If you don't think the nation is changing, think again. California's Latino population is going to overtake the white population in only two months, according to this year's state budget report. And the Golden State is also getting older, with the population of over 65s predicted to hit a boom over the coming months (1,000 people out there turn 65 every day). The state has been getting more diverse for a while, but now the Latino population will be 'the single largest race or ethnic group', and it's thought to be because most Latino groups are in their prime childbearing years. According to the 2013-2014 report, by March Latinos will make up 39 per cent of California's population of 38.2 million and outstrip the white population by 76,000; non-Hispanic whites will make up 38.8 per cent.

Speaking of California, San Francisco's Parkside Lending continues its growth. Parkside's recently broke news about the formation of its REIT, release of its new non-QM product and expansion into new states. One can add to the list new growth and job openings on its San Francisco operations team for a QC Manager, In-house Council, as well as a Closing Manager. Confidential inquiries can be submitted to Rick Nelson at Rick@parksidelending .com or visit "careers".

And First National Bank is expanding its operations in Cleveland, Pittsburgh, and Baltimore and is searching for experienced Mortgage Loan Originators. First National Bank is an affiliate of F.N.B. Corporation, a diversified financial services company with over $12 billion in assets and services including banking, trust, consumer finance, and insurance. "F.N.B. Corporation (http://www.fnbcorporation.com/) has community banking offices are located in several states including Pennsylvania, Maryland, Ohio, and West Virginia. The Mortgage Originator is responsible for the generating residential mortgages, which includes working with existing customers with residential mortgage needs and developing new business from external sources. This position will also need to provide the highest quality of customer service to both internal and external customers. "We offer a competitive commission structure, 401K, medical, dental, vision, stock purchase program, and much more!"  Please visit FNB's careers website to complete an online application.

Just when we think everything is quiet on the appraisal front, Kate Berry with American Banker writes that Fannie Mae has created a blacklist for appraisers. "In its ongoing effort to flag defective loans long before they default, Fannie Mae is taking aim at the home appraisal industry. The government-sponsored enterprise is keeping a virtual blacklist of appraisers that it views as shady and is warning banks and mortgage lenders to be careful about doing business with them. All loans with work done by appraisers on the list will be subject to extra scrutiny before Fannie buys them from lenders and could be rejected outright, Fannie says. The list is a small one, with just four names on it for now, but it is likely to grow as Fannie scours its appraisal database to identify appraisers who repeatedly submit shoddy work. Unacceptable appraisal practices include inflating the appraised value of a home, misstating the characteristics of a house, and failing to use the best comparable sales of physically similar properties...Fannie has moved toward a model in which appraisals are scrutinized early in the mortgage process before it even buys a loan from a lender. Instead of forcing costly buy backs for defective loans years after the fact, Fannie now will reject loans for egregious inconsistences made by appraisers."

Ms. Berry's well-written article continued: "Fannie's aim is to not just make sure that the loans it buys and bundles into mortgage-backed securities meet its standards, but also to collect consistent data on appraisals to ensure that property values are accurate and that borrowers have the ability to repay their loans over the long haul without defaulting. Fannie has not made its blacklist public. The list, to be published monthly, is accessible only by lenders and will not be broadly distributed. Observers say that the mere existence of a blacklist will likely deter banks and mortgage lenders from doing business with appraisers whose names appear on the list."

Certainly appraisals are coming under increased scrutiny. For example, here's a recent article stating that there are more appraisal flaws since the "invention" of the appraisal management company.

Mike Ousley, President of Direct Valuation Solutions (DVS), a compliant and automated direct to appraiser SaaS platform for lenders wrote, "Rob, most folks know that HVCC sunset and Appraiser Independence was reinforced when the Dodd-Frank Act went into effect. It is still, however, amazing to me how many lenders have interpreted both HVCC and Appraisal Independence rules in Dodd-Frank to mean that they MUST use an AMC.  The article in Newsday [noted above] points out this myth, as well as some other unintended consequences of the Appraisal Management Company model. 'The upshot is that appraisers who have never stepped foot in a neighborhood and who have no historic knowledge are now paid less to do an appraisal, and the results have been, in the words of one appraiser, disastrous.' Far too many AMCs pay only a fraction (often 50% or less) of the consumer paid appraisal fee to the appraiser, assuring less experienced and less neighborhood knowledgeable appraisers doing the valuation and collateral due diligence, thus jeopardizing the transaction as well as putting the lender at buyback risk. In this technologically advanced day and age - what with the Uniform Appraisal Dataset (UAD) and automated assignment logic and quality control - aren't lenders putting their very business futures and reputation at risk by utilizing one of the literally hundreds of third party AMCs (many only thinly managed or capitalized) rather than consider taking control of the valuation process and directly hiring knowledgeable and local appraisers through compliant SaaS software systems?"

And Brian Coester with Coester VMS (http://www.coestervms.com/) writes, "I completely disagree with the article not just based on owning an AMC but on the basis of being an appraiser and being on both sides of the table. The reality is the appraisals are more accurate than they've ever been. The issue of geographic competency and fees and pressure to hit the value has been a topic for years, and appraisers have been complaining about the same things for years. Yes, fees haven't gone up in some time but that will change in time as well as AMCs will get their business processes in place to be able to make less and automate most functions. The appraisal industry has been turned upside down, but for the long term betterment of the industry. In the short term there will be issues to work out; however appraisals are better than they've ever been. The reason for the appearance of lack of quality is now we just know have the ability to check against relevant data like an AVM, Automated scoring, UCDP and variety of other tools that weren't available before. The reality is appraisals are generally right, and most do a great job, the generalization that 'AMCs are killing the industry' is a huge overstatement and inaccurate. The thing 'killing the industry' is the fact the appraisal fee is a competitive price point for lenders and that the GSEs, as well as HUD, don't allow trainee appraisers to inspect the property which limits new trainees in a big way."

Hey, one training note! Yesterday I mentioned several Plaza Home Mortgage training events in Florida, and missed one in Illinois: "Successful Selling to the Realtor Market". It is slated for tomorrow the 29^th, from 8:30 to 11:30AM, at the Doubletree by Hilton Chicago Oak Brook. Link

Moving over to life with depository banks, John C. writes, "Here's a map showing a time-lapse map of bank closures. You can re-size the circles in the graph to reflect bank size, loss to the FDIC, etc.: http://graphicsweb.wsj.com/documents/Failed-US-Banks.html. Yes, we've had a couple recent closures. Regulators closed The Bank of Union ($331mm, OK) and sold it to BancFirst ($5.9B, OK) under a purchase & assumption agreement. BancFirst gets 2 branches, all deposits (excluding brokered) and about 68% of the assets. And DuPage National Bank, West Chicago, Illinois, was closed, and Republic Bank of Chicago, Oak Brook, Illinois stepped in.

But there is plenty of bank M&A as banks see geographic and cost-saving benefits from joining forces. SNL Financial reports there were 242 whole bank acquisitions in 2013 vs. 244 in 2012 and an average price to tangible book of 1.24x. Bay Commercial Bank ($327mm, CA) will acquire Community Bank of San Joaquin ($119mm, CA) for about $4.8mm. Peoples Bank ($1.9B, OH) will acquire The First National Bank of Wellston ($92mm, OH) for $12.6mm in cash and stock. Evans Bank ($818mm, NY) said it has partnered with Welch ATM to provide machines in Rite Aid stores across New York State. Industry Bancshares ($2.4B, TX), the holding company of five TX banks, will acquire Bank of Brenham ($100mm, TX) for an undisclosed sum. The parent company of Stillwater National Bank and Trust Co. ($1.7B, OK) and Bank of Kansas ($294mm, KS) will sell 3 branches in KS with $135mm in deposits to BancCentral ($318mm, OK) and Fidelity Bank ($1.5B, KS). BancorpSouth Bank ($13B, MS) will acquire Central Community Corp ($1.3B, TX) for $210.8mm in cash (14%) and stock (86%). And First Federal of Northern Michigan ($214mm, MI) will acquire Bank of Alpena ($74mm, MI) for $4.3mm in stock.

Investment banker Keefe, Bruyette & Woods has been busy, doing 5 bank transactions already in January. It acted as financial advisor to Jefferson Bancshares, Inc. in a transaction where HomeTrust Bancshares and Jefferson Bancshares signed a definitive agreement under which HomeTrust will acquire Jefferson. Upon the completion of the transaction, the combined company is expected to have approximately $2.1 billion in assets. And TriCo Bancshares and North Valley Bancorp jointly announced that the companies have agreed to combine their two leading northern California bank franchises in a transaction valued at approximately $178.4 million. (The combined company will have approximately $3.5 billion in assets, $3.1 billion in deposits, $2.2 billion in gross loans and approximately 80 branches throughout California - stretching from Bakersfield in the south to Crescent City in the north.) Center Bancorp, Inc. and ConnectOne Bancorp, Inc. jointly announced that they have entered into a definitive agreement to merge, in a transaction valued at $243 million. And VantageSouth Bancshares, Inc. and Yadkin Financial Corporation jointly announced that they have entered into a definitive merger agreement.  The combination will create the largest community bank headquartered in North Carolina with approximately $4.0 billion in assets and significant distribution and scale across the state.

Turning to the agency MBS world, the flows were light on Monday. A trader summed things up by reminding us, "Mortgages continue to trade at uber-tight levels caused by a Fed that buys double the net production being created by originators. Even at the pace our economic team sees QE slowing down ($10 billion every session), we still see the Fed buying more than net production all the way to July/August."

For news, the one yesterday showed that purchases of new homes in the U.S. fell more than forecast in December, ending the industry's best year since 2008. (Sales decreased 7 percent to a 414,000 annualized pace, but for all of 2013, demand jumped 16.4 percent to 428,000, the most in five years.) But in spite of the continued Fed purchase volume, and the slowing housing news, agency MBS prices worsened about .250 and the 10-yr closed at 2.77%.

This morning we've had the always volatile Durable Goods number (December was expected lower on headline and core readings, and it came out at -4.3%, core -1.6%). We'll also have the S&P Case Shiller home price index for November, the release of January's Consumer Confidence, and the 1PM EST $32 billion 2-yr note auction. In the early going rates are a shade better: the 10-yr is at 2.75% and MBS prices are higher by .125.

Language discrepancies naturally arise in different geographic regions, like the raging "pop" vs. "soda" debate. But the South undoubtedly takes the cake. Conversations south of the Mason-Dixon Line will befuddle anyone not born there, and here is part 1 of 4 (or 5) of some of the more "interesting" Southern sayings with explanations.

1. "We're living in high cotton."

Cotton has long been a key crop to the South's economy, so every harvest farmers pray for tall bushes loaded with white fluffy balls in their fields. Tall cotton bushes are easier to pick and yield higher returns. If you're living "in high cotton," it means you're feeling particularly successful or wealthy.

2. "She was madder than a wet hen."

Hens sometimes enter a phase of "broodiness" - they'll stop at nothing to incubate their eggs and get agitated when farmers try to collect them. Farmers used to dunk hens in cold water to "break" their broodiness. You don't want to be around a hormonal hen after she's had an ice bath.

3. "He could eat corn through a picket fence."

This describes someone with an unfortunate set of buck teeth. They tend to stick up and outward, like a horse's teeth. Imagine a horse eating a carrot, and you'll get the picture.