Earlier this week I received a note from the owner of a mortgage bank in Pennsylvania. "Rob, with all this 3% cap talk going on [editor's note: it is from QM] what is to stop us just instituting a minimum loan amount? How is the borrower and lender going to cover all their costs on an $80,000 loan? With our current cost structure, plus that of the closing agent, underwriting, appraisal, and so forth, we'll just set the bar at $250k." Well, it makes perfect business sense, but not so much from a Fair Lending perspective. If the CFPB doesn't catch you, which they will, then the Department of Justice will. The case that jumps to mind about discrimination and setting minimum loan amounts that attracted a big penalty to the lender took place 7 months ago.

Affiliated Mortgage Company's Correspondent Division, located in Monroe, Louisiana, currently has an opening for a Shipping Manager. Position responsibilities include managing a team responsible for the preparation of electronic loan packages and all other administrative functions of loan delivery, including resolving exceptions, creating documentation and preparing reports. The person will also serve as the main point of contact with third party investors on post funding issues to ensure timely and accurate purchases and will work with mortgage managers to improve processes, document flow and retention. Affiliated Mortgage Company is a wholly owned subsidiary of Benchmark Bank of Plano, Texas and is "a mainstay in the correspondent lending business." Please contact jobs@affiliatedcorrespondent.com for more information.

Lenders, want to go after purchase business from Realtors? Well, you can emulate Wells Fargo: it hired 76-year old former Notre Dame football coach Lou Holtz. According to the Bloomberg article, "Holtz, who led Notre Dame to a national championship in 1988, will offer inspirational tips today at an invitation-only program hosted by the San Francisco-based bank. Presentations by Holtz and others will be broadcast in high-definition to about 24,000 Realtors in 86 movie theaters across the U.S. While this is the bank's sixth annual 'CineMeeting,' intended to bolster its relationship with real-estate agents, the event is taking on added importance this year as lenders seek an edge in financing home purchases."

A quick note on whether or not one can assume a VA loan. Here is the actual link to the VA Lender's handbook. Go to Chapter 5, Section 7. (Thank you very much to Gary B. from Envoy for providing this.)

FHA & VA loans see their share of delinquencies and foreclosures, although the VA program, in spite of its high LTVs, has a disproportionate low share of them. Last year, and to some extent this year, the focus of servicers was on the $25 billion National Mortgage Servicer Settlement. But the independent foreclosure review settlement is also causing some hand-wringing for servicers and borrowers. Recently lawmakers lambasted regulators for providing poor oversight of consultants hired to review millions of troubled home loans as part of a multibillion dollar foreclosure agreement with the country's largest banks. "People want to know that their regulators are watching out for the American public, not the banks," Sen. Elizabeth Warren (D-Mass.) told regulators at the Senate banking committee hearing. "Without transparency, [we] cannot have any confidence in your oversight or that markets are functioning correctly."

Speaking of foreclosures, attorney Brian Levy wrote, "On April 11, the Senate held a hearing on the OCC's use of independent consultants who were hired pursuant to Consent Orders to determine if the banks had made foreclosure errors and borrower compensation as a result.  When Senators asked the witnesses what were the error rates that they found in their reviews, 2 of the 3 witnesses claimed 'privilege'. The other claimed he did not have that information. I found this interesting because 'privilege' usually requires representation of a client whose confidential information needs to be protected from disclosure. Here, the reviewers were supposed to be acting at the demands of the regulators and substantial efforts were made in the engagements to ensure independence. So, the consultants' claims of privilege begs the question of who really was/is their client. Meanwhile, given the massive sums the consultants received to find out if errors were made, I'm not sure saying you don't have that information is a better response. While it is extremely difficult to identify specific consumer harm (as opposed to just improper paperwork) arising from most of the types of servicing and foreclosure errors that the consultants were asked to examine, there is no doubt that after spending $2 billion to find out what happened, apparently all we learned is that the consultants got paid a lot and the OCC would do it differently next time. I suspect the story will continue to unfold." (Thank you Brian, and if you want to reach him he is at blevy@kattentemple.com.)

Law firm Bilzen Sumberg reported in its write up "Shocking Statistics from Foreclosure Review." "As widely reported recently, close to 1.2 million borrowers (about 30% of the more than 3.9 million households that faced foreclosure proceedings by the 11 leading financial institutions in 2009 and 2010), had to battle purported wrongful seizures of these properties. These battles were frequently waged despite the borrowers not having defaulted on their loans, being protected against foreclosure under federal law, or having been in good-standing under bank-approved plans to either restructure their mortgage loans or temporarily delay required payments. Here is the link for more: http://www.mortgagecrisiswatch.com/.

Let's move on to some events, seminars, and bank earning updates.

The Illinois Mortgage Bankers Association is sponsoring a Mortgage Market/Regulatory Update Conference on April 23 in Chicago near O'Hare. The agenda includes concurrent sessions on selling cash loans to Fannie Mae, Loan Officer Compensation, Market and Regulatory changes affecting valuations, CFPB Update, Affordable Housing Programs/FHA Update, Anti-Money Laundering, and Mortgage Servicing/HAMP Litigation/Legislative Updates. Attendees must register in advance at www.imba.org.

Here is a webinar being hosted by Mortech on Allregs.

M&T Bank Corp., the lender trying to buy Paramus-based Hudson City Bancorp, said that first-quarter earnings increased by nearly one-third, reflecting higher mortgage banking revenue and lower costs associated with problem loans compared with the year-earlier period. M&T's mortgage banking revenue, derived largely from collecting origination fees on refinanced loans and selling the loans in the secondary market, increased to $93.1 million in the most recent quarter from $56.2 million in the first quarter of 2012. However, mortgage banking revenue fell by $23 million compared with the fourth quarter of 2012, when the bank posted a record $116.5 million. The decline in refinancings in the first quarter as compared with the fourth period appears to be a trend: Wells Fargo and JPMorgan Chase & Co. last week reported that their mortgage banking results declined in the past three months as well.

Citigroup reported a 30% jump in first-quarter net income to $3.8 billion and a 6% increase in revenue, to $20.5 billion. The housing rebound helped Citi ink smaller losses, roughly $794 million, in its Citi Holdings unit that houses $149 billion of problem assets left over from the financial crisis. In previous quarters, those losses came in above $1 billion. Citi funded $18 billion in mortgages in North America, up 26% for the year. (Wells funded $140 billion, enough to maintain a dominant market share, but down 25% for the year.) Citi executives said they weren't looking to significantly grow the mortgage business.

In yet another microcosm of the mortgage industry, and indicative of what many are seeing, Horizon Bancorp came out with its earnings. Focusing on "mortgage", residential mortgage lending activity during the first quarter of 2013 generated $3.1 million in income from the gain on sale of mortgage loans. This was an increase of $832,000 from the same period in 2012 and a decrease of $896,000 from the fourth quarter of 2012. "The quality of the loans we are originating has consistently facilitated the sale of longer-term, lower interest fixed rate mortgages to the secondary market. This has driven valuable non-interest income and enabled us to manage the risk profile of our loan portfolio." Total loans decreased by $100.9 million from $1.2 billion at December 31, 2012 to $1.1 billion at March 31, 2013. Mortgage warehouse loans decreased by $107.8 million and consumer loans decreased by $7.4 million. The CEO noted the slow-down in the company's mortgage warehousing business reflects interest rate movements, seasonality and the decline in the demand for mortgage refinance business. The short-term funding needed for mortgage warehouse loans declined and deposits increased.

Generally speaking, a slowing economy leads to less demand for borrowing, and thus declining rates. How slow is it in China? The US has supplanted China as the top destination for Japanese exports for the first time since 2009, as the impact of China's slowdown was exacerbated by the fallout from a territorial spat between Asia's two largest economies.

For mortgage lenders, rates have not done much, but companies continue to report trying to hang on to locks. In spite of huge questions on the CFPB's take on renegotiations (the disparate impact of changing one person's lock and not changing everyone's), decisions must be made to cut margin and chase loans or stay consistent and hope for enough loans to "grease the origination wheels." And although rates will probably be steady for many months, the cost of originating a loan will only increase (some gfees going up on June 1, with more increases expected later this year).

Yes, rates have not done much, but yesterday afternoon we did have the Fed Beige Book's description of economic conditions around the U.S.: slow and steady growth for the most part - "moderate" was the term used. Regardless, the market was not surprised, with agency MBS prices finished roughly unchanged from Tuesday's closing levels and the 10-yr yield at 1.70%. In the early going rates are nearly unchanged from Wednesday afternoon, which means they've been behaving themselves all week, but we'll see what happens after Initial Jobless Claims (expected 350k versus 346k previously), 8AM MST's March Leading Economic Indicators (+0.1 versus +0.5) and April Philly Fed Index (+3 versus +2).

Jack decided to go skiing with his buddy, Bob. So they loaded up Jack's minivan and headed north.

After driving for a few hours, they got caught in a terrible blizzard. So they pulled into a nearby farm and asked the attractive lady who answered the door if they could spend the night.

"I realize its terrible weather out there and I have this huge house all to myself, but I'm recently widowed," she explained. "I'm afraid the neighbors will talk if I let you stay in my house."

"Don't worry," Jack said. "We'll be happy to sleep in the barn. And if the weather breaks, we'll be gone at first light."

The lady agreed, and the two men found their way to the barn and settled in for the night.

Come morning, the weather had cleared, and they got on their way.

They enjoyed a great weekend of skiing.

But about nine months later, Bob got an unexpected letter from an attorney.

It took him a few minutes to figure it out, but he finally determined that it was from the attorney of that attractive widow he had met on the ski weekend.

He dropped in on his friend, Jack, and asked, "Jack, do you remember that good-looking widow from the farm we stayed at on our ski holiday up north about 9 months ago?"

"Yes, I do!" said Jack.

"Did you, uh, happen to get up in the middle of the night, go up to the house and pay her a visit?"

"Well, um, yes!" Jack said, a little embarrassed about being found out. "I have to admit that I did."

"And did you happen to give her my name instead of telling her your name?"

Jack's face turned beet red, and he said, "Yeah, look, I'm sorry, buddy. I'm afraid I did. Why do you ask?"

"She just died and left me everything."

(And you thought the ending would be different, didn't you?)