Hey, if you can't beat 'em, join 'em. I bet many wouldn't mind making nearly a quarter million a year being a "cutting edge" CFPB regulator - link. Compare that to a story last week in the Wall Street Journal noting, "Government regulators will cut sharply the pay of the executives they hire to succeed the departing heads of Fannie Mae and Freddie Mac, said regulators, which may make it difficult for the struggling mortgage-finance giants to attract and keep qualified chief executives. Some officials even have floated the idea of paying a salary of $1. Whatever ultimate pay arrangement is approved by regulators for Freddie could set a precedent that would be adopted by Fannie." MBA President David Stevens warns that the pool of CEO candidates will shrink as compensation for the post (which can be difficult to fill given the limitations of being under government control) declines.

In the private job market, Florida Capital Bank Mortgage is expanding its national mortgage operations with the opening of an Operations Center in Northern California. FLCBM is looking for underwriters, processors and closers for this location. In addition, they are looking for AE's across the country to support its growing broker, mini-correspondent, correspondent and Early Purchase Funding Program allowing brokers to become mortgage bankers. Interested operational candidates can contact Gerhard Naude at gnaude@flcb.co and AE's can contact Tommy Adkins at tadkins@flcb.com.

In addition, Prospect Mortgage is hiring Loan Officers and Sales Managers who leverage relationships with business referral partners for sales growth. Prospect Mortgage offers nationwide lending and has branches from coast to coast. For rankings, "Prospect is one of the largest independent residential retail mortgage lenders in the US: it is the second largest 203K lender, a top-10 FHA lender and a top-five Fannie Mae HomePath Renovation lender." So if you know of anyone interested in the retail side of things with Prospect, they should contact Chief Talent Officer Daniel Nieto at Daniel.Nieto@prospectmtg.com.

In other corporate news, SunTrust Bank's 16% decline in earnings for the fourth quarter highlighted a problem many originators are having: setting aside higher mortgage repurchase provisions. Earnings were down from a year ago, as were revenues. "SunTrust's mortgage repurchase reserves rose to $320 million from $282 million in the third quarter. The bank received $636 million in repurchase demands, up sharply from $440 million a quarter earlier and $233 million in the fourth quarter 2010." Management saw it coming, as it warned the industry that repurchases would increase significantly in the fourth quarter. Putting some numbers on the problem, SunTrust holds $120 billion in unpaid balances from loans done between 2006 and 2008, and about $21 billion have gone 120 days or more past due. Of those unpaid legacy mortgages, SunTrust has received repurchase demands on $4.4 billion, with $3.9 billion of those resolved. Repurchase issues were a factor in the mortgage production side of SunTrust swinging to a $62 million loss from a $41 million profit a quarter earlier.

As we move toward having more regulators than originators, in Utah, Primary Residential Mortgage created of a new Enterprise Risk Management (ERM) group that will "manage risk through the entire loan origination process and ensures that the company has the appropriate monitoring and evaluation policies." Dave Zitting, president and CEO, observed, "While the larger banks all have ERM departments, it's uncommon for a company of our size to have one but we wanted to take aggressive steps to demonstrate to our customers, partners and employees our commitment to providing a safe and compliant mortgage experience." The leader of the group noted, "In today's mortgage environment, lenders must manage compliance and quality issues more closely than ever before. By establishing this new group we are implementing a solution that will sharpen our focus on complying with all mortgage banking laws and regulations, improve on our overall loan quality and help us to better manage risk across all areas of our company."

Bank of America certainly turned some heads last week when it told its retail loan officers nationwide that the lender will halt, for now, originations of cash-out refinancings, citing what it calls a "surge of refinancing activity" and capacity problems. A memo written by B of A home loans sales executive Matt Vernon notes that "while we regret the inconvenience this will cause to some of our customers in the short term, we are making the responsible choice that is in the best interest of our long-term capabilities to provide a predictable customer experience." In spite of arguments that this is some of the cleanest product ever to be originated, and profit margins being solid for many in the business, BofA continued to de-emphasize residential loans in the fourth quarter, producing just over $22 billion in mortgages, a stunning 75% decline from 4Q 2010.

At least Bank of America is not expecting to have the FDIC come through its doors on a Friday afternoon...but others had that happen (for the first time in over a month). In PA American Eagle Savings Bank was closed and became part of MD's Capital Bank, National Association. Down the coast in Florida, Central Florida State Bank became part of CenterState Bank of Florida, National Association. And in neighboring Georgia, the depositors of The First State Bank will soon have the name of Hamilton State Bank on their checks.

Mortgage company transition is expected to continue in 2012. Industry vet Larry Charbonneau, owner of Charbonneau & Associates, wrote to me, saying, "Rob, I've been in this business over thirty years, and 2011 was one of my busiest ever. Your readers should know that merger and acquisition activity is picking up. There are some commercial banks looking to acquire well managed mortgage bankers, and the warehouse industry is very liquid now and credit is readily available to those who have the required net worth." If you want to reach Larry, shoot him an e-mail at larry@charbonneauinc.com.

Regarding recent legal events, David Oldenberg writes, "Attorneys are going to do the same thing to themselves that we did to the mortgage industry. We created better and better loans programs to get people into homes and it back-fired when there were no more buyers left and the bottom dropped out. Attorneys are going to keep creating more and more ways to sue lenders and eventually they will all stop lending, leaving no one left to sue. They will destroy their industry based on greed, the same way the mortgage industry has destroyed itself. When I used to play stock broker and financial advisor on my radio show, I always said, 'the trend is your friend until the end!'"

Barry S. from Illinois wrote, "I just had another two week fight with one of the top 4 investors. They underwrote the loan - it has MI, is a condo, and an 800 credit score. They have some overlay that says HO6 insurance must be escrowed, we never heard of such a thing, none of our other lenders force you to escrow HO6 insurance. Anyway, loan was cleared to close and the underwriter never said anything about HO6 being escrowed. We closed it and they wouldn't purchase the loan because the HO6 was not being escrowed on the HUD. So the borrower signed new docs escrowing the HO6 since they had to pay it themselves so they really didn't care if it was escrowed. Then the original investor refused to purchase the loan because it's a TILA violation: they say you need to reopen the recession period because the total payment has changed! I asked, 'What happens each year when escrow analysis are done and servicers increase a borrowers total payment when their taxes or insurance increase, TILA violation? What happens when a borrower calls a bank to add escrows to their mortgage payment TILA violation? What happens when a title company or lender puts the wrong info for the taxes and insurance escrows and has to fix the mistake on the HUD-1, TILA violation?' These are the same guys who three weeks ago gave me the same song and dance when a digit was reversed on an address in the closing package, fun thing was the borrowers were both big time attorneys in Chicago and couldn't believe they had missed the mistake while signing. (An investor finally bought that loan after a month of saying you can't fix a typographical error on a closing package!) But now we have to take the loan elsewhere."

(For the uninitiated, HO6 insurance is designed for condo owners. The HO6 condo insurance will cover losses to any of your persona property and any structure you own. This policy also covers damages to any fixtures of upgrades you added on since the move-in date. A lot of people have HO6 insurance because they are required to if they have a mortgage on the condo. A regular condo insurance policy does not cover your actual unit or any of your belongings. HO6 does provide liability protection.)

Sometimes it is tough for compliance and QA personnel to stay up on the changes in the market. They should check out the next monthly conference call (free!) of the California Mortgage Bankers Association's Mortgage Quality and Compliance Committee (MQAC) - you don't even have to live in California. Call in this Thursday (26^th) at 11AM PST (free!). The topic is "Regulatory Forecast for 2012: How Should You Be Prepared?" Let your fingers do the walking: 1-800-351-6802, passcode 43784. For more questions contact Dustin Hobbs with the CMBA at dustin@cmba.com.

Turning to interest rates, which are still pretty low on the radar screen of concerns of originators, they slid higher last week. In fact, Treasuries had their biggest weekly loss in a month with the 10-yr moving to 2.02% and MBS prices (on Friday) worse by about .125. Is the economy really picking up? The current administration sure hopes so, although the president comes in a distant third to stimulating the economy compared to the Federal Reserve and Congress. Existing Home Sales increased 5% in December to an annual rate of 4.61 million units, and were up 3.6% versus a year ago. "Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market."

For scheduled economic news in the United States this week doesn't commence until Wednesday with Pending Home Sales, the FHFA Housing Price Index, and the FOMC's rate decision. Thursday is Jobless Claims, Durable Goods, New Home Sales, and Leading Economic Indicators; on Friday are GDP and a Michigan Consumer Sentiment number. With things continuing quiet in Europe, and no news here, we find the 10-yr's yield up to 2.08% and MBS prices worse.


I pointed to two old drunks sitting across the bar from us and told my friend, "That's us in 10 years".
He said "That's a mirror, dummy!"