"Rob, I've read that wholesale lending accounted for only 5% of Wells Fargo's volumes. Only 5%? What are you hearing about its remaining business and what will happen to that 5%? I am sure lots of wholesalers would be happy with it." During the first quarter of 2012, Wells did about $7.4 billion, and, according to National Mortgage News, only had about a 14% market share. (This is out of the firms that report volumes to NMN, which is not everyone.) The "Top 10" wholesalers had about a 61% market share, versus the Top 10 correspondents having 73%. So the wholesale business is much more diversified.

Sure, that $7 billion will be absorbed by others (Provident, Flagstar, etc.) who are happy to have the $2-3 billion a month spread between them, forgetting about capacity issues for a moment. But the industry really is caught between a rock and a hard place. You have politicians who want to do away with Fannie Mae and Freddie Mac and at the same time encouraging lenders to step up, the FHA concerned about its own solvency, but foreign governments who will only buy MBS's backed by those groups (especially Ginnie's). The same lenders that Congress thinks are going to take up the slack are now scaling back (BofA, Wells, GMAC) for various reasons, you have Basel III coming down the pipe which could have a huge negative impact on residential lending and mortgage holdings (more on this soon), every lender is worried about buybacks and lawsuits, and yet the barriers of entry for anyone considering entering this business are practically insurmountable. One area of the government is concerned about "too big to fail" yet other areas are slowly creating an environment where only large institutions, with established compliance and legal departments, can become any larger. Just my opinion...

Yet companies continue to expand. Capital Markets Cooperative (CMC) is seeking experienced Secondary Marketing candidates to join its trading desk team. The account manager will be responsible for daily pipeline management, trading MBS and loan collateral, best execution analysis and customer support.  Requirements include 2-3 years secondary marketing experience, strong SQL and Excel skills and attention to detail. CMC, founded in 2003 and located in Ponte Vedra Beach, FL, provides mortgage bankers the expertise to reduce risk and maximize profit in the secondary market through hedging and it's cooperative. Interest parties should send their resume info@capmkts .org.

And Mid America Mortgage, Inc., a National lender, is seeking to expand its retail operations with qualified branch managers and loan originators. Privately held Mid America Mortgage is a Ginnie Mae Issuer, Fannie Mae Seller/Servicer, USDA National Lender and offers many other competitive products. The organizational belief in hard work, high ethical standards and the use of superior technology are the foundation on which the company will continue to grow. Anyone interested in learning more please contact National Sales Manager, Donna Wright, at Donna.Wright@MidAmericaMortgage .com.

By the way, occasionally I am asked about how much origination volume has taken place over the last ten or so years, just to get an idea about how much is taking place now. Here you go.

And if you want to know what's on the CFPB's plate for the next year, here you go.

And my apologies for letting this one slip by me. Fair Isaac came out with a new FICO score. Here is the story.

Congratulations to Kroll Bond Ratings, having rated its first commercial MBS one year ago, now occupies the #3 market-share spot in CMBS ratings. Kroll has rated about $10.6 billion worth of CMBS over the past year via its 11 offerings, which include both private-label deals issued by bank lenders and transactions backed by Freddie-underwritten loans on multifamily properties.  Moody's and Fitch, occupying the Number 1 and 2 positions, rated just under $18 billion. You'll notice that Kroll was recorded as having a higher market share than Standard & Poor's, whose credibility took a hit after a blunder on a $1.5 billion deal in July 2011 led to bonds being pulled from the market post-sale.  As a result, S&P's market share has declined significantly, allowing smaller and new agencies to fill the vacuum. It is obvious that rating agencies like Kroll have definite advantages in the current climate - they certainly don't have the legal legacy issues (sounds like mortgage banking). Although Kroll employs the oft criticized "issuer pays" model, it uses transparent criteria and analysis, whereas pre-crisis the large agencies were notorious for the unclear and subjective criteria they employed when issuing ratings. In the past year, Kroll has expanded into municipal-bond ratings and asset-backed securities and is scheduled to issue its first corporate rating this autumn. I had the privilege of being in a meeting in Manhattan with Jules Kroll a few years ago - a good guy!

Turning the political arena, Julian Hebron (The Basis Point) observed that in order for Mitt Romney to qualify for a mortgage here in the U.S., he'd need two years of tax returns - and he's only provided one. Two years of filed tax returns is a loan approval requirement of Fannie Mae and Freddie Mac, which own or back more than half of the $13 trillion in U.S. mortgage debt. Julian points out that, "Full disclosure is very slowly rebuilding the system. With that backdrop, let's try to answer this question: is it ok that you have to provide more information to get a mortgage than a politician does to be president? First, let's understand the basic rules that voting masses must follow. To get a home loan in this country, all lenders-even the ones making "Jumbo" loans that aren't eligible for purchase by Fannie/Freddie-start from the Fannie/Freddie template requiring borrowers to provide two years of filed federal tax returns. If a borrower provides 2010 tax returns plus a 2011 filing extension along with draft 2011 returns as Romney has, this isn't sufficient to approve and fund a mortgage. In this scenario, the borrower must also provide the filed 2009 returns to complete the approval and funding process. The exception to this under Fannie/Freddie rules is if a borrower only has W2 income (Form 1040, line 7). Then they can get a loan with one year of filed returns. But if a W2 borrower has unreimbursed expenses (Schedule A, line 21) on filed 2011 returns, their filed 2010 return will also be required. Or if a borrower has any sort of income beyond straight W2-such as dividend, interest, 1099/Self-Employed earnings, income from owning part/all of entities/properties, capital gains, or anything else on lines 8-21 of Form 1040-two years of filed returns must be provided so the lender can root out income AND losses. Lenders subtract losses from income to qualify borrowers. Romney has income/losses on lines 8, 9, 10, 12, 13, 14, 17, and 21 of his 2010 filed return. So he'd have to provide another year if he was applying for a loan. His 2011 draft would be ignored because it isn't filed, and 2009 would be required."

In the interest of equal time (something I rarely do, but here it is), the Obama Administration must not only contend with a stagnant job market, but now something else has popped up: the number of Americans in poverty is increasing. "The ranks of America's poor are on track to climb to levels unseen in nearly half a century, erasing gains from the war on poverty in the 1960s amid a weak economy and fraying government safety net. Census figures for 2011 will be released this fall in the critical weeks ahead of the November elections." It is expected that the official poverty rate will rise from 15.1 percent in 2010, climbing as high as 15.7 percent. Several predicted a more modest gain, but even a 0.1 percentage point increase would put poverty at the highest level since 1965. "The issues aren't just with public benefits. We have some deep problems in the economy," said Peter Edelman, director of the Georgetown Center on Poverty, Inequality and Public Policy. He pointed to the recent recession but also longer-term changes in the economy such as globalization, automation, outsourcing, immigration, and less unionization that have pushed median household income lower. Even after strong economic growth in the 1990s, poverty never fell below a 1973 low of 11.1 percent. That low point came after President Lyndon Johnson's war on poverty, launched in 1964, that created Medicaid, Medicare and other social welfare programs. "I'm reluctant to say that we've gone back to where we were in the 1960s. The programs we enacted make a big difference. The problem is that the tidal wave of low-wage jobs is dragging us down and the wage problem is not going to go away anytime soon," Edelman said.

The 2010 poverty level was $22,314 for a family of four, and $11,139 for an individual, based on an official government calculation that includes only cash income, before tax deductions. It excludes capital gains or accumulated wealth, such as home ownership, as well as noncash aid such as food stamps and tax credits, which were expanded substantially under President Barack Obama's stimulus package. (An additional 9 million people in 2010 would have been counted above the poverty line if food stamps and tax credits were taken into account.) The analysts' estimates suggest that some 47 million people in the U.S., or 1 in 6, were poor last year. An increase of one-tenth of a percentage point to 15.2 percent would tie the 1983 rate, the highest since 1965. The highest level on record was 22.4 percent in 1959, when the government began calculating poverty figures. It is indeed a serious problem.

Thanks to a slow U.S. economy, and problems in Europe that will continue for years, our rates are great. The yield on the "benchmark" 10-year bond briefly hit 1.398%, its first time below 1.4%. Moody's downgraded the outlook for Germany, The Netherlands and Luxembourg from stable to negative. Inspectors are in Greece this week to determine if they have made enough progress to receive bailout funds as Greece has fallen behind targets agreed upon.  Spain issued 3mo and 6mo bills above their target, but the Spanish 10-yr yielding about 7.57% is still cause for concern. In this country, the 2-yr auction results were somewhat benign, and the FHFA House Price Index rose .8%. By the end of the day MBS prices were marked higher by .125 and the 10-yr closed at 1.40%.

This morning we learned (from the MBA) that last week's apps didn't do much, volume-wise. The overall number was +.9%, with refi's +2% and purchases dropping 3%. Refi's are 81% of all applications - much of it at large aggregator banks. Ahead we'll have New Home Sales and a $35 billion 5-yr T-note auction; ahead of that our 10-yr is at 1.43% and MBS prices a shade worse than Tuesday's close.

RETIRE WHERE?   Here are some of your choices, part 3 of 5:
You can retire to New York City where... 
1.  You say "the city" and expect everyone to know you mean Manhattan.
2.  You can get into a four-hour argument about how to get from Columbus Circle to Battery Park, but can't find Wisconsin on a map. 
3.  You think Central Park is "nature." 
4.  You believe that being able to swear at people in their own language makes you multi-lingual.
5.  You've worn out a car horn. (If you have a car.)
6. You think eye contact is an act of aggression.