(Yes, a paragraph of pure fluff to start the year.) Does anyone handwrite checks anymore? Always a struggle to remember “2017” instead of “2016.” And here’s a story about twins being born in separate years. With the change in year it is good to know that Saudi Arabia is adopting the Gregorian calendar - the one we, and most of the world, uses and which was introduced in 1582. The state previously used the Islamic calendar, where it is 1438, not 2016.

The regulatory and compliance quagmire that residential lending finds itself in has some extreme examples.  One was the Minnesota Department of Commerce settling, for $45,000, against title company TitleSmart for hosting a boat cruise supplying realtors and mortgage loan officers with dinner and drinks. Jeremy Potter wrote, "My previous experience with real estate brokers, title companies and mortgage brokers leads me to believe this is commonplace with local companies (i.e. smaller markets). If this is going to be a RESPA violation for state regulators, they will have many, many $45,000 fines to dole out. 

"Second, the article published by the state slightly misquotes RESPA's prohibition of providing a 'thing of value' in exchange for direct referrals of settlement services; the article states 'anything of value.' Nit-picky I know, but words matter. Third, the state provides valuable advice for any consumer of settlement services. It is unclear that consumers ever see or understand this type of advice, but it is of course good advice for customers to consider before signing up with a provider. The bottom line is there are common misconceptions about how RESPA treats normal business development or sales tactics versus direct payment for referrals and as a result, RESPA remains a hot topic on the federal and state level." Thank you Jeremy!

Soon after Trump won the election there was some talk of the CFPB being closed. It is generally thought, however, that the CFPB will receive a makeover, not a shutdown. Its ruling by enforcement action could sure use some work, and even if the CFPB is reigned in somehow we can expect state mortgage regulators and attorneys general to step up enforcement of lending rules. Since the elections there has been much discussion of how expected changes under a Trump administration are likely to reduce the Consumer Finance Protection Bureau's impact, particularly in the enforcement arena.

At the Congressional level, Dodd Frank will not be eliminated. It will be refined - which is a good thing. The industry and Administration should look at what works, and correct what doesn't. Trump has indicated that his administration may focus on less Federal enforcement, but the states will remain aggressive, especially in California, Illinois, and New York - primarily Democratic states.

And the CFPB is doing a fine public relations job. Its most recent complaint snapshot highlighted debt collection complaints. The CFPB tells us that the most common complaint was in regards to attempts to collect on a debt that the consumer says was not owed. Additionally, the report showed that consumers continue to report being harassed about debts they have already paid.

And is the Consumer Finance Protection Bureau a tragic failure? If you have some time, check out this thorough, well-written article from an insider about the CFPB, and thank you very much to Ken S. for passing this along.

Of course the Department of Justice doesn't want to be known as a slacker. Credit Suisse had agreed in principle to pay U.S. authorities $2.48 billion to settle claims it misled investors in residential mortgage-backed securities it sold in the run-up to the 2008 financial crisis. Credit Suisse will also provide $2.8 billion in consumer relief over five years from the settlement, assuming the negotiations of final documentation and approval by its board of directors work out.

The final deal is in line with the $5 billion-$7 billion the U.S. Department of Justice (DOJ) had asked Credit Suisse to pay earlier in negotiations. Don't forget that Deutsche Bank agreed to a $7.2 billion settlement with the DOJ over its sale and pooling of toxic mortgage securities.

"The deals highlight the Justice Department's efforts to hold European banks accountable for shoddy securities that contributed to the U.S. housing market collapse."

Effective for loans originated on or after January 1, 2017, CFPB's Final Rule updates the dollar amounts for provisions implementing amendments to Truth-in-Lending Act (TILA) under the Home Ownership and Equity Protection Act (HOEPA) and the Dodd-Frank Act. Accordingly, Sun West will be updating sections of its guidelines.

Changes in the last week or so regarding conventional conforming (Freddie Fannie) loans from the Agencies or investors? Yes there are - they never seem to stop.

Could you use a 2016 year-end recap of Fannie Mae announcements and notifications? In Case You Missed It 2016 summarizes Selling Guide and related policy updates, clarifications, and other communications in an easy-to-follow table format. It includes a brief description of each communication as well as links to related resources for a convenient reference to Fannie Mae updates.

Fannie continues to promote its low down payment/high LTV loans.  Fannie said it will immediately begin accepting applications for fixed-rate 97% LTV financing of borrowers with FICO scores as low as 620. Freddie, meanwhile, has taken a more cautious approach, delaying the start of the program, requiring credit counseling, and in some cases only allowing FICO scores as low as 660.

M&T announced a substantial revision to its Fannie Mae HomeStyle product. It has removed the "Structural" vs. "Non-Structural overlay from the program. Several sections of its corresponding product page have been updated to reflect the overlay removal. These changes began 12/28.

AmeriHome will be implementing the new 2017 loan limits. Pricing will be available at the new limits with commitments issued beginning today.

Pacific Union Financials' Conventional DU Cash-out Refi requires at least one borrower on the new mortgage transaction must have been on title to the subject property for at least six months prior to the disbursement date of the new loan. Guidelines were updated to clarify that a waiting period is not required if documentation supports that the borrower acquired the property through an inheritance or was legally awarded the property (divorce, separation, or dissolution of a domestic partnership).

Moving from the primary markets into the secondary markets...

Freddie Mac recently priced its second offering ($43 million) of a Multifamily Structured Credit Risk (SCR) Debt Note, which gives private investors a portion of the credit risk on certain multifamily mortgage loans backing targeted affordable rental housing tax-exempt bonds guaranteed by Freddie Mac. (Remember that SCR Notes are unsecured and unguaranteed corporate bonds that build on the company's successful multifamily securities offerings and single-family Structured Agency Credit Risk debt notes, and reduce taxpayers' exposure to mortgage default risk. With SCR Notes, the first-loss credit risk of a specified pool of mortgages is transferred to private capital markets credit investors. Freddie Mac retains the senior loss credit risk.)

We ended 2015 with the 10-year yield at 2.27% - it began 2015 at 2.17% so not a lot of net movement. It did, however, hit a low yield of 1.36% in the early summer. (It's high was 2.60% last month.) Friday it closed yielding 2.43%, so yes, rates are higher. But not by a huge amount. The difference, of course, is all the millions of borrowers who now have 30-year fixed-rate mortgages in the 3's.

What are the prospects for 2017? The increase in rates for fixed-rate mortgages has pushed roughly 75% of the universe out of the refi window. ThomsonReuters expects gross issuance to ease to $1.1 trillion in 2017 with net issuance at about $196 billion. Mortgages will still prepay, whether it is refinancing, or someone selling their home and paying off the mortgage. And so reinvestment purchases from the NY Fed are expected to continue through 2017 to the tune of $1-2 billion a day.

Congress returns to session today. Nothing specific is scheduled, but investors and bond traders will be watching very closely to see how the tax reform language evolves as the legislation works its way through various committees in the House and Senate. Is the mortgage interest deduction (MID) in danger, especially for "the rich"? Stay tuned...

Looking at economic news, it is another shortened week but with plenty coming at us, unlike last week which was a snoozer. This morning we'll have some Institute of Supply Management (ISM) numbers, along with Construction Spending. Tomorrow things speed up with two weeks' worth of application data from the MBA and the FOMC minutes from the December 13/14 meeting. On Thursday the 5^th we'll have the Challenger Job Cuts data, ADP Employment Change, and Initial Jobless Claims. We finish off the week with Friday's employment data (look for +175k with the unemployment rate at 4.7%), and a set of Factory Orders.

Remember that the bond market improved most of last week. But this morning we're giving a piece of that back: the 10-year's yield is back up to 2.51% with agency MBS prices worse about .250 versus Friday's close due to some estimated strength in the Chinese economy.

Jobs and Announcements

In the here and now, Quicken Loans is searching for Account Executives for Georgia (remote/in the area), Texas (remote, in the area), and Inside Account Executives for North Carolina. "We're the #1 online lender in America, closing loans in all 50 states, and we've grown to be one of the largest full-service residential mortgage lenders in the country. Quicken Loans was named a J.D. Power and Associates 2010 - 2015 Customer Service Champion, one of only 40 companies named in the U.S. We were also ranked highest in the nation for customer satisfaction among mortgage servicers the last three years, the first years we were eligible. There's a simple reason we've been so successful: We care about the people we work with. AEs are expected to increase and grow the Company's wholesale lending business by developing and maintaining mortgage loan broker relationships and agreements with qualified banks, community banks, credit unions and other qualified financial institutions (QFIs) within the Account Executive's authorized territory."

If you're interested in a job with a warehouse bank, "Is your resolution for 2017 to start a great job in warehouse lending? Looking to make a switch? If so, NattyMac just may have the right opportunity for you. NattyMac, a wholly owned subsidiary of Stonegate Mortgage Corporation (NYSE: SGM), is dedicated to providing effective, reliable warehouse lending. As Warehouse Lending Client Manager, you will be responsible for building relationships and meeting the needs of a regional portfolio of NattyMac warehouse customers. Work with top performing sales and operations teams to deliver a high level of service to customers."  Interested applicants should send confidential resumes to resumes@nattymac.com.

Fairway Independent Mortgage rolled out its FairwayNOW program for its loan officers. "The platform allows our LOs, borrowers, and Realtors to connect via one platform for their loan needs. Borrowers can search for homes, run loan scenarios, apply in under 10 minutes, easily scan and upload documents direct to the LOS, and receive push notification of status. LOs are able to view their pipeline on the go and click to call or message their borrowers/Realtors, send pre-qualification letters on the go, that are tracked and approved by Fairway's compliance department, and provide co-branding opportunities with Realtors. 'The goal is to make communication between all parties more efficient, for borrowers and LOs to do everything they need to via their smartphone, and really enable LOs to be free from the office to do what there are best at.'" (Questions can be addressed to Sarah Middleton, EVP - National Production & Marketing.)

The residential lending environment is always changing, and I received this well-thought out note from Joe Panebianco, CFA CMB and President & CEO of AnnieMac. "A widely unanticipated election result puts our industry in a very different operating environment in terms of economic growth and higher interest rates. In preparation for this new operating environment AnnieMac took the proactive step of properly aligning its resources toward its already purchase-heavy retail branch network. 

"It's our strong belief for an originator to maintain the same levels of production they were accustom to in 2016 they will need more purchase referral sources in 2017. Towards that end we've spent the last 4 years investing in and preparing for this environment. We've expanded our technology platform, referral partner offerings, marketing and coaching divisions all geared towards the purchase originator. AnnieMac continues to believe that the future belongs to those firms that are prepared for a world of higher rates and fewer refinances despite an overall strong housing market. AnnieMac plans to significantly expand its retail footprint in 2017 by adding well-managed, purchase oriented teams that want to grow in a contracting market." Thank you Joe!