A police recruit was asked during the exam, "What would you do if you had to arrest your own mother?" He answered, "Call for backup." 

The SEC didn't appear to call for backup when it announced a $28 million RMBS (residential mortgage backed security) settlement, filing and simultaneously settling a suit alleging that an H&R Block subsidiary engaged in the fraudulent sale of subprime RMBS's. The complaint alleges that during a short period at the beginning of 2007, Option One Mortgage, now known as Sand Canyon Corporation, sponsored over $4 billion of RMBS and represented to investors that it would repurchase or replace any pooled mortgage for which there was a breach of a representation or warranty. The SEC alleges that at the time it sponsored the RMBS at issue, Option One was experiencing financial difficulties related to the broader decline of the subprime mortgage market and faced substantial margin calls from its creditors. As such, Option One's condition would have prevented the company from meeting its obligations to repurchase faulty loans. Further, according to the SEC, (i) Option One failed to disclose that it was reliant on a line of credit from its parent, (ii) H&R Block was under no obligation to provide that funding, and (iii) Option One's losses threatened H&R Block's credit rating at a time when the parent was negotiating the sale of Option One. But only $28 million?

I have been retained by a Texas-based bank with a large warehouse division which is seeking a marketing director to develop and manage clients for the eastern half of the United States. The candidate must reside in this region, have 4-5 years of warehouse experience, and have a basic understanding of financial statements. The bank's management would be interested in meeting any qualified candidate at the upcoming MBA conference in Manhattan next week. If you have any interest, please submit your resume and contact information to me at rchrisman@robchrisman .com.

In Southern California, Mountain West Financial has an immediate opening for a VP of Compliance. Primary responsibilities include: analyzing current & future regulations to assess their impact on the company and creating policies & procedures to incorporate changes as necessary; ongoing review of existing policies & procedures to test compliance and adherence; and ongoing risk assessment for all areas of the company, implementing changes where needed. Founded in 1990, MWF is headquartered in Redlands, is FNMA, FHLMC, and GNMA approved, retains a majority of its servicing rights, and is increasing its footprint in California and contiguous states. Submit resumes to Gary Martell at garym@mwfinc .com.

Maybe these jobs will see some interest from agency folks. The "brain drain" at our agencies continues, with the latest being Anthony Renzi, who oversees Freddie's single-family business, is leaving to take a job with me writing this daily commentary. Okay, just kidding about that, but in the past few years not only have many executives left F&F, but both CEO's have said they plan on leaving this year. Per the FHFA, Freddie saw its voluntary-turnover rate rise to about 13% in the first six months of 2011, up from 8.5% on average over the previous five years, and Fannie's rose to around 11% after averaging slightly above 6% over the preceding three years. And who can blame them, given less pay, public complaints, compensation not tied to performance, second guessing from regulators, low morale, and a dubious future.

Speaking of compensation questions, I receive my share of notes complaining about other lenders appearing not to follow the letter, or at least intent, of the LO comp rules. The latest was this: A few months ago I had an interview with a potential LO recruit for one of our offices and was quite surprised to hear that our comp plan was not competitive with her current plan. She then explained her plan that she could still charge different amounts on a loan-by-loan basis. So I asked how that worked and she said if she had a FHA loan she would price it at 3 points rebate and charge 1 point origination and she would make a 70% SPLIT on her 4 points payable 70 basis points on her next payroll and the remaining 210 basis points was banked and she could pay for marketing her assistant out of that 'bucket.' Any money left in that bucket at the end of the quarter was paid out as a bonus. This is quite different than the way my attorney and I have interpreted the rules. I would just like a level playing field where we pay fixed basis points for all of our loans, as do others. To whom can I report this?"

Both the state regulators and the CFPB are responsible for compliance. Since the LO Comp Rule is a component of the Truth in Lending Act, the direct regulator is the CFPB.  And, in its examination procedures, receipt of complaints can be a factor in initiating an examination and/or will be considered in connection with an otherwise scheduled examination. The CFPB has set up a whistleblower program, which you can get information about here.   Most state regulators also have a system to submit such information, and many states, such as California, incorporate applicable federal law into the licensing requirements such that a violation of a federal law concerning mortgage loan origination (such as the LO Comp Rule) constitutes a licensing violation and, potentially, grounds for license discipline.

Okay, last word on "youts" in mortgage banking & real estate. Jordan T. wrote, "I am a 25 year old who started in this business while I was still in college, and it's been an interesting 4 years.  I am often the youngest person in the room, whether it is a client's office or conference vendor hall.  For me, part of the appeal of the industry is the fantastic knowledge base from the veterans.  I am lucky enough to work with an outstanding group of people who constantly take the time to teach me and give me the chance to learn from their diverse experience.  Directly, I work with some excellent women who strive to make me a better businesswoman and teach integrity by example.  If a youngster can learn to work with the craziness that is the mortgage business and have a supportive team of mentors in place, then the mortgage industry can foster great career. And if everyone is getting old, aren't we going to need leaders? Why wouldn't a twenty-something want to get in this business? It's fast paced, always challenging, constantly changing, and involves a good amount of socialization. Technology is becoming more prevalent in the industry and us 'kids' have an easy time navigating everything from an Excel to web based complex systems to Webinars. With an aging demographic, there is ample room for upward movement. Connections exist in a small enough circle to allow us to really get our name out there if our current company isn't delivering. To your point, I can count the number of 20 something, nationally known, Mortgage Professionals that I know on one hand.  But, wow - it's a talented group.  The mortgage business is in my blood and I'm not leaving any time soon. Expect great things of us, and we will deliver."

How about some somewhat recent lender/investor/agency/MI updates? As always, it is best to read the actual bulletin, but this will give one a flavor for what is happening out there. In no particular order...

Wells Fargo Wholesale has issued a reminder to brokers that, under Sections 301.02 and 302.02 of the Broker Origination Guide, it is their responsibility to comply with the relevant state laws on disclosures.  This is especially pertinent for brokers operating in New Mexico, who are subject to disclosure requirements for transactions negotiated in a foreign language but finalized in English.  In such cases, the consumer must be supplied with a summary translation in the language used in the negotiations along with the final documents.  Wells Wholesale, for its part, will fund and purchase loans in New Mexico so long as the broker complies with the Broker Guide.

Wells Fargo Correspondent, for one, has changed its Early Payoff policy from 90 to 180 days after the date of purchase for Best Effort Registrations, Best Effort Locks, and Mandatory Commitments on and after May 1st.   If it is a pooled FHA, VA, GRH, Conventional Conforming, or Conventional Non-conforming SRP loan that is completely paid off within the 180 day limit, the seller may be required to reimburse Wells.  This also applies for non-pooled FHA, VA, GRH, Conventional Conforming, and Conventional Non-conforming loans that have an above par pricing premium.

Flagstar requires that, for all refinances it underwrites that close on or after May 1st, the payoff statement cannot reduce the loan payoff by the amount of the escrow balance.  The escrow balance may not be credited to the borrower in the 100 or 200 section of the HUD-1 Settlement Statement, nor may it be used to reduce the borrower's funds to close.  Escrow funds must be refunded by the servicing lender after the full loan payoff is received.  Due to the federal regulations that prohibit escrows from being used for any other purpose than those for which they were originally received, this will affect FHA refinances on conventional, VA, and USDA loans.  Flagstar will no longer purchase FHA loans from DE Delegated Correspondents that have closed on May 1st or after that do not comply.

Good news for the housing market continues, with the U.S. Census Bureau reporting that vacancy rates for both owner-occupied and rental properties dropping to new recent lows in the first quarter of 2012. Hey, people need a place to live, right? The rental vacancy rate dropped below 9 percent for the first time since the second quarter of 2002 and the homeowner rate was the lowest since the first quarter of 2006.

Fortunately rates continue to behave themselves, and volatility is nil. We have certainly not seen many intra-day price changes recently, and no one minds that. Yesterday the "benchmark" 10-yr closed at 1.91%, and MBS prices were slightly better. Today may not be much different, with only some "second tier" economic news out of the U.S. (April ISM manufacturing details and Construction Spending for March - neither liable to move rates). In the very early going this morning, at 1.92% the 10-yr is nearly unchanged, as are agency MBS prices.  See current MBS prices.

Shampoo warning - I never knew this! It involves the shampoo when it runs down your body when you shower with it. A WARNING TO US ALL!!!
YOU NEED TO READ THIS. DON'T DELETE IT BEFORE READING!
I HAVE JUST RECEIVED THIS WARNING!
I don't know WHY I didn't figure this out sooner!  I use shampoo in the shower! When I wash my hair, the shampoo runs down my whole body, and printed very clearly on the shampoo label is this warning: "FOR EXTRA VOLUME AND BODY."
No wonder I have been gaining weight!
Well! I have gotten rid of that shampoo and I am going to start showering with Dawn dish soap instead. The label reads: "DISSOLVES FAT THAT IS OTHERWISE DIFFICULT TO REMOVE."
Problem solved!