There are lots of training videos out there. But there aren't many 0% down payment programs from the government - the USDA is about it. Here is one AE's video on the USDA program (among other topics) to his brokers. LOs need to stay up on things! And it is tough to keep up with the job market. For example, we all know that there's been a slowdown in mortgage origination that has pushed companies like Wells Fargo & Chase to announce thousands of mortgage-related job cuts. (The MBA estimates refinancing activity will drop 22% this year given higher interest rates, and the fact that most people who could refinance did, which certainly influenced Wells cutting 20% of its 11,406 LO work force.) But Wells Fargo said it will hire about 5,500 people nationwide to support growth in its brokerage, private banking and retirement business lines. Same skill set? Perhaps.

Brother, can you spare a dime? That was a song title during the Great Depression. But in JPMorgan Chase's case, it may take $6 billion - that is the amount that the FHFA is seeking as it claims Chase misled Fannie & Freddie.

I'm worried the courts won't have anything to occupy their time with, once mortgage litigation backs away from its six-year highs. In July the 8^th Circuit Court of Appeals, joined the 10^th Circuit (remember there are 13 judicial circuits, in case the question ever comes up at dinner), in ruling that "notice alone within the three-year period is insufficient to validly exercise a right to rescind." Ballard Spahr writes, "While it held that the borrowers had not preserved their right to rescind because their lawsuit seeking rescission was not filed within the three-year period, the Eighth Circuit nevertheless ruled that the borrowers had a cognizable claim for damages based on the bank's refusal to rescind. According to the court, even though the borrowers' right to rescind was extinguished, their failure to rescind cause of action accrued when the borrowers requested rescission and the bank denied their request. Since the borrowers filed their lawsuit seeking damages within one-year of the denial, the court found their damages claim was timely. However, the court ultimately denied the borrowers' damages claim because they had not established TILA violations entitling them to rescind their loan."

Speaking of lawsuits and lawsuit potential, according to an American Bankers Association survey, at the end of June 60 percent of vendors had not told their banker clients when they will be ready to comply with the Consumer Financial Protection Bureau's new mortgage rules. The survey was aimed at senior mortgage executives of ABA member banks to learn more about their overall implementation efforts and the progress that their vendors have made in delivering applicable technology. "This survey confirms what we've been telling regulators and Congress all along: banks need more transition time to implement these mortgage rules," said Robert Davis, executive vice president of mortgage policy at ABA. "Community banks in particular have indicated that updated software, programming and training are big concerns, and training can't occur until systems are operational." Most banks, 79 percent, will use vendors to create software and systems that will allow the bank to continue making mortgage loans in compliance with the rules released earlier this year by the CFPB. Twenty-four percent of bankers said help will not be available until November 2013 or later. Once banks receive materials from their vendors, they will need additional time to adjust and test the vendor product and train staff. Eighty-two percent of banks expect to take two months or more to fully integrate the vendor's products once they are made available to the institution. "There simply is not enough time. Without a transition period, we will see fewer mortgage loans made available, jeopardizing the housing and economic recovery," said Davis. Here is the full write-up.

Last week this commentary took a swipe at providing information on lenders "renting" space from real estate brokers, but there continues to be interpretations of what the government's rules say. Teri Hodgett sums it up by saying, "Paying higher than market rental fees in exchange for referrals is a clear violation of Section 8 of RESPA. From the link below: 'HUD, therefore, interprets Section 8 of RESPA and its implementing regulations to allow payments for the rental of desk space or office space. However, if a settlement service provider rents space from a person who is referring settlement service business to the provider, then HUD will examine whether the rental payments are reasonably related to the general market value of the facilities and services actually furnished. If the rental payments exceed the general market value of the space provided, then HUD will consider the excess amount to be for the referral of business in violation of Section 8(a).' More here." Thank you Teri!

Let's move on to some bank, agency, and vendor news.

Heritage Bank USA ($978mm, KY) and Heritage and Sumner Bank & Trust of Gallatin ($184mm, TN - where my grandfather was born!) have agreed to terminate their merger agreement, due to Sumner's failure to meet a certain performance requirement under the merger agreement.

But in Texas, Independent Bank ($1.8B) will buy Live Oak State Bank ($124mm) for $20mm (50% cash and 50% stock).

KBW announced that The Boards of Directors of 1st Constitution Bancorp (Nasdaq: FCCY), parent company of 1st Constitution Bank, and Rumson-Fair Haven Bank and Trust Company (OTBB: RFHB) announced that the companies have entered into a definitive agreement and plan of merger, pursuant to which Rumson will be merged with and into 1st Constitution Bank, with 1st Constitution as the surviving bank holding company.

And Mercantile Bank Corporation (NASDAQ: MBWM) and Firstbank Corporation (NASDAQ: FBMI) jointly announced the signing of a definitive merger agreement under which Mercantile and Firstbank will merge to create one of the largest banking institutions headquartered in Michigan.

Accurate Group Holdings, Inc., a Cleveland-based, technology-enabled, outsource provider of real estate transaction services to mortgage lending and loan servicing clients, announced today it has closed on the acquisition of Preferred Appraisal, Inc., based in  Northbrook, Illinois, for undisclosed terms. While Accurate successfully resold the Companies' products for years, this deal provides Accurate ownership of the industry leading Desktop Appraisal Solutions known as ValueNet, ValueNet Plus and ValueNet Ex. (Inc. magazine has ranked Accurate Group NO. 867 on its seventh annual Inc. 500|5000, an exclusive ranking of the nation's fastest-growing private companies. Accurate Group also ranked No. 26 of the fastest-growing private companies in the real estate sector.)

Way out in Northern California, Luther Burbank Savings announced plans to open a new division in Southern California that will issue mortgages directly to home buyers. Previously, the company made home loans through a network of independent brokers (wholesale) or concentrated on apartment loans. The company has set a goal to originate $1 billion in loans through the new division by its second year of operation - an amount that would be roughly equal to the total loan business that Luther Burbank will conduct this year, per CEO John Biggs. LBS ($3.6 billion in assets) hired Jay Robertson, former president of First Capital Mortgage in Los Angeles, to run the new unit. In an interesting twist, the new division will offer not only Luther Burbank mortgage products but also arrange loans from other companies.

Fannie Mae released its STAR servicer rankings yesterday, and to see if you're company is on the list, here you go.

On to the markets! Frequent readers of the daily commentary already know that our cat Myrtle is a supply-side contrarian, but should note that our other cat Gusto is an aggregate-demand Keynesian (you should hear some of their arguments). However, they both agree on one thing: bond market volatility is rarely economically beneficial to either discipline. So they both lifted their heads from the food bowl when I read aloud a recent bond market report: http://libertystreeteconomics.newyorkfed.org.

Taper, taper, taper. It is already priced in to the markets? Probably, but we may see a small shock higher when they actually do it. Right now the smartest minds in the room think the $85 billion a month will drop by $10 billion in Treasuries and $5 billion in agency MBS. And the timing of the scaling back isn't the most important policy decision due out of the Fed.  Instead, we should really be asking at what pace will tapering take place?  During his recent public remarks, Bernanke suggested a somewhat linear rate of cuts wrapping up by mid-2014. The Fed clearly is watching mortgage rates closely (this was acknowledged in the FOMC statement this week and Bernanke has remarked on the importance of the housing rebound several times) which is leading some to think Treasuries may be tapered first so as to maintain the purchase pace of MBS for the time being. And is the Fed watching loan level price adjustments, which have also contributed to higher rates?

Yesterday morning the financial markets reacted to the risk of increased US involvement in the conflict in Syria. (Here we go again?) The resulting flight to safety helped MBS, and the bond market in general, and hurt stocks. Oil prices have increased as well. The Conference Board's index of U.S. consumer confidence increased to 81.5 in August from 81 the prior month, better than forecast. We also had the S&P/Case-Shiller Index, with its two-month lag, showing home prices increased in June - property values climbed 12.1 percent from the same month in 2012 after rising 12.2 percent in the year ended in May, the biggest gain since March 2006. In Nevada "Lost Wages" was up 25%!

Despite supply and demand, yesterday MBS prices could not keep up with the Treasury rally, and near the close of business Tuesday prices on 30-year FNMA 3s through 4.5s ranged from +.625 to +.250 (3.5% Fannie is back above par - 100) while the 10-year Treasury note improved .75 in price. Per Thomson Reuters, Tradeweb reported volume in mortgage-backed securities remained below normal at 81 percent of the 30-day moving average.

Here on Hump Day, as folks gear up for the Labor Day Weekend, there isn't much scheduled market-moving news although we have a $35 billion 5-year T-note auction at 1PM EDT. We'll have July's Pending Home Sales at 10AM EDT.  And we'll have the MBS's applications numbers. In the very early going, rates have moved a little higher, and the yield on the 10-yr., which closed Tuesday at 2.72%, is back to 2.74% which suggests MBS prices will be worse about .125.