Here's your IT lesson for the day. The NSA's Skynet program utilizes metadata to identify suspected terrorists. The system uses mass surveillance of cell phone data and runs patterns through a learning algorithm that identifies "normal" human behavior (i.e. daily routine travel patterns) against individuals who go through greater lengths to remain undetected. The use of metadata is not new (i.e., Instagram is uses it to sell products to users) but the NSA's program overseas is far more controversial as the results are passed along to the CIA for potential drone strikes. I am not a terrorist, but don't like Apple or Google tracking where I am all the time so turned that feature OFF on my phone. (Go to Settings, Privacy, Location Services, System Services, Frequent Locations - but it is a great way to see where your kids have been.)

And after less than a year in operation, Google is reportedly abandoning its mortgage comparison business in the U.S. It's also closing its well-established U.K. mortgage site. Google sent a letter to advertisers saying the sites would shut down March 23. "Despite people turning to Google for financial services information, the Google Compare service itself hasn't driven the success we hoped for. We greatly appreciate your partnership and understand that this decision will be disappointing to some. But after a lot of careful consideration, we've decided that focusing more intently on AdWords and future innovations will enable us to provide fresh, comprehensive answers to Google users, and to provide our financial services partners with the best return on investment." In other words the revenue generation was insufficient and selling leads cannibalized Google's other advertising businesses. After all, there is overlap. Had Compare not existed, many lead buyers would have used Google AdWords to attract mortgage leads.

Yesterday the commentary mentioned several updates to Fannie's, Freddie's, and other conventional conforming programs. There's more! And why do folks care? Because the lion's share of originator's volume continues to be directed to these programs, which in turn flow into agency mortgage-backed securities.

A state of emergency has been declared for Flint, Michigan, due to the city's water quality. This Fannie Mae Notice reminds servicers that workout options are available to assist borrowers who may be struggling to make their mortgage payments, including granting disaster relief. "Servicers are authorized to temporarily suspend or reduce a borrower's mortgage payments for up to 90 days. The Notice also reminds lenders about existing products and options that homeowners can use to purchase homes, or refinance or repair existing homes. This includes DU Refi Plus and Refi Plus, HomeReady, HomeStyle Renovation, and Community Seconds. Fannie Mae continues to buy loans secured by properties in Flint and the surrounding area. We also published Frequently Asked Questions that answer a number of appraisal- and property-related questions that we have already received."

Fannie Mae servicing guide updates include: Updates to Form 629, Removal of the DO and DU Maintenance Fee, Update to the New Jersey Foreclosure Attorney Fee, Introduction of the Servicing Guide Change Control Log, and Reminder of Law Firm Selection and Retention Requirements.

Fannie Mae is eliminating the continuity of obligation in its entirety via SEL 2016-02. "The continuity of obligation policy is being eliminated in its entirety. This policy was introduced during the financial crisis, to ensure borrowers who recently acquired ownership of a new property in the absence of a recorded sale of the previous property were properly qualified and it applied to all limited cash-out and cash-out refinance transactions. Since this policy was introduced, Fannie Mae has implemented a number of policy updates to improve the reliability of borrower qualification, broadened the collection of appraisal data, and developed Collateral Underwriter®, an appraisal assessment tool. These actions collectively provide adequate controls to ensure borrower eligibility requirements and maximum LTV ratio limits are met. As a result, the continuity of obligation policy is no longer required. The elimination of this policy will simplify refinance transactions. The Desktop Underwriter® (DU®) messaging referencing continuity of obligation will be updated in a future release and may be disregarded until that time. Also, the reference to continuity of obligation on the Eligibility Matrix has been removed. The updated Matrix is available on Fannie Mae's website.

Effective Feb. 8 Fannie Mae and Freddie Mac implemented the Appraisal-Sharing release in the Uniform Collateral Data Portal (UCDP). This new functionality enables correspondent lenders to easily share appraisal information in UCDP with their aggregators. Aggregators also have access to real-time results for their correspondents' appraisals. Updated UCDP user documentation, as well as new job aids that highlight this functionality, are all available on the UCDP page.

Effective for loan submissions after February 1st, ditech updated its Fannie Mae (DU and Manual Underwrite) guidelines regarding how to calculate and document self-employment income, including the parameters under which business income without a history of distribution may be included to qualify self-employed borrowers. Ditech has posted an update to its DU Refi Plus products. When the borrower receives/received Hardest Hit Funds assistance (HHF), the loan is not eligible if the borrower received HHF assistance to make the mortgage payment in the past 12 months. For loans submitted to ditech for underwriting, a copy of the HHF note and the disbursement schedule and bank statements for last 12 months will be required to verify funds were not used in making the mortgage payment. For loans underwritten by a delegated correspondent, ditech recommends obtaining this documentation to verify the HHF assistance was not used to make the mortgage payments. Note, this process is for refinance transactions where the borrower had previously received HHF assistance. Ditech does not currently allow a refinance transaction with new HHF assistance.

Lenders are encouraged to begin using Fannie Mae's new Loan Delivery application as soon as possible. Import and submit functions within the old application will be disabled as of Feb. 1, 2016 (only archive and MBS correction functions remain). Lenders should be aware that delayed use of the new system could impact future deliveries. To support your transition reference the Checkpoint, At-A-Glance User Tips and more on the new Loan Delivery page.

For all loans sold to AmeriHome, Sellers must comply with the requirements of the Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice (Section 501(b) of the Gramm-Leach-Bliley Act (GLBA)). Its new requirement, to ensure compliance, Sellers must: maintain a response program designed to address incidents of unauthorized access to borrower information maintained by the Seller, report known or suspected data breaches affecting loans sold to AmeriHome, and cooperate with AmeriHome in the event of a breach.

ditech is eliminating the 5% reduction to the LTV for mortgages with secondary financing that are locked in a Freddie Mac program. Implementation of the removal of the 5% reduction will be done in phases.

Fifth Third Correspondent is aligning with HUD guidelines, and a new appraisal is required to be ordered on all HUD REO properties.  For HUD REO properties with escrow repair, the cost of the necessary repairs will be based upon the appraisal, Real Estate Assets Manager's (REAM) inspection, and/or staff inspections, as necessary.  Regarding Freddie Mac cash-out refinance, the maximum LTV/TLTV/HTLTV expansion to 85% for fixed-rate mortgages secured by 1-unit primary residences is permitted provided ALL of the following conditions are met: minimum 740 FICO, LP Accept/Ineligible required with Ineligible due to LTV, any condo must not have used a Streamlined Project Review and not Super Conforming.

We had a fair amount of U.S. news yesterday, but it was mixed. The S&P/Case-Shiller showed that home prices in major metropolitan areas continued to rise in December. The 20-city home price index increased +5.7% as the best year-over-year gains centered in Portland, San Francisco and Denver each adding over 10% gains. But Consumer confidence numbers fell to seven-month lows as Americans are more pessimistic about job prospects and business conditions. But wait! U.S. existing home sales rise to a six-month high. So when all was said and done agency MBS prices didn't do much.

Intra-day volatility has increased however, which is never an inexpensive thing for lenders trying to hedge their pipelines and pass along cost savings to borrowers. As a proxy for the bond market in general, 10-year notes briefly broke 1.80%, hitting a high of 1.814% but then finally closed at 1.75% - about where they started the day!. The early backup in treasuries proved attractive for MBS investors who were good buyers on better than average volumes early in the session. And then the Fed came in buying their usual daily billions which certainly helped the "demand" side of the equation.

This morning the MBA told us what lock desks around the nation knew: overall app volume was down about 4%. (Purchases were actually up about 2% with refis tumbling almost 8%.) Later we will some forgettable Market Services PMI number, but also January New Home Sales at 9AM CST. And if you have any loose change the Treasury will conduct two auctions today: $13 billion reopened 2-year FRNs and a $34 billion 5-year auction. As mentioned above we had a 1.75% close on the 10-year and this morning it is down to 1.69% and agency MBS prices better by roughly .125-.250.

The Quotes of Steven Wright, part 1 of 3.

1 - I'd kill for a Nobel Peace Prize.

2 - Borrow money from pessimists -- they don't expect it back.

3 - Half the people you know are below average.

4 - 99% of lawyers give the rest a bad name.

5 - 82.7% of all statistics are made up on the spot.

6 - A conscience is what hurts when all your other parts feel so good.

7 - A clear conscience is usually the sign of a bad memory.

8 - If you want the rainbow, you got to put up with the rain.

9 - All those who believe in psycho kinesis, raise my hand.

10 - The early bird may get the worm, but the second mouse gets the cheese.

< >11 - I almost had a psychic girlfriend, but she left me before we met.

12 - OK, so what's the speed of dark?

Jobs and Announcements

For opportunities, and something a little off the beaten path, "Attention Mortgage Account Executives and Loan Officers! Looking for a way to significantly increase your earning potential and get away from TRID and the CFPB? CapitalFront, LLC, one of the most well capitalized and fastest growing companies in the Fintech/Business lending space, is searching for account executives to take part in our explosive growth -especially in the Philadelphia market. Founded by longtime mortgage industry veteran Brian Simon (former COO of New Penn Financial and Freedom Mortgage), and backed by significant investment partners, CapitalFront is bringing innovative products and technology to the business lending arena. If you are looking for a new industry where your mortgage skills can be leveraged into greater career and financial opportunities, please send your resume to HR Manager Clare McGovern.

On the retail side American Bancshares Mortgage in Miami Lakes, Florida is expanding its footprint in the North and South Eastern states and is searching for top LOs. "ABSM is a 21 year old direct seller/servicer committed to the American Dream. 'We have a strong company culture and have made a commitment to exceptional service levels,' said John Cosculluela,President and CEO, CMB. 'We are looking for Branch Managers, Loan Officers and State Sales Managers who are passionate and have a strong work ethic.' Contact Sandy Garcia, VP of production today for more information about our benefits, commission structure, products, exceptional turn times for underwriting and closing, and to schedule a confidential interview.

Want to take a stab at winning an iPad? One entry takes only 3 minutes in Hammerhouse's 6th Annual Survey of Originator Producer and Leadership Opinions. The Survey will be coming to a close in less than a week. "Year over year, we look for trends in how Leaders and Producers place value in the organization they work with and how they evaluate those trying to recruit them. Often, the indicators point back to leadership and culture driving decisions for movement and retention, while other components like operations, product/pricing,compensation and technology are viewed as 'expected' to be competitive in order to retain or attract new folks to the team. If you have not already, follow the link to participate. It takes very little time and we will tally and publish the result to share with all in March."

In other news that gives us an indication where the industry is and where it's going, Mitch Hochberg, a former attorney & lead counsel with the CFPB, will lead compliance efforts at Goldman's digital lending upstart. He has joined Goldman Sachs as the head of compliance for its new online consumer lending business. Hochberg worked on mortgage regulations tied to the implementation of the Dodd-Frank financial reform laws but left the regulator to join Fenway Summer, a consumer finance investment and advisory firm founded that year by former CFPB deputy director Raj Date.