"American schoolchildren rank 25^th in math and 21^st in science out of the top 30 developed countries, but USA ranked 1^st in confidence that they outperformed everyone else." How true. Speaking of rankings, here's a nifty map showing how much Americans owe on mortgages in every state

Switching gears entirely, ever had your deed stolen? Me neither - and I pray that it never happens. In some counties and states it is easier to do than officials want to admit; if they don't get a new system for filing deeds this will get more pervasive.

On Saturday the commentary posted a question from a reader about referral fees, and an answer from an attorney. I promptly heard from both attorneys and compliance staff: stay away from them. J. Steven Lovejoy, Esq., with Maryland's Shumaker Williams, P.C. wrote, "...payment of referral fees to former customers, real estate agents and others, there is nothing likely about the fact that such conduct is exactly what RESPA prohibits. The statute reads, in part: 'No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person." 12 U.S.C § 2607. Any statement that you should try to avoid paying a referral fee makes it sound like this is a 'gray' area.  It is not. If you pay referral fees, the CFPB, or class action plaintiffs' attorneys will be coming after you.  See, In Re: Lighthouse Title consent agreement with the CFPB. Lighthouse paid a $200,000 fine for paying referral fees. There is nothing 'gray' about that outcome."

And for the third time in recent years the Supreme Court has decided to hear a case centered on the so-called disparate impact theory, which allows plaintiffs to prove discrimination by showing actions that disparately harm protected groups, even if plaintiffs cannot prove the actions were taken with the intent to discriminate. Remember that civil rights groups worked to settle the two other cases before the Court got to hear them, fearing the conservative-leaning court would invalidate the disparate impact standard.

The old saying about "lead, follow, or get out of the way" refers to many things, from sled dogs to Congress. As we've seen for quite some time, Congress is unable to move ahead with measures to move Freddie and Fannie out of conservatorship. And thus the MBA, FHFA, NAR, lenders, and local organizations are moving ahead without politicians. One step in that direction is the move toward a single security (why have different MBS for Freddie and Fannie?). Late Friday, MBA submitted its comments in support of FHFA's effort to create a common agency security to serve the conforming single-family housing market. MBA also highlighted several areas where additional analysis and review could measurably improve the outcome of the proposed initiative.

Along those lines (having the industry enact change rather than outside politicians or regulators), the MBA's Dave Stevens wrote an op-ed for USA Today. He was asked to respond to an editorial reporters wrote (a link embedded in his write up). Their opinion agrees with the over-prescription of underwriting requirements, but blames Fannie and Freddie for this. Dave takes a different view. "In the aftermath of the housing crisis, the regulatory pendulum has swung too far. One thing we all agree on: Credit is too tight for potential home buyers and those looking to refinance. In the aftermath of the housing crisis, the regulatory pendulum has swung too far as many qualified borrowers are being denied mortgages, which is hurting the housing market and the economy. Lenders of all sizes point to two primary factors that are causing the pullback in mortgage credit - a confusing regulatory regime and a hyper-charged enforcement atmosphere, both of which leave them afraid to lend to people who traditionally would be considered solid borrowers...In developing new rules and regulations coming out of the crisis, legislators and regulators, albeit with good intentions, upended the delicate balance between consumer protection and access to credit. The strict new rules and the aggressive enforcement for even minor mistakes have left lenders fearful that the penalties for just one error could put them out of business. The only reasonable reaction by lenders is to virtually eliminate the likelihood of a loan defaulting by lending only to the most well-heeled borrowers...  A new secondary mortgage market will do nothing to responsibly expand credit if lenders remain afraid to make mortgages and sell into it."

Dave's note wraps up. "The solution is a clear, reasonable set of rules so lenders can be confident that they won't face unending scrutiny and enormous legal costs should a borrower default for reasons unrelated to the mortgage itself. Lenders need to be accountable for mistakes. And they have been, to the tune of more than $100 billion in fines and settlements in the past eight years. But the current atmosphere has lenders running scared. Lenders want to lend. But until they have faith and confidence in the rules of the road, they will continue to lend defensively, for fear that the next enforcement action, the next repurchase request or the next multibillion dollar legal settlement could put them out of business."

Unlike every NFL team, FNMA doesn't get a bye week; on the last day of September (it's always on the last day) Fannie Mae updated its rules for asset verifications, rental income and other changes. These changes are represented in Fannie Mae's Selling Guide Announcement SEL-2014-12, and describe updates to the following: automated asset verification, rental income treatment, employment-related assets, Texas 50(a)(6) title insurance, affordable lending for Native American and rural housing, along with a list of approved mortgage insurance forms.

Fannie Mae plans to implement updates to the Desktop Underwriter® (DU®) and Desktop Originator® (DO®) User Interfaces this weekend, Sept. 20, 2014. The User Interface will be updated to no longer display the DU Underwriting Findings report, Credit report, and loan data displayed via the View Loan and View 1003 options in a separate pop-up window outside the DO/DU web browser session. In addition, certain data checks currently performed by DO/DU when credit is requested or when a loan casefile is submitted for underwriting will be removed. Review the DU September User Interface Release Notes for additional information. The DU for government loans October Release Notes have been updated to further clarify the change to Mortgage Insurance Premium information sent to FHA. Review the DU for Government Loans October 2014 Release Notes for additional information.

Fannie Mae's Notice alerts servicers to an upcoming adjustment to the Fannie Mae Standard Modification interest rate. The new rate, available on Fannie Mae's Business Portal, will be effective for all Fannie Mae Standard Modifications approved on or after Oct. 14, 2014.

Effective Jan. 5, 2015, Fannie Mae will only post indicative prices for standard 30-, 20-, 15- and 10-year fixed-rate Actual/Actual products on the Indicative Pricing page. All other products will be removed. Lenders may view live pricing on all products by logging into Fannie Mae's whole loan commitment platform.

During the weekend of Oct. 18, 2014, Fannie Mae will implement updates to the Asset Management Network (AMN)/HomeSaver Solutions® Network (HSSN) application. Changes include the removal of servicers' ability to close short sale cases, a new field for servicer evaluation date, and the implementation of fields in HSSN for FHFA mandated requirements for mortgage release and short sale workout cases. Read the Release Notes for details.  Additionally, a recorded tutorial is now available to help learn more about the new look and feel of the redesigned Servicing Guide. Find the tutorial and other resources on the 2014 Servicing Guide page.

Looking at the economy and rates, all I seem to hear is "fragile economy", "fragile housing market", "fragile credit", and "economy not strong enough to handle higher rates". Heck, things seem more fragile than a 16 year old on prom night! We had very little economic news last week to move the markets, yet they moved - mostly based on overseas events. We have plenty of scheduled news. Today are WFC, C, and JPM's earnings - always fun to slice and dice those mortgage numbers. But the predominant news moving the market today, and causing capital markets' staffs to worry about renegotiations, is perceived worldwide economic weakness.

Tomorrow is Retail Sales, Empire Manufacturing, the Producer Price Index, and the release of the Federal Reserve's Beige Book. Thursday the 16th is Initial Jobless Claims, the Industrial Production and Capacity Utilization duo, Philly Fed Survey, and the NAHB Housing Market Index. We finish up Friday with the Housing Starts and Building Permits twins, and the University of Michigan Confidence number tagging along. This morning that darned 10-yr yield is down to 2.18% - better by .875 in price - and agency MBS prices that impact rate sheets are better by .5. We will see how pipeline pull through is impacted - it is important to remember that rate locks should be observed by both the lender and the borrower!

Announcements

Speaking of which, Roadrunner Solutions is an exciting new (and free) service to help connect LOs and their pre-approved borrowers with local Real Estate professionals. "Roadrunner has a large network of Realtors that will respect the relationship between you and your borrower. Roadrunner will improve your closure rate and help deliver a high level of customer service required for the purchase money borrower. If you are a Call Center LO, run a Call Center Platform, or originate loans outside of your local area, Roadrunner is a great service for you to try.  And there is no fee or cost for you or your borrower to take advantage of our program. If you would like to find out more, they will be at the MBA in Las Vegas - email RoadRunner to setup a meeting.

And sales automation strides are being made. "Today, consumers are more empowered than ever and the way they interact with brands and companies has evolved with more heading online to research and purchase both products and services - including mortgages. The best opportunity to convert prospects to customers is within seconds of inquiry while the consumer is actively engaged in the decision making process. Managing online customer inquiries has also evolved, according to Josh Friend President and CEO of inSellerate. The company will be introducing version 4.0 of its robust Sales Automation System (SAS) at the MBA Expo in Las Vegas, Booth 134.  InSellerate is a simple to use, yet sophisticated system that includes sales force automation and lead management, real-time sales dashboard reporting, and an automated personalized email marketing platform. The result is almost instant lead engagement, real-time sales and marketing resource management and incremental revenue through consistent lead nurturing. For demonstration appointments contact Tyson Hilton.

For more new product news, LoanNEX is trying to address the lack of liquidity in the non-agency market. LoanNEX is an innovative mortgage software platform that combines loan level origination and servicing data to create a transparent marketplace. Loan level data is transformed into standardized and searchable descriptors, which creates the ability to communicate and assess credit attributes of a wide range of mortgage assets. It also offers benchmarking utilities to allow individual users to compare their portfolios to a larger population of loans. LoanNEX is designed to assist Banks, Credit Unions, and other Institutional Investors in managing their current balance sheet risks, assessing portfolio acquisitions, and obtaining new mortgage assets with increased efficiency and true risk-based pricing capability. As with any new market it needs buyers and sellers. If your company would be interested in participating, contact Eloise Schmitz for a demo during the MBA Annual Convention.

On the personnel side, congrats to Jim Loving who was tapped by Planet Home Lending as its Director of National Sales - Correspondent Division. Mr. Loving has over 30 years of mortgage industry experience. As the Director of National Sales - Correspondent Division, Mr. Loving will be responsible for hiring and developing a sales team and for building a nationwide network of correspondent sellers for the Company. And congrats to Larry Gunnin who has joined Mortgage Network Inc. as the company's Southeast regional manager. Gunnin will be responsible for leading Mortgage Network's strategic growth in the southern part of the country by opening branches and recruiting mortgage professionals in areas in which the company does not currently have a presence, including North Carolina, Georgia, Mississippi, Tennessee, Arkansas, Florida, Alabama and Louisiana.