In yesterday's commentary, the information about ING should be clarified. Specifically, Capital One did recently close on its purchase of the U.S.'s ING Direct. For the entire corporation, however, and its holdings of sovereign debt, that is in the parent corporation, not Capital One. Regardless, ING is shuttering its mortgage operation.

Moving away from mortgage companies shutting down and on to those expanding, Republic Mortgage is seeking top producing branch manager candidates to open new territories in WA, OR, ID, MT, WY, CO, IL, TX, AZ, CA, NV and NM. Republic is based in Salt Lake City and has been in the full service mortgage banker business for 30 years. It offers "a full line of competitive loan products, competitive comp plans, decentralized processing, good training, marketing materials, a help desk, and a corporate theme of 'Continuous and Never-ending Improvement.'" Finally, as a side note, I have known these guys personally for many years and can highly recommend them as people of integrity. Contact Terry Mott at tmott@republicmortgage.com to arrange for a private and confidential interview.

Farther out west, Mortgage Solutions is hiring wholesale AE's and remote DE underwriters in OR, WA, and Southern & Northern CA. Mortgage Solutions, which has been around for 15 years and is a direct Fannie, Freddie, and Ginnie seller-servicer, "epitomizes niche lending by also offering HomePath, USDA, FHA/VA Manufactured Housing (following true HUD guidelines), FHA 203k, Rural Housing loans, HARP 2.0 (with no over-lays or LTV restrictions) and Non-Conforming Jumbo product." To lead this expansion, Mortgage Solutions has recently hired 20-year veteran Wholesale Production Manager Jim Woodcock to further expand and manage its sales force in the Northern CA, OR and WA. Mortgage Solutions offers a very competitive compensation and benefits package available to qualified individuals! All Wholesale sales candidates are required to have an active broker base prior to consideration. To learn more visit www.msofco.com, or to see rate sheets or inquire about available job opportunities with Mortgage Solutions please email Jim at jim.woodcock@msofco.com.

Will appraisals be required for principal reductions? Why would a borrower refinance when there is the possibility that Fannie & Freddie will be told to reduce what you owe in one big stroke? The implications are HUGE - what about all those poor FHA, VA, portfolio, jumbo, USDA, bond, rural housing, etc., borrowers?  The director of FHFA, which oversees F&F, has been steadfastly against principal reductions. (Read: DeMarco: Forbearance Protects Taxpayer Upside, Over Forgiveness) Recently Mr. DeMarco noted that F&F own or guarantee 60% of the outstanding mortgages in the country but account for only 29% of seriously delinquent loans. But over half of the modifications done through the Home Affordable Modification Program (HAMP) are on GSE loans.  Between HAMP and the GSEs' own proprietary programs there have been more than 1.1 million modifications of GSE loans completed since the fourth quarter of 2008. The agencies have taken the approach that modifications are better: to adjust the payment to an affordable level.  This lower payment, rather than a change in LTV from a principal reduction, has proved to be the key to a successful modification, and the GSEs achieve this through principal forbearance (charging a zero rate of interest on the forbearance amount and deferring its repayment).  This makes the monthly mortgage payment affordable, keeps the borrower in the home, and if the borrower is successful in this modified loan preserves for taxpayers an ultimate recovery on the debt. In other words, the method used by the GSEs produces the same lower payment as a modification based on principal forgiveness, and if the borrower ends up defaulting on a forbearance, the loss to the taxpayer will be the same.  If the borrower is successful, however, the taxpayer retains the opportunity to benefit from the upside, "a reasonable deal given the support the taxpayer has provided to assist the family in keeping their home." DeMarco said this approach also recognizes that three out of four deeply underwater borrowers on the GSEs books of business are current on their loans.  Their continued willingness to meet their obligations should be recognized and encouraged, not dampened with incentives to discontinue payment.

Turning to legal issues, which could easily fill its own daily commentary, the Department of Justice (DOJ) and the U.S. Attorney's Office for the Southern District of New York filed a lawsuit alleging that GFI Mortgage Bankers violated federal fair lending laws by charging African-American and Hispanic borrowers higher interest rates and fees on home mortgage loans because of their race or national origin, not based on their creditworthiness. Race, of course, has always been an issue: (Read - Justice Department Sues GFI for Overcharging Minority Consumers). The complaint against this 7-state lender, however, is turning some heads in the industry. It falls under the federal Fair Housing Act and Equal Credit Opportunity Act (ECOA). The complaint alleges that GFI charged higher loan prices to African-American and Hispanic borrowers than it charged to similarly-situated White borrowers by charging higher interest rates and fees for home mortgage loans. The suit alleges that the disparities, based on race or national origin, are statistically significant, and are unrelated to credit risk or loan characteristic, and since GFI's LO's shared in in the profits of each loan, there was an incentive to price their loan products in a discriminatory manner.

Although it is far beyond the scope of a short daily commentary to track all the mortgage-related news that comes out of every state every week, but this one is somewhat interesting: "Arizona Alters Financial Institution and Loan Originator Licensing Provisions." On March 16, Arizona enacted Senate Bill 1014, which make changes to fees and definitions affecting financial institutions. The new law sets a maximum fee of $250 that the Department of Financial Institutions (DFI) can charge to change the licensee name on a financial institution or enterprise license. The law tightens an exception to the definition of "loan originator" such that loan originators that originate five or fewer mortgage loans per calendar year are exempt only if the source of the prospective financing also makes five or fewer mortgage loans per calendar year. The new law now requires the Superintendent of the DFI to deny a license from an individual who (i) has been convicted of, pled guilty to, or pled nolo contendere to a felony seven years prior to the application, (ii) has been convicted of, pled guilty to, or pled nolo contendere to a felony involving fraud, dishonesty, a breach of trust, or money laundering at any time, or (iii) lacks the responsibility, experience, or competency to adequately serve the public. These changes take effect 90 days after the state legislature adjourns this year, which it is expected to do on or around April 17.  More

For LO's in Northern California, the Mortgage Insight conference will be held on Thursday, April 26th in Sacramento. I will be part of a panel including David Battany, former Director of Single family business at Fannie Mae and soon to be part of PennyMac, Sue Woodard, President of Mortgage Market Guide and Phil Rasori, capital markets director of MCT Trading. The afternoon will be spent looking forward into the future of the mortgage business and address the challenges and opportunities facing loan originators. The event is moderated by Jeff Tarbell, VP of Comstock Mortgage and host of Talkin' Money on CBS radio. Details can be found at www.insightconference.net.

An old trading adage says, "Rates fluctuate: sometimes they fluc up, and sometimes they fluc down." Tuesday they went up,  basically because the market "realized" that the Fed said that if the economy continues to improve, it won't have to always provide stimulus (READ: FOMC Minutes Show Waning Enthusiasm For QE3. Bonds Tank). Yesterday folks came to their senses, somehow, and remembered that returning the markets toward more normal buying and selling might not be such a bad thing (READ: MBS RECAP: Surprisingly Stable Rally. Waiting on NFP). The bottom line is that it's back to the data, along with looking at Europe. And Europe isn't doing so well again, so we're seeing a bit of a flight to quality.

This morning, in the very early going, the 10-yr is back down to 2.19% from its Wednesday's close of 2.24%, and "rate sheet" MBS prices - those securities filled with current production loans, are better by about .250. This morning we'll have weekly Jobless Claims but the next big number is, of course, tomorrow's Non-Farm Payroll which comes out on Good Friday - which is also an early close for the bond markets. So originators are best advised to lock today or first thing tomorrow.

(Parental discretion advised.)
Here is an interesting "fact" on manure.
In the 16th and 17th centuries, everything had to be transported by ship and it was also before the invention of commercial fertilizers, so large shipments of manure were quite common. It was shipped dry, because in dry form it weighed a lot less than when wet, but once water (at sea) hit it, not only did it become heavier, but the process of fermentation began again, of which a by-product is methane gas, of course. (Just ask the person in the next cubicle.)

As the stuff was stored below decks in bundles you can see what could (and did) happen: methane began to build up below decks and the first time someone came below at night with a lantern, BOOM!
Several ships were destroyed in this manner before someone figured out just what was happening.  After that, the bundles of manure were always stamped with the instruction, "Stow high in transit" on them, which meant for the sailors to stow it high enough off the lower decks so that any water that came into the hold would not touch this volatile cargo and start the production of methane. Thus evolved the term, made from the initials of "Stow High In Transit" which has come down through the centuries and is in use to this very day.
You probably did not know the true history of this word. Neither did I - I always thought it was an underwriting term.