Clients of Franklin American received this e-mail yesterday: “Due to the market environment and regulatory concerns, Franklin American will be removing the jumbo fixed rate product offering from our rate sheets effective Tuesday, December 17^th.  Today is the last day to lock jumbo fixed loan product with Franklin American.” Of course, “today” was yesterday, and locks are shut down. The “smartest guys in the room” are saying that FAMC will not be the last to change or eliminate programs based on the current environment.

When mainstream lenders (with large compliance staffs) throw in the towel on a channel or program, is the borrower better off? And what do they know that smaller lenders don’t? Jumbo loans in general can be problematic, with volatile fallout, and due diligence often doing a 100% forensic review creating issues in this QM/non-QM world. One slip of the DTI…

On the QM vein, with 16 business days left, here’s a note from an MI executive: “The industry is keenly aware of the different approaches/decisions the large Correspondent lenders are taking with regards to BPMI Singles and how to count the fees towards the 3% limit. You may have seen that Wells chose to make lenders count all point towards the 3% without regards to refundability or the 1.75% exemption.  US Bank, on the other hand, for example, is allowing the lender to exempt the first 1.75% as long as the BPMI single is refundable over at least 5 years.   Those are two that I have heard announce so far and others I’m sure will be coming out soon. Unfortunately for smaller lenders that sell to these, and other aggregators, it just seems like it is going to cause a significant amount of confusion in the marketplace and will be interesting to see how it all shakes out.”

So let’s catch up with what the CFPB has been doing lately. Last week it released updates to its Mortgage Rules Readiness Guide in connection with the new mortgage regulations issued in January 2013 and amended through October 15, 2013. “This update offers financial institutions, and other industry participants, valuable guidance on how to evaluate their readiness for complying with the 2013 mortgage rule changes. The updated guide incorporates changes made to Regulation Z, the implementing regulation for the Truth in Lending Act (TILA), and to Regulation X, the implementing regulation for the Real Estate Settlement Procedures Act (RESPA). (The Readiness Guide now contains changes to final rules issued by CFPB through October 15, 2013, covering both RESPA and TILA.)

And because I continue to be asked about exams, in late November the CFPB released updates to its exam procedures in connection with the new mortgage regulations issued in January 2013 and amended through October 15, 2013. “These updates offer financial institutions, and other industry participants, valuable guidance on how we will conduct examinations for compliance with the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA).”

But the big news of note came yesterday. The CFPB has sued CashCall, and others, for illegal online loan servicing in the Bureau’s first online lending action. It is seeking a refund on illegally collected money.  From the release: “Today the Consumer Financial Protection Bureau (CFPB) took its first action against an online loan servicer, CashCall Inc., its owner, its subsidiary, and its affiliate, for collecting money consumers did not owe. The CFPB alleges that the defendants engaged in unfair, deceptive, and abusive practices, including illegally debiting consumer checking accounts for loans that were void.  California-based CashCall, its subsidiary, WS Funding LLC, and its affiliate, Delbert Services Corporation, a Nevada collection agency, are all under the common ownership of J. Paul Reddam.” Of course, speaking of penalties, everyone is waiting to see what happens when the CFPB names individual LOs – that will be an attention-grabber!

The FHFA wants to know what we think of gradual GSE purchase limit reductions. (If it really matters, slow is better than fast.) The FHFA announced it was seeking input on a proposal for reducing the maximum GSE purchase limit (NOT conforming loan limit) for one unit properties from $417,000 down to $400,000 for loans originated on or after October 1, 2014. That four percent reduction is what would be used to lower purchase limits in higher cost areas down to $600,000 (from $625,500). In theory this expands the sampling size for non-agency mortgages. But given the sometimes onerous and litigious constraints concerning qualified mortgages (QM) via Dodd-Frank, it is doubtful mortgage banker’s spring into action.

Let’s take a look at some upcoming training & events.

The Department of Housing and Urban Development (HUD) will host a special free Webinar overview briefing session on December 18, 2013 at 1-2PM EST Eastern to review with FHA stakeholders the details of HUD’s Qualified Mortgage Final Rule. (This Final Rule was published in the Federal Register on December 11.) “Join senior HUD policy advisors and members of FHA’s Office of Single Family Housing for this one-hour interactive web-based information session. In this Webinar, FHA stakeholders will hear more about HUD’s Qualified Mortgage definition, and how it applies to FHA mortgage products and programs. You must register to attend this information session.  Space is limited; registrations will be accepted on a first come, first serve basis. The Qualified Mortgage policies in the Final Rule become effective for mortgages with case number assignments on and after January 10, 2014. One can register here.

Stearns Lending’s executive leadership team is hosting a series of educational webinars where “we will discuss the Ability to Repay and Qualified Mortgage Rules implemented by the Consumer Financial Protection Bureau that will go in to effect on January 10th, 2014. In addition, we will discuss the relationship between those rules and existing consumer regulations such as RESPA. During the course of the webinar, we will review the changes and their impact on our industry.” The next one is tomorrow, 12/18, 9AM PST, Teleconference Dial-In Number: (800) 230-1951; Conference ID: 312594. (There is also one on the 19^th)

The 11^th Annual Eastern Secondary Market Conference with exhibits will be held February 5-7, 2013 at the Hyatt Regency Orlando (easy in and out from the airport). It appears to be quite the event, and all the conference information can be found on this web site.

In a recent press release, Genworth’s chief appraiser Adam Johnston announced that the housing industry expects a significant increase in green activity over the next several years, rising from 17% in value in 2011 to a projected 38% in 2016.  As such Genworth has released a video to help lenders understand the valuation of homes either constructed or renovated using sustainable building methods, as at present there is no standard definition of the features that make a new or existing home green.  To access the video, contact Alfred King at Alfred.king@genworth.com.

Software provider MortgageDashboard has released the first installment of “The Featured Series,” in which industry leaders in business, finance, and entertainment give 18-minute taped talks that are then made available to the public. The series is meant to serve as a complement to MortgageDashboard’s LOS.

The Colorado Mortgage Lenders Association has extended the registration deadline for its Mortgage Leadership Program to January 1^st.  The program allows “growing influential professionals” to work within teams to build relationships across the industry; learn about the industry’s history and legislative, compliance, and mortgage company analysis; and become involved with community service projects and CMLA leadership committees.

The Maryland Mortgage Bankers Association will be hosting its “Conference of Champions” on May 8^th in Columbia, MD. Early bird pricing for will be available through February 1^st, and opportunities for those interested in being a sponsor or an exhibitor, opportunities are still available as well (e-mail info@mdmba.org for more information).

And let’s see what some vendors are up to: basically trying to make life easier, and stay ahead of the QM changes.

FormFree Holdings is promoting its AccountChek services. “If you are still collecting bank/brokerage statements the old school way, you should look at AccountChek from FormFree Holdings, the winner of this year's Mortgage Technology "Fix It" Award at the MBA in D.C. We provide digital account statements along with an instant VOD directly from the borrower's bank, allowing you a real time view of the borrower's finances. Your LO's and processors no longer have to deal with paper or emailed statements! Because the account data come directly from the borrower's financial institution, fraud and error is virtually eliminated. And who wouldn't say yes to increased efficiency? Go paperless.” Contact George Manolis at george@formfree.com for more information.

Richey May launched a Business Advisory Services Division to provide a “business advisory firm for independent mortgage bankers provides M&A, financial, operational, compliance and management advisory services. The new division is comprised of four advisors with a combined total of 51 years of experience within the mortgage banking industry.  The team is led by Keith May, managing director of the company’s advisory services, and includes Trevor Reinhart and Kurt Blohm, managers of advisory services, and Tyler House, supervisor of advisory services. Richey May has been providing business advisory services to mortgage bankers since it was founded in 1985, but did not have a specialized division dedicated to the practice.

My Christmas gift to my family this year was going to be a four page report on the difference between the consumer price index (CPI) and the personal consumption expenditure price index (PCEPI)……until a couple of economists at the SF Federal Reserve stole my thunder. If you’re like me, and enjoy giving gifts that keep on givin’ then “Why Do Measures of Inflation Disagree” should be put on your list. Inflation as measured by the personal consumption expenditures price index is near historical low levels, below the Federal Reserve’s 2% longer-run goal. Another common inflation measure, the consumer price index, is also historically low, but remains closer to 2%. The recent gap between these two measures is due largely to the cost of shelter, which makes up a larger proportion of the CPI consumption basket. Based on history, the gap between the two inflation measures should close at a rate of 0.05 percentage point per month.

I just spent some time in Hawai’i with the board of the Hawaii MBA, and head to Kansas today, and a fair amount of the talk out there is about rates. More specifically, when all is said and done, when the Fed decides to scale back its purchases (which it will at some point), what will rates do? It is hard to argue that the U.S. economy is sagging. Yesterday, for example, November Industrial Production jumped 1.1% from October, well above the consensus of 0.5%. This was the largest increase since November of last year. Capacity utilization for the industrial sector increased 0.8 % point in November to 79.0%. Labor Productivity increased 3.0% in the nonfarm business sector in 3Q13, and Unit Labor Costs decreased 1.4%.

This morning we’ve had the Consumer Price Index (see story two paragraphs up), which was unchanged for November. Later we’ll have the December NAHB Homebuilder’s Index, along with a $32 billion 2-yr note auction. But more importantly we have Day #1 of the December FOMC meeting – we’ll see what they say tomorrow. For numbers, yesterday we closed the 10-yr. at 2.88% and in the early going we’re nearly unchanged at 2.87%. Agency MBS prices are a couple ticks better.