraged the agencies to reach down the credit curve several years ago to help precipitate the credit crisis, and also usher in the HVCC regulations, charged Bank of America Corp, former Chief Executive Kenneth Lewis and former Chief Financial Officer Joe Price with fraud for allegedly misleading shareholders about the acquisition of Merrill Lynch. On the other hand, BofA just settled with the SEC by agreeing to pay a $150 million civil fine and bolster disclosure and governance practices. Cuomo is using a New York law used to combat securities fraud to accuse Bank of America, Lewis and Price of intentionally failing to disclose massive losses at Merrill prior to a December 5, 2008 shareholder vote on the merger.

Fidelity National Financial Earnings
Fidelity National Financial, headquartered in Florida, has reported a net profit of $69 million for the fourth quarter 2009 and a net profit of $222 million for the full year, both turnarounds from 2008 losses. Direct orders opened in the fourth quarter 2009 were up, although actual title claims paid in the fourth quarter 2009 were up also. The former LandAmerica units, Lawyers Title and Commonwealth Title, were profitable.

GMAC Earnings Loss
GMAC posted a loss in the fourth quarter of $3.9 billion, with a net loss of $4.95 billion after writing down mortgage holdings. For all of 2009, GMAC swung to a net loss of $10.3 billion from a $1.87 billion profit. Many wish that they were as optimistic as the CEO who said, “GMAC has undergone significant transformation in 2009 and as a result, is better positioned to pursue business and market opportunities going forward.” Translation: “I think that there is nowhere to go but up.” We, the taxpayer, currently own 56% of the company. The mortgage unit lost $4 billion from continuing operations before taxes after the company wrote down $2.6 billion in assets that are scheduled to be sold, and the parent company said it contributed about $2.8 billion of capital to ResCap, more than a previous estimate of $2.7 billion. As I mentioned in an earlier commentary, GMAC will cut about 554 jobs, including 313 positions at ResCap’s offices in Charlotte, North Carolina and Costa Mesa, California.

Daily Humor: A Super Bowl Joke
A Cajun who died went to hell.

The devil assigned him the usual punishment: he put him in the mass pit where the heat was melting others.

The devil came back sometime later surprised to find the Cajun just sitting around, not even misting, much less sweating. “How come you’re not so much as sweating here where everyone else is screaming for relief from the heat?”

The Cajun laughed and said, “Man, I was raised in the bayous of Sout Looziana. Dis ain’t nothin’ but May in Lafayette to me!”

The devil decided to really put the Cajun through it. He put him in a sealed off cave in the pit with open blazes and four extra furnaces blasting.

When he came back, days later, the Cajun was sitting pretty, had barely begun to bead up with sweat.

The devil was outraged. “How is this possible!? You should be melted to a shrieking puddle in these conditions!”

The Cajun laughed even harder than before. “Hey, man! I done tole you. I was raised in Sout Looziana. You tink dis is heat?! Dis ain’t nothin’ but August in Jennings!”
So the devil thought, “Alright, a little reverse ought to do the trick.” He put the Cajun into a corner of hell where no heat ever reached. It was freezing; and, to add to the Cajun’s misery, he added massive icebergs and blasting frozen air. When he returned, the Cajun was shivering with ice hanging from every part of him; but he was grinning like it was Christmas.

Exasperated, the devil asked, “HOW!? How is it possible?! You’re impervious to heat, and here you sit in conditions you can’t be used to…freezing cold; and yet you’re happier than ever. WHY?!”

The Cajun kept grinning and said, “Dis mean de Saints done won da Super Bowl?!!”

Comeback For Jumbo Loans
What is the American Securitization Forum? Darned if I know, exactly, but they were meeting in Washington DC and came out with a statement conjecturing that non-agency product (a $1.2 trillion market 4-5 years ago, $25 billion in ’08 and $44 billion in ’09) may start to be securitized again later this year. The reason? There’s more talk about it this year than last! Right now, however, jumbo loan production is pretty small, and profit margins are pretty slim since jumbo rates aren’t all that much higher than agency rates. (I have an idea! Let’s split the pools into tranches, and then have Wall Street work with the rating agencies… oh, never mind, I guess we tried that.) As I mentioned yesterday, banks are holding onto this product, but if other buyers materialize and the loans can be sold at profits, things could loosen up. Whole loan packages and syndications of interests in pools of loans may be steps in the right direction.

More on the return of Jumbo mortgages and mortgage securitization overall from this Bloomberg report.

Next Week’s Treasury Auctions
Today we have already seen the weekly Jobless Claims number and productivity numbers and will have Factory Orders later on. In other words, pretty quiet on the economic news front. We do have another $81 billion in 3, 10, and 30 year Treasury instruments to auction off next week. Overall, rate-wise relative to Treasury securities, mortgages have been doing well. In fact, if an investor buys a current coupon mortgage security (without originator profit margins) their yield will be less than 70 basis points higher than the 10-yr Treasury yield!

Higher Jobless Claims, Lower Rates
Jobless Claims unexpectedly rose last week, up 8,000 to a seasonally adjusted 480,000 in the last week of January. The four-week moving average for new claims rose 11,750 to 468,750 last week, which is the third straight week of increases. And U.S. non-farm productivity rose faster than expected in the fourth quarter up 6.2%. For all of 2009, productivity grew 2.9%. Employers have been cutting costs and headcounts. The bond market likes the news, and is retracing yesterday’s losses: mortgage prices are better by .250 and the 10-yr is back down to 3.65%.

2010 Planning Questions For Mortgage Companies
Although the industry saw a nice pickup in locks last week, and mortgage bankers and brokers are by nature an optimistic lot, careful planners are continuing to look at 2010 as a “down in volume” year. God forbid any mortgage companies shut down, but it is bound to happen: does management have a point at which they will lock the doors? Is it based on volume or profits? Loss of net worth? No one wants to think about it, but criteria should be set.

Commercial Loans Up 12% 4Q09 vs. 3Q09
MapQuest really needs to start their directions on #5. Pretty sure I know how to get out of my neighborhood. Speaking of neighborhoods, in signs of a rebound from very low levels, according to the MBAA, commercial and multifamily mortgage loan originations in the fourth quarter of 2009 were 12% higher than they were during the same period last year and 15% higher than during the third quarter of 2009. Loans for hotels were up 105%, retail loans were up 101%, industrial property loans were up 59%, but multifamily loans were down 8%.

Biggest Commercial Lenders
Who are the big commercial servicing companies out there? At the end of 2009, Wells Fargo topped the charts with about $475 billion in U.S. master and primary servicing volume. Next were PNC Real Estate/Midland, Berkadia Commercial Mortgage, Bank of America, KeyBank Real Estate Capital, and GEMSA Loan Services. (A primary servicer is generally responsible for collecting loan payments from borrowers, performing property inspections and other property-related activities. A master servicer typically serves in a fiduciary capacity and is generally responsible for collecting cash and data from primary servicers and then providing that cash and data, through trustees, to investors, per the MBAA.)

GMAC Cutting 550 Jobs, Including DiTech
GMAC, however, plans to cut over 550 jobs and close three offices in an effort to cut costs. Bloomberg reported that GMAC will cut over 300 positions at Res Cap’s offices in California (DiTech) and North Carolina, according to a spokeswoman. And auto loan servicing offices in NC and Tennessee will close, eliminating another 200+ jobs.

Home Loan Applications Up 21% Last Week
Applications rose 21% from the week before, according to MBAA stats, heading back to volumes similar to mid-December. Is everyone, whoever is left, trying to jump on the refi wagon (refi rocket?) before rates go up? Maybe – apps to refi were up over 26%. Purchases were up over 10%. And the four-week moving average, to catch the trend, showed apps up over 7%. And at this weekend’s Super Bowl party you can tell folks that refi’s still make up 69% of applications.

Deutsche & MetLife Earnings
Deutsche Bank (Germany’s biggest bank, and having a presence here in the US) posted a fourth straight quarterly profit versus a loss in 2008. The company earned $1.8 billion in the fourth quarter. PNC will be repaying $7.6 billion (about 70%) of the TARP funds.

MetLife announced that its fourth quarter revenues fell 12% to $12.3 billion, and net income in the quarter fell 70% to $289 million. For the year, MetLife’s total revenues fell 19.4%, and its net loss for the year was $2.4 billion. MetLife Bank, however, the nation’s 11th largest funder of residential mortgages, had operating earnings of $65 million in the fourth quarter, a 400% increase from the same period a year earlier, and may still be exploring entering the warehouse and correspondent sectors.

NAMB Partners With Appraisal Company
NAMB is the National Association of Mortgage Brokers. NAMB Enterprises, a wholly-owned subsidiary of NAMB, has partnered with Olde City Lending Solutions to offer mortgage broker appraisal ordering services for FHA loans. The “NAMB Appraisal Ordering System” uses blind ordering of appraisals on FHA loans, and its press release states that it is portable from lender to lender. (I am sure that somewhere, someone knows why this is not a conflict of interest.)

Loan Officer Tips For Good Faith Estimates
US Bank’s wholesale division sent out a great “Top Errors of GFE’s” list. Although it won’t make the David Letterman show, they are reminding operation staffs that:

Adjusted Origination Charges (Blocks 1 & 2) needs to be completed correctly. (Page 2 Box 1 should include all income the broker/lender expects to receive, with the exception of discount points. This includes, but is not limited to, origination fees, broker fees, broker compensation (such as that typically earned from YSP), and USBHM’s commitment fee. Box 2 should include any credits for over-par pricing/YSP (Box 2) or discount points paid to lower the rate/ below-par pricing (Box 3.) Only one box may be checked and only one dollar amount may appear in Block 2.)

Homeowner’s insurance (Block 11) needs to be completed, especially for purchase transactions.

Important dates section needs to be completed correctly – page 1. (Box 1 must include the rate expiration date if the rate is locked, Box 2 must include a date that is at least 10 business days from the date of the GFE, excluding Saturdays, Sundays, and legal Federal Holidays, Box 3 must include the rate lock period if the rate is locked; or “N/A” if the rate is floating, etc.

Owner’s title insurance (Block 5) must be completed for all purchase transactions.

Tradeoff table needs to be completed, and the completion of the first column of the table is required in all instances. (Completion of the second and third columns is not required under RESPA; however, may be required under other state and/or local law or regulation.)

Lender information needs to be completed.

Escrow account information must be compatible with an indication of whether or not escrows are required. (If the “Yes” box is checked, then the dollar amount of the escrows must be included in the box above. If the “No” box is checked, then the box above should state an escrow amount of “$0.”)

Upfront MIP/VA funding fee must be listed when applicable (Block 3) – page 2.
The date the GFE was prepared must appear on the disclosure, beneath the property address.

Lastly, the originator’s e-mail address must be complete.

Daily Humor
There was an unfortunate accident at the Guinness Brewery one afternoon, and poor Patrick Murphy drowned.

When his boss went to see the widow Murphy to tell her of the news, she was understandably distraught. After a few minutes, she pulled herself together and asked how it happened.

The boss said that he fell over a railing and into a vat of the beer.
She nodded and after a pause asked, “Please, at least tells me that he passed quickly.”

The boss lowered his eyes and said, “Sorry, ma’am. Truth be told, he got out three times to piddle.”

This CNBC report from the World Economic Forum in Davos this week has some comments worth calling out from Bank of America CEO Brian Moynihan and Barclays President Bob Diamond. Highlights from each below:

BRIAN MOYNIHAN, BofA CEO
“Bank of America is not too big. Big by definition is not the question, it’s a question of how you conduct your activities, how you manage activities and how you manage risk.”

“I think the role that government is trying to play is to make sure the institutions remain stable through all kinds of crises and I think that’s an absolutely appropriate role for the government to play.”

BOB DIAMOND, Barclays President
“There is absolutely no evidence…to say big is bad or big is riskier. Banks aren’t big because they want to be big, banks are big because their customers need them to be big.”

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The CEOs of Goldman, Bank Of America, JP Morgan Chase, and Morgan Stanley went before the Congressional Financial Crisis Inquiry Commission today to revisit what happened during the heat of the financial crisis in 2008. Yesterday the NYT published a good list of questions that should be asked. Some are populist propaganda, but many are relevant and legitimate. Perhaps the best question of all, that gets at the root of the entire issue, was offered by David Stockman, OMB Director under President Reagan. The question is below, but unfortunately the political pitchfork waving in a key election year will likely overshadow the ability to get to the root of that question. And even if Congress can get to the root of the banking problems, take a look at this picture of the testifying CEOs. Do these expressions (especially Blankfein and Dimon, the two on the left) look remotely contrite or willing to play ball?

Without the Troubled Asset Relief Program, Wall Street banks would not have survived the shock to the financial system that occurred in September 2008. Nor would they have subsequently accrued large profits and bonus pools in 2009. Shouldn’t a substantial share of those bonus pools be sequestered on bank balance sheets for several years to increase the banks’ capital levels and shield taxpayers against another bailout?/blockquote>

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