This Friday is Good Friday. But today is not so "good" for our government, as S&P cut its US debt rating outlook to a "negative" given the debt & debt ceiling debate, pushing markets this morning. Religious sentiment aside, Good Friday falls into one of those "pseudo-holiday" categories, since the markets are closed, but many originators are open. Most are taking locks, but can't hedge them, or they sell the loans to investors at what could be termed "conservative" prices.

How many co-workers do you have? "Less than I had five years ago," is the answer for mortgage personnel. According to data from the Bureau of Labor Statistics, sliced and diced by the MBA, the mortgage industry hit a peak in early 2006 at 505,000, but is now at 248,000. Granted, many who shouldn't have been in the business have left, and there was excess manpower 5 years ago, but still it is really a sign of the times. The story can be found at MortgageJobsFading.

Some may want to move to Northern California - MetLife Home Loans is growing its footprint in that area. (MetLife itself is #51 in the Fortune 500 companies, and in 2008 MetLife Bank acquired First Horizon Home Loans. Although First Tennessee Bank retained most of the servicing portfolio in a holding company, MetLife has continued to expand and is now in the top ten retail mortgage banks with plans to increase market share.) "They are a sales and customer centric culture offering top notch local fulfillment and a jumbo portfolio product with 80% to $2,000,000." In the Bay Area MetLife is actively looking for loan officers/consultants for its various branches - interested parties should contact branch managers April Balthaser (abalthaser@metlife.com) or Joanne Berson (jberson@metlife.com).

On the banking side, leaving out the usual verbiage of "X Bank was closed by the appropriate state banking organization, which appointed the FDIC as receiver, who then entered into a purchase and assumption agreement with Y Bank..." let's go through Friday's FDIC activity (which had been somewhat quiet for the last few weeks). In Georgia, Bartow County Bank is now part of Hamilton State Bank and New Horizons Bank is now part of Citizens South Bank (NC). Over in Alabama, Nexity Bank is now using AloStar Bank of Commerce's letterhead and Superior Bank wasn't so superior and is now part of Community Bancorp LLC (TX). Up in Minnesota, Rosemount National Bank is now a branch of Central Bank. In M-i-s-s-i-s-s-i-p-p-i Heritage Banking Group now belongs to Trustmark National Bank.

The FDIC recently updated its loss, income, and reserve ratio projections for the Deposit Insurance Fund (DIF) over the next several years. The projected cost of FDIC-insured institution failures for the five-year period from 2011 through 2015 is $21 billion, compared to estimated losses of $24 billion for banks that failed in 2010 alone. The future is never certain, but most believe that the fund should become positive this year (it has increased for four consecutive quarters) and reach 1.15 percent of estimated insured deposits in 2018. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that the fund reserve ratio reach 1.35 percent by September 30, 2020.

Last October the FHA increased its MIP's from 55 basis points to 90 basis points, and today is increasing the monthly fee to 115 basis points for higher LTV loans. The FHA insurance premiums are not "grandfathered in," so a borrower who is currently paying low MIPs will have to pay higher MIPs if he/she were to refinance. This is a pretty clear example of what is bad for one group (originators, borrowers) is good for another (investors in existing Ginne Mae securities).
 
(Also note that starting today FHA systems will require mortgagees to certify at the time of requesting a case number that they have an active application for the borrower and property, and provide the borrower's name and social security number for all new construction. And FHA systems will automatically cancel any uninsured case number where there has been no activity for 6 months since the last action except for loans where an appraisal update has been entered and/or loans where the UFMIP has been received.)

An LO wrote, "I have always wondered why it is so difficult for my clients that have money in the bank and perfect credit to be approved, while an FHA buyer that has a gift of 3.5% down payment and no cash reserves zips right through the system.   I lost one last month. My borrowers had $2.5 million verified in the bank, looking for 35% down on a $200k loan. But they are retired and have little income. Part of it is their choice - they don't take more than they need from the accounts for tax reasons.  So, the debt ratio was over 45 (it was 47) and loan was denied.  After I told them, "Sorry, we were denied due to lack of income," they paid cash the next day.

CitiBank released some financial information this morning: earnings came in slightly higher than expected, although earnings were slightly below. Net credit losses were down 25% in the first quarter, and analysts are hoping for more good news ahead. It had a 10% loan growth in the first quarter, but repurchase requests are expected to take a toll on future earnings.

River City Mortgage, one of the larger residential lenders in Minnesota, has agreed to be taken over by Wintrust Financial Corp (Illinois). River City has been around for 17 years, but president Louis Olsen said tighter federal regulations played a key role in his decision to sell, basically saying that new rules have created an "uneven playing field" between non-bank mortgage firms like River City and large banks that are exempt from the regulations. The new regulations, "... will cost consumers in the long run because it will reduce competition and banks will be able to charge whatever they can" for mortgages. River City Mortgage originated $500 million in 2010, making it one of the five largest nonbank mortgage lenders in Minnesota.

"Fannie Mae told mortgage servicers to halt a practice that could help them avoid repurchasing flawed home loans.  In a notice to banks today, the company said servicers are prohibited from entering into loss-sharing or indemnification agreements with mortgage insurers. The deals help servicers avoid having their policies revoked." FannieServicers
Licensing is on the mind of every LO, and on every mortgage company. The NMLS Mortgage Call Report is a quarterly report of mortgage activity and company information created by state regulators and administered electronically through NMLS. "The NMLS Mortgage Call Report is intended to be completed by all state-licensed companies and all state-registered companies that employ licensed mortgage loan originators" and will be functionally rolled out May 2. The first NMLS Mortgage Call Report filing is due May 15th. A practice worksheet has been set up, and training is being held. Visit NMLS

Speaking of training, REMN is offering a webinar for more information on GFE standards. The session is tomorrow at 2PM EST. REMNTraining 

Investor news continues. Wells Fargo's wholesale group sent out news on "Compensation and Anti-Steering: GFE Review on Lender-Paid Transactions, Clarification: Specify USDA in Notes When Ordering an Appraisal, Reminder: Appraisal Required on FHA Loans with Case Numbers Six or More Months Old - Effective April 18, TPO Brokers: Requesting an FHA Case Number on the Broker's First Website."

Union Bank's wholesale group has developed guidelines to allow borrowers who meet certain criteria to utilize their assets as an income stream. The information below details the criteria that must be met and how to calculate the income stream. It is a step in the right direction. Borrowers must have a minimum of $250,000 in liquid assets plus certain reserve requirements based on loan size, and eligible assets include a range of instruments such as checking accounts, CD's, a percentage of stocks or bonds, and so forth. Check with your Union Bank rep or the announcement for specifics.

On Friday Kinecta Federal Credit Union rolled out its Jumbo 30 Year Fixed Portfolio product to its Platinum Business Partners. The program includes loan amounts up to $2,000,000, LTV/CLTV up to 70/70%, primary residence only, and on purchase or R&T refinance transactions.

Pricing engines released M&T's intermediate term hybrid ARM product line-up, along with a series of Affiliated Mortgage's FHA products (10-yr, 15-yr, etc.)

Looking back to Friday, agency mortgage-backed securities had a nice little improvement: .5-.625 depending on coupon. Volume picked up a little, which is nice to see in a rally, although for the week volumes were below normal. (We'll probably see this in Wednesday's MBA app index.) The 10-yr notes rallied by more than .5 in price, closing around 3.41%. Interestingly, this happened in spite of inflation coming in about as expected, Industrial Production increasing .8% in March and Capacity Utilization hitting 77.4% (the highest since August 2008), and the University of Michigan's preliminary index of consumer sentiment moving up to 69.6, higher than forecast.

Unlike last week, this week will be shortened by a holiday and will be a light week for economic data. We have some type of housing index data today, unlikely to move rates. But tomorrow we'll have the excitement of Housing Starts and Building Permits. Existing Home Sales will come out on Wednesday, and the Philly Fed numbers, Leading Economic Indicators, and another house price index are scheduled for Thursday. Mortgage markets will close early on Thursday and will be closed on Friday in observance of Good Friday. The 10-yr is down to 3.38%, and agency MBS prices are better by about .125.

Several men are in the locker room of a golf club.  A cellular phone on a bench rings and a man engages the hands-free speaker function and begins to talk.  Everyone else in the room stops to listen.

MAN:  "Hello."
WOMAN:  "Hi Honey, it's me. Are you at the club?"  
MAN:  "Yes." 
WOMAN:  "I'm at the shops now and found this beautiful leather coat.  It's only $2,000.  Is it OK if I buy it?"  
MAN:  "Sure, go ahead if you like it that much."  
WOMAN: "I also stopped by the Lexus dealership and saw the new models. I saw one I really liked."  
MAN:  "How much?"  
WOMAN:  "$90,000."  
MAN: "OK, but for that price I want it with all the options."  
WOMAN: "Great! Oh, and one more thing.  I was just talking to Janie and found out that the house I wanted last year is back on the market.  They're asking $980,000 for it."  
MAN: "Well, then go ahead and make an offer of $900,000. They'll probably take it. If not, we can go the extra eighty-thousand if it's what you really want."  
WOMAN: "OK. I'll see you later!  I love you so much!"  
MAN: "Bye! I love you, too."  
The man hangs up.  The other men in the locker room are staring at him in astonishment, mouths wide open.  
He turns and asks, "Anyone know whose phone this is?"