A senior citizen goes to the doctor. After running some tests, the doctor says, "I have bad and even worse news, you have cancer and Alzheimer's." The senior replies, "Well at least I don't have cancer!" This grim "joke" seems to relate to the current woes of the financial services sector. Aside from the continued fraud stories in the newspaper, the public relations efforts are paying off somewhat, and then we receive the news that Barclays manipulated LIBOR. (The new nickname is LIE-BOR.)

Just so you don't have to brush off your ARM index notes, LIBOR is short for London interbank overnight rate, and it one of the most popular indices used to reset ARM loans - whatever ARM loans haven't been refinanced. A British banking trade group sets it every morning after international banks submit estimates of what it costs them to borrow money. American and British regulators fined one of those banks, Barclays, $453 million last week for manipulating LIBOR between 2005 and 2009 by submitting false reports of borrowing rates. But it doesn't end there - other banks, including Citigroup and JPMorgan Chase, are being investigated. Barclays' CEO and chief operating officer resigned Tuesday. The chairman of the board stepped down Monday. The scandal has raised more questions about banks' credibility after the 2008 financial crisis.

LIBOR is used in a similar way to determine interest rates for some credit cards and student loans and for what it costs corporations to borrow money. LIBOR and a related European rate influence more than $500 trillion in global contracts. Barclays has admitted that it submitted figures that were lower than accurate for its interbank borrowing during the financial crisis. The false reports made it appear that Barclays was healthier than it was. Interestingly, Barclays' antics also could have made borrowing cheaper for people whose mortgages are indexed to LIBOR and were due to adjust. Read more.

Per the Financial Times, AIG is "frustrating attempts by US homeowners to refinance their government-backed mortgages, according to politicians and Obama administration officials.Unlike its rivals, AIG's mortgage insurer is refusing to automatically waive its right to pursue lenders for misrepresenting the quality of loans that may default. That in turn has put the brakes on some refinancings of AIG insured loans, according to industry officials. A review of the five biggest mortgage insurers by the Financial Times shows that borrowers with AIG insured loans have been the least likely to benefit from a US government refinancing program." Remember that the government still owns 61% of AIG, so this HARP-related news is of interest. "The stance taken by United Guaranty...undermines efforts by the Obama administration and US-controlled mortgage financiers Fannie Mae and Freddie Mac, officials said."

The Financial Times reports that Kim Garland, CEO of UG, said the company "in no way interferes with borrowers' ability to take advantage of HARP". He added that the company gives up its right to pursue lenders for poor underwriting on the "vast majority of loans". About 27,000 mortgages insured by United Guaranty have been refinanced under Harp since it launched in mid-2009, the lowest number among the top five US mortgage insurers. (It has refinanced loans worth $5.3 billion under HARP, equal to 23% of its exposure to government-backed loans as of mid-2009, but MGIC, Radian, Genworth and PMI Financial have all refinanced mortgages of value equal to at least 25% of their exposure. For Radian and Genworth the figure is closer to 33%.) Lastly, the other MI companies all agreed to automatically waive many of their rights to challenge payouts should loans refinanced under HARP default, but Mr. Garland said: "United Guaranty is unwilling to take on sole responsibility for loans that may have fraud or may have been poorly underwritten."

Earlier this week the commentary mentioned LO comp, overtime, and how an appeals court thus let stand the DOL's Interpretation that employees performing the typical duties of a mortgage loan officer do not qualify for the administrative exemption and are therefore entitled to receive minimum wages and overtime compensation under the protections of the FLSA. This prompted one reader from New Jersey to ask, "Does the Labor Ruling conflict with the CFPB MLO Proposal? It is my understanding that two Federal Laws may NOT conflict with one another. Any labor Law /TILA Attorneys with an opinion? I do not believe OT was an option in the CFPB base comp, only salary and bonus. I'm wondering how Net Branches can account for the number of hours a LO spends working? Do they have to maintain a log? Is soliciting realtors working or only when in contact with the borrower? I will bet this really hurts inner-city lending." Perhaps yet another unintended consequence.

Here are some somewhat recent investor/agency updates, providing a flavor for the environment. They just don't stop. As always, it is best to read the actual bulletin.

The FHA announced a while back that files where the total outstanding balance of all disputed credit accounts or collections is under $1,000 and the accounts in question are at least two years old, if they received a TOTAL Mortgage Accept, would not be referred for review as disputed accounts.  Currently, the FHA is seeking feedback on these guidelines and has consequently delayed their implementation.

With regards to its decision to lower the Up-Front and Annual MIP for refinanced mortgages endorsed before May 31, 2009, the FHA has announced that it will not be enacting a deadline by which loans that had not yet closed by June 11, 2012 need to have new case numbers.  This is due to the large volume of pipeline streamline refinance loans that are eligible for the lower premiums but have not yet closed.

As a reminder, the disputed account and collection account requirements scheduled to go into effect on July 1st have been rescinded by the FHA.  In the meantime, the self-employment documentation and identity of interest requirements that went into effect on April 1, 2012 are still effective.

Freddie Mac has issued a reminder that the Uniform Collateral Data Portal Submission Summary Report is scheduled to be updated for appraisals on July 1st.  The report will include sections that feature UCDP edits and UAD compliance messaging and will be accessible via the Freddie website.

The Fannie Mae Loan Modification Agreement form (Form 3179) has been revised to include a line for the lender's signature, which is available here.  Servicers should employ this form for all modifications that have Trial Period Plans beginning after June 20, 2012.  Use of the new form will be mandatory for all Trial Period Plans beginning on or after September 1, 2012.

Both Freddie and Fannie plan to offer assistance to military personnel currently struggling with their mortgages as a result of Permanent Change of Station orders, which are received by about a third of active service members annually.  PCS orders can pose problems because of their short, strict timelines, and as such, receipt of such an order will be treated as a hardship in the case of service personnel looking to qualify for a short sale, even if they are current on their existing Fannie or Freddie mortgage.  The FHFA is expected to provide full guidance on the matter by September 30th, with the short sale reforms going into effect in the next 60 days.

Wells Fargo Funding revised its Mandatory and Best Effort options at the end of last month, adding options for government loans and simplifying pricing.  The need to select either GNMA I or GNMA II pricing when locking Best Effort FHA, VA, and Guaranteed Rural Housing loans has been eliminated, and 15-year fixed rate transactions are now allowed for High Balance FHA and VA loans.  These loans are also eligible for rate changes in 0.125% increments.  Thirty-year fixed rate High Balance VA transactions may have amortization terms of 240-360 months, and 5/1 ARMs are available for all High Balance VA transactions.

Wells Funding has also made adjustments to Best Effort prices on conventional conforming products, improving many products by 0.25% to 0.50%. In an effort to speed up the funding process, BE and Mandatory locks and commitments will need to include the "Metadata" Loan Submission Summary form in the loan package beginning on July 11th.  Failure to include the form will result in increased purchase clearing suspensions. Those whose companies are selecting "Wells Fargo" as a sponsor when they convert their DOs to DUs should be aware that Wells examines all such instances whether or not it receives the final file and that Fannie charges for it every time.

Somehow from Tuesday on this week it seemed like it was Friday or Saturday, so glad to see we finally made it. Thursday's, and into this morning's, markets chopped around a little. Central banks continue to ease monetary conditions to support growth globally - most notably ECB and People's Bank of China cut rates 25 basis points and the Bank of England expanded a bond purchase program (QE). Thursday rates improved, stocks sold off, as did commodities (gold dropped another $15 per ounce, and oil dropped $1 per barrel). The popular press was once again filled with stories about how mortgage rates are the lowest they've ever been. Originators, processors, and underwriters know that rates are only part of the story. Anyway, Thursday the 10-year note gained more than .250 and closed at 1.60% while "rate sheet MBS prices" improved by about .125 on lower-than-average volumes. (Lock desks are pretty slow with the holiday.)

Today we've had the unemployment data, generally out the first Friday of every month, and fixed-income prices, and mortgage spreads, indicate the odds of another Quantitative Easing by the Fed. I'd heard ranges for Nonfarm Payrolls from +90k to +120k, with the unemployment rate seen holding at 8.2%. Nonfarm Payroll was actually +80k for June, well below expectations and once again calling into question the predictive ability of the ADP number earlier in the week. The unemployment rate was unchanged at 8.2% - overall a sluggish report. The unemployment rate has been above 8% for over three years - will that shape November's results?

Prior to the number our 10-yr was down to 1.58%, and afterward we dropped to 1.56% with early MBS prices better by .125-.250.

How high is the price of gas in France? A thief in Paris planned to steal some paintings from the Louvre. After careful planning, he got past security, stole the paintings, and made it safely to his van. However, he was captured only two blocks away when his van ran out of gas.

When asked how he could mastermind such a crime and then make such an obvious error, he replied, "Monsieur, that is the reason I stole the paintings."

I had no Monet.

To buy Degas.

To make the Van Gogh.

See if you have De Gaulle to send this on to someone else.

I sent it to you because I figured I had nothingToulouse.