The vast majority of people always need money, and always wants loans - of varying rates and from various sources. So does prohibiting banks from doing business with Payday lenders really help the consumer? Several senators seem to think so. (Others believe, as I do, that the flow of capital, like water, will eventually flow around blocks like this, but will just become more expensive to the end consumer.)

Last week the mortgage biz saw plenty of earnings news from well-known lenders and investors. As the commentary discussed Wells Fargo's numbers earlier this week, what do some of them tell us about the mortgage side of things? For example, Bank of America and Citigroup both released their fourth-quarter earnings Thursday, revealing the scars their legacy mortgage issues have left. BofA reported net income of $732 million, a significant decline from $2 billion in Q4 2011. The bank did better on a year-long scale, coming in at $4.2 billion (well above its $1.4 billion income in 2011). Legal expenses also weighed down profits at Citigroup, though the company did manage to come out ahead on a yearly basis with a $1.2 billion profit in Q4.

So BAC had a number of special provisions (mostly pre-released), but still managed to beat headline expectations ($0.29 versus the $0.20 that was expected). BB&T beat as well, while both FifthThird and PNC had modest misses. BB&T Corporation reported fourth quarter net income available to common shareholders of $506 million, an increase of 29% compared to $391 million reported in the fourth quarter of 2011. Mortgage banking income improved $96 million, or 71.1%, as a result of $93 million in higher gains on residential mortgage loan production and sales. Mortgage banking income was up $20 million compared to the prior quarter due to $15 million in higher gains on residential mortgage production and sales. Of note was BB&T's correspondent group's fundings - a record at over $20 billion. Congrats.

Earnings released in the past several days show mortgage activity accounting for about 15% of the profits at Wells Fargo. JPMorgan Chase, meanwhile, reported $418 million in profit from its mortgage banking business, compared with a loss of $269 million a year earlier. Even Bank of America, which has been retreating from the mortgage market, posted a 41% spike in loan originations in the fourth quarter, to $22 billion. In an earnings call with analysts, JPMorgan CEO Jamie Dimon agreed that the housing market has turned, which was reflected in the bank's 33 percent jump in mortgage originations. JPMorgan, the second-largest home loan lender with 10 percent of the market (still a far cry from Wells' 30%), witnessed mortgage fees and related revenue jump to more than $2 billion in the fourth quarter from $723 million a year earlier.

The industry can continue to thank the United States government, or its branches, for not only keeping rates low but also promoting refinancing through the various programs being promoted (namely HARP and HARP 2.0). But what if the government stops buying agency MBS, or what if, slowly, everyone who can refinance does - what then?  Will the banks', and mortgage companies, earnings suffer? And what about the consumer?

The mortgage-lending business has such narrow profit margins that most banks need high volumes to make money. As we all know, government intervention in the market, through such efforts as establishing the Home Affordable Refinance Program (HARP) or keeping interest rates artificially low, created a surge in refinancing activity that benefited banks. But once that business dries up, home sales are going to need to pick up for banks to sustain mortgage gains.

At Wells Fargo, the biggest mortgage lender with 30 percent of the market, mortgage originations in the 4^th quarter climbed 4%, to $125 billion, with refinancing accounting for 72% of that volume. But loan production was off from the record $139 billion in the third quarter, a sign that refinancing activity is slowing.

Meanwhile, inventories of homes for sale are down everywhere. Maybe it is just the season, maybe not, but Realtors say things are slow, and wonder what happened to the massive "shadow inventory" that was supposed to wash over our markets. Well, loan modification and refinance programs have sopped up much of that, and venture capital and equity firms, such as Blackstone, have been buying up huge swaths of single family homes. Meanwhile, the agencies have been experimenting with holding properties and renting them out.

Inside Mortgage Finance believes that refinancing activity is on track to account for about 72 percent of all mortgage activity in 2012 (just like 2003). The difference, however, is that 10 years ago the mortgage industry was pulling in $4 trillion in revenue, whereas last year the market took in an estimated $1.8 trillion. Profits are nowhere close to what they were in the boom years, but considering that $2 trillion in earnings used to qualify as an average year, the market seems to be returning to some semblance of normalcy.

And so far in 2013 we're off to a good start. Pipelines were in very good shape heading into this quarter. And the "possible refinance pool" is still deep: CoreLogic says that more than 70 percent of mortgages had interest rates above 4 percent, meaning those borrowers could apply for a lower rate.

And for new homes, builders are en fuego! Nearly all 12 of the Federal Reserve's banking districts reported increases in home construction and home sales from mid-November through early January. The number of housing permits issued in November also rose almost 4%.

And there are few mortgage companies being created, which certainly helps existing lenders. The government frowns on lack of competition, but this situation has been created in the mortgage banking world - is it yet another in a long list of unintended consequences? Banks such as JPMorgan and Wells Fargo have gobbled up the mortgage market since the recession, as Bank of America and Citigroup stepped back to raise capital. And the consumer pays, now and in the future, through higher rates but also higher prices for loans. Underwriters in the past who could go through 6-8 files a day can now audit 2-3, so companies have to pay 2-3 times the price for underwriting as they did in the past. That is just one quick example of the process, and one quick example of something that is passed on to the consumer - lenders have not become non-profit institutions yet.

Let's go over to some recent investor and agency updates. As always, it is best to read the full bulletin, but these will give you a flavor for what is going on.

FHA lenders are reminded that they're required to have correctly registered their loan officer names and NMLS data in FHA Connection by January 28^th or will not be provided with a case number.  New TPOs must also be registered in the FHAC Sponsored Originator Registry with the TPO's NMLS ID number, full corporate address, and EIN number.  As a reminder, the Sponsored Originator Registry recognizes the geographic locations of TPOs, which means that attempts to register TPOs in one of the five states currently exempted from registering their companies with NMLS will not go through.  Individual loan officers should not be registered as TPOs unless they have legally incorporated themselves or are set up as a sole proprietorship.

US Bank has rolled out a new 10/1 ARM product that allows financing up to $2 million (purchases), rate/term refinances, and cash-out refinances) on 1-unit primary residences.  Apart from LTVs being caps between 65 and 85%, the guidelines, adjustment and lifetime CAPS, margins, and underwriting requirements are the same as US Bank's Elite 7/1 ARM.  For pricing, see the Treasury Jumbo ARM Products section of the rate sheet.

Beginning January 21^st, US Bank will be changing its appraisal fee structure.  Instead of the current tiered fees, a Set Fee will be instituted for property values under $1 million and a Quote Fee will be instituted for properties valued at more than that amount.  Appraisal fee increases will not be considered as changed circumstances.

US Bank has just released its enhanced guidelines for declining market states and has increased the maximum CLTV/HCLTV to 80% for properties in Arizona and California.  With regards to Simultaneous HELOCs, in Arizona, California, Florida, Michigan, Nevada, New Jersey, and New York, the new HCLTV cap is 80%, effective for all loans whose applications are dated January 16^th and after.   For Arizona and California 1-unit primary residence purchases, the maximum HTLTV is 85%, with a minimum FICO requirement of 740.

Flagstar is now offering Relief Open Access II loans.  In order to be eligible, loans must have been sold to Freddie Mac but not be currently serviced by Flagstar.

GMAC has updated Jumbo Fixed pricing such that loan amounts under $1 million with an LTV between 70 and 75 and a FICO under 750 are subject to an adjuster between +.375 and +.500.  Loan amounts over $1 million with an LTV between 70 and 75 and a FICO under 750 will be subject to an adjuster between +.375 to +.625.

Affiliated Mortgage has updated its Unacceptable Appraiser List, the full version of which can be accessed here.  The new list affects all loans with an underwriting decision dated January 15^th or after, regardless of lock date.

In training and events news:

The FHA is offering an introductory webinar on property and appraisal FAQs on January 22^nd that will cover some of the common queries received from single-family underwriters and appraisers.  The program will discuss flipping, the appraisal validity period, case numbers, REOs, manufactured homes, new construction, water and septic issues, attics and crawl spaces , lead-based paint, termites, unique properties, and the appraiser roster.  Register here.

LoanSifter is hosting a webinar on the broker-banker transition on January 22^nd that will discuss warehouse lending, funding loans, how to obtain investors for correspondent lending, secondary marketing, operation, and how LoanSifter/PPE features may be affected.  The presenting panel features several top executives from a variety of areas of the industry.  Those interested can register here.

In light of the recent QM and TILA announcements, the Ohio Mortgage Bankers Association will be holding a training session on February 1^st in Columbus, OH.  The program will cover loans that fall outside the "Qualified Mortgage" definition, what's included in the 3% points and fees, safe harbor and rebuttal presumption, broker and LO compensation fees, portfolio loans and small depository lenders, and proposed changes to the High-Cost loan definition and homeownership counseling requirements.  OMBA members can participate at a discounted rate.  Contact omba@ohiomba.org to register.

It doesn't matter what temperature a room is, it's always room temperature.

Yesterday, my eyeglass prescription ran out.

I'm a peripheral visionary.

I make my own water - two glasses of H, one glass of O.

Ballerinas are always on their toes. Why don't they just get taller ballerinas?

The other day, I went to a tourist information booth and asked, "Tell me about some of the people who were here last year."

Why in a country of free speech, are there phone bills?