Some folks in the business seem to be pretty clever at both naming websites and structuring deals. See for yourself HERE. I don't know enough about this business to make a compliance judgment about the advertising campaign. I do think it's the standard mortgagee letter from HUD...but they appear to be stretching the guidelines. Just like the old days, right?

Okay, everyone got excited over a new non-agency security that will soon be issued. But how will investors determine if the security fits their risk tolerance? The disclosure on the Redwood Trust/CitiMortgage issue is extensive, and the loans look excellent credit-wise. In the "old days" investors would rely on one of the top three rating agencies to tell them how safe a mortgage security was, but will anyone believe them now?

Rating agencies have been around for a century and their ratings have been used by regulators since the 1930's. They increased in popularity in the 70's, with the SEC giving S&P, Moody's, and Fitch "Nationally Recognized Statistical Rating Organization" status. The ratings often dictate what institutions like banks, insurance companies, and money market funds can and can't do. For example, if a money market fund can't have more than 5% of their assets in low-rated commercial paper, etc., it must buy higher credit quality paper.

Of course, just because a rating agency says a particular bond is AAA doesn't mean that investors have to buy it - the rating should be only one part of the decision making. But not only did rating agencies contribute to the credit bubble, they also accelerated the crash. In late 2007 and early 2008, for example, the agencies downgraded almost $2 trillion in MBS's. What was "AAA" one day was "C+" the next. And many institutional investors are prohibited from owning too many low-rated securities, so these downgrades led to forced selling, magnifying the panic. Buy high and sell low. Of course, the rating agencies are paid by the companies issuing the bonds - a conflict of interest? Sure it is. If you're buying AAA securities, you can claim that you're being responsible, but the rating agency might have missed correctly grading the risk. As one article put it, "working with a fake safety net is more dangerous than working without any net at all."

Not that it impacts smaller originators, but anyone servicing Freddie Mac loans learned of a new system that the agency is rolling out. Titled the "Freddie Mac Reimbursement System", the system will provide "operational efficiency to Freddie Mac Servicers", and replacing its current Online Reimbursement System. No more paper claims, real time decisions on submitted claims, etc. But wait, there's more! Freddie also updated its Guide to reflect new Broker Price Opinion (BPO) costs, a new expense code for the reimbursement of legal fees related to multiple bankruptcy filings, and a revised Form 1128, Loss Mitigation Transmittal Worksheet. Check it all out HERE

Sterling Bancorp (NY), the parent of Sterling National Bank, is entering the warehouse business. "The warehouse lending group will focus on serving established mortgage banking firms and will concentrate primarily on warehouse facilities secured by Fannie Mae, Freddie Mac and Federal Housing Administration residential loans."

Wells Fargo Wholesale, for the Fannie DU Refi Plus program, told brokers that the process was different if the existing loan was being serviced by Wells Fargo or not. For Wells Fargo-serviced loans, "If the SSNs on DU do not match the SSNs of the loan being paid off, verify the borrowers on the existing Fannie Mae loan are the same borrowers that will be on the new loan. Acceptable documentation for verification includes: Recent mortgage statement from loan being paid off, the existing mortgage note or security instrument, or the most recent Form 1098 Mortgage Interest Statement. For loans not serviced by Wells Fargo, if the SSNs on DU do not match the SSNs on the existing Fannie Mae loan, the loan is ineligible for DU Refi Plus.

Flagstar told brokers that it will be updating certain LPMI price adjustments on all eligible products based on changes by the MI companies. The LPMI price adjustments that will be updated are based on LTV and FICO's effective today. Flag will also be updating its current ARM programs. "Currently, Flagstar only offers Fannie Mae ARMs...we will be combining our current Fannie Mae ARMs with Freddie Mac guidelines to create an Agency ARM program. The current Fannie Mae 3/1, 5/1, 7/1 & 10/1 LIBOR ARMs will be renamed to the Agency 3/1, 5/1, 7/1 & 10/1 LIBOR ARMs." Eligibility criteria will remain the same except for "Primary residence, purchase and rate/term refinances, 3- to 4-unit properties now allowed to 80% LTV with an LP Accept response."

In one of the more interesting updates, Mountain West Financial told brokers that it has been "getting some push back from HUD in regards to swimming pools". Per MWF, HUD has been requiring that swimming pools be filled and all equipment is in working order. Therefore this lender will require will require all FHA loans (where the appraiser has given value to the swimming pool) to have the pool filled and all equipment be in working order. Apparently MWF already requires this for conventional loans. I am always amazed at how little I know...

Existing Home Sales rose 6.8% in March to the fastest annualized pace since....December. Total housing inventory is now at an 8 month supply. The median price was $170,700 in March, up 0.4% from March 2009. Distressed homes accounted for 35% of sales last month - unchanged from February.  Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 straight months. But FHFA's Purchase-Only House Price Index (it covers only conforming loans) fell 0.2% in February and is down by 3.4% from its level in February 2009. The regional indices came in mixed, with declines in the South Atlantic, New England, and West North Central divisions offsetting moderate increases in the Middle Atlantic, Pacific, and West South Central regions. HERE are a bunch of charts and more color on the topic.

The housing data is becoming hard to keep track of - so many numbers. Housing Starts data estimates how much new residential real estate construction began in the previous month, but does not include remodels. Building Permits data gives forward-looking data on planned construction, and thus is part of the Conference Board's Index of Leading Economic Indicators.

Baltimore first filed suit against Wells Fargo in 2008 accusing the bank of violating the Fair Housing Act by targeting minority neighborhoods with dishonest loans. That case was dismissed, but now a new complaint has been filed focusing on the alleged damages to the city caused by vacant houses. Apparently Baltimore would like Wells Fargo to foot the bill for the increase in annual cost per block of police and fire services.

Unfortunately for borrowers or brokers waiting to lock, Thursday was not a good day. Not only did the stock market come back from being down, but the Treasury announced a record large amount of new government debt issuance for next week. The Treasury said it will auction a total of $129 billion ($44 billion in 2-yr, $42 billion in 5-yr, $32 billion in 7-yr notes, and $11 billion 5-yr TIPS). Mortgage sales appeared heavy, with estimates of sales running at about $2 billion. Interestingly, the euro fell to a near one-year low against the U.S. dollar after the EU said Greece's budget deficit was worse than feared and Moody's cut its rating of Greek government debt (it's 10-yr yield is 8.40%). It appears that Greece will need to receive emergency loans to avoid default - are Spain and Portugal next? But bailouts can create massive political instability, in addition to the Euro falling in value. The Greek problem is not going to be over in a month or two. READ MORE

Today we had Durable Goods (very volatile) and New Home Sales. Durable Goods were expected to be +.3% for March and originally reported as +.5% in February, the third consecutive monthly increase (although most of the gain in February's number was due to a 4.7% monthly increase in machinery bookings). Prior to the number our 10-yr was at 3.81%. Durable Goods came out -1.3%, but ex-transportation it was +2.8% and February was revised higher to +1.1%, and after that the 10-yr went up to 3.82% and mortgage prices are worse by .250-.375. New home sales rebounded from historic lows this month, improving 26.9% in March. These "improvements" seem great but I remind that we are operating in an environment where new home sales are puttering along at record low levels. Thus month over month upticks look bigger on paper.

I went fishing last weekend but after a short time I ran out of worms. Then I saw a cottonmouth with a frog in his mouth. Frogs are good bass bait. Knowing the snake couldn't bite me with the frog in his mouth I grabbed him right behind the head, took the frog, and put it in my bait bucket.

Now the dilemma was how to release the snake without getting bit. So, I grabbed my bottle of Jack Daniels and poured a little whiskey in its mouth.

His eyes rolled back, he went limp. I released him into the lake without incident and carried on fishing using the frog.

A little later, I felt a nudge on my foot. There was that same snake with two frogs in his mouth.

Life is good in the South.