Where are the residential refis coming from? I hear that there is the usual mix of rate & term (as ARM loans adjust, or borrowers actually look at current rates) and cash out. Sure enough, the popular press has once again seized on the "Using Homes as ATMs" catch phrase.

Fannie & Freddie are paying attention to lending on condominiums.

Sometimes I am asked about the fabled "condo questionnaire." The Condo Questionnaire gives a current snapshot of the property's physical, legal, and financial health - When a buyer applies for financing on a residential condominium unit, the lender ask the Management Company or HOA representative to fill out a Condo Questionnaire. This questionnaire will ask questions regarding property's financial, legal, and organizational health. Items such as general occupancy and use of the units, current HOA dues, reserve account, and annual budget, maintenance / repair issues or assessments, and insurance coverage are a few of the common inquiries on the questionnaire. The proper insurance coverage for the building carried by the HOA is paramount. Insufficient building coverage can result in a deal breaker. As with most investments, financing comes down to risk management. In other words, is the unit a financially and legally stable building or development? The Mortgage Originator or processor is responsible for submitting the CQ to the management company, who often charge a fee to process it for lenders.

Freddie Mac's most recent Guide update will help promote borrower access to credit, provide flexibility and respond to customer inquiries and current market practices and conditions. Updates include Mortgage eligibility and credit underwriting, Condominiums, definition for fixed-rate mortgages that are relocation mortgages as well as additional updates.

Beginning October 26, new critical edits will appear on LP for the following situations: Application Received Date, Unpaid Principal Balance (UPB) Amount for Mandatory Cash - Servicing Released, Financed Mortgage Insurance (MI) Amount, and Financed Mortgage Insurance (MI) Amount.

Ditech Mortgage Corp. announced its new minimum loan amount for all Crimson Jumbo Non-Warrantable Condos and Condotels is $417,001, effective immediately. See Product Matrices for complete product details. Yes, ditech has reinstated the minimum loan amount for condotels to $100,000.The minimum loan amount for non-warrantable condos will remain at $417,001.

Penny Mac has revised its condo requirements and reserve verification requirements. Click the link to view the announcement.

While we're on condos, Zillow recently found that new home construction has increased during the recession and has remained at historically high levels throughout the recovery, as more homes are being built on less land. Around the early 2000s, newly constructed homes had three feet of yard space for every foot of finished indoor space. By later 2014, this amount of yard space for every foot of finished indoor space declined to just under two feet. This may be due to more condominiums and townhomes being built, except the majority of new construction is now shifting to detached single-family homes. The median lot size for newly constructed homes has dropped from 9,600 square feet in the late 1990s to 8,600 square feet, while the median finished square footage of new homes is up almost 25 percent over the same period from 2,100 square feet to 2,600 square feet. Larger homes with smaller lot sizes have been popular in the Southwest and Great Plains, as well as New York to South Florida. Lot and home sizes have remained unchanged on the West Coast and New England. Larger new homes also tend to have more bedrooms and bathrooms and homes with higher structure area to lot area are more expensive.

Multifamily Mortgage debt outstanding exceeded $1 trillion in the second quarter of the year for the first time. The increase in debt is built on multifamily property income and values that are continually growing. From the second quarter of 2014 to the second quarter of 2015, apartment property incomes increased by 6.5 percent and the value of the apartment properties grew by 15 percent. During this same time period, the sum of multifamily mortgage debt outstanding rose by 9.5 percent.  The multifamily debt in the GSE portfolios and MBS grew 3.4 percent ($14.5 billion), accounting for 62 percent of the increase in mortgage debt outstanding.

The MBA's Pete Mills reported in on the latest regarding MSAs, where every lender who doesn't have them in place wants them to go away and every lender who has them wants to make sure theirs are okay. "Following up on my letter from last week on the CFPB's marketing services agreement (MSA) guidance, please find here a more detailed analysis.

Law firm Black, Mann, & Graham weighed in on last week's CFPB flare. "The purpose of the Bulletin is to advise the mortgage lending industry of the substantial risks posed by entering into MSAs and, based on the CFPB's investigative efforts, that it appears many MSAs are designed to evade the RESPA prohibition on the payment and acceptance of kickbacks and referral fees. The Bulletin provides an overview of the RESPA prohibition on mortgage kickbacks and referral fees, and describes examples from the CFPB's enforcement experience as well as the risks faced by lenders entering into MSAs. The Bulletin points out that MSAs are usually framed as payments for advertising or promotional services, but in some cases the payments are actually disguised compensation for referrals. The Bulletin also points out that efforts to adequately monitor MSA activities are inherently difficult and the risk of violating RESPA is significant, even when MSAs are carefully drafted to be technically compliant with RESPA."

Risk sharing, it's not just a catchy, industry buzz-word anymore; traction with new issuance risk-sharing securities has steadily increased over the last few years. Way back in 2012, the FHFA set about developing the politically mandated task of transferring mortgage credit risk away from the GSE's. Since that time the agency has meaningfully increased the GSE's annual risk sharing targets. How? By way of utilizing credit risk-sharing securities (CRT); over 90% of the risk-sharing to date has been done through CRT securities, specifically by way of FNMA's Connecticut Avenue Securities (CAS), and from FHLMC's Structured Agency Credit Risk (STACR).

Keefe, Bruyette & Woods write, "CAS and STACRs. Fannie Mae has issued $11 billion of CAS bonds, which provide credit risk protection for $371 billion of underlying mortgages, and Freddie Mac has issued $10 billion of STACRs, which provide credit risk protection for $236 billion of underlying mortgages. The level of risk that is transferred can vary but the GSEs have generally retained a small first lost piece and then obtained insurance on a mezzanine slice of risk. On the 2015 STACR transactions, Freddie Mac has retained no first loss risk." Data from the FHFA and KBW show investors purchasing these credit risk-sharing securities are: Asset Managers (53%), Hedge Funds (31%), Banks (6%), Insurance Companies (6%), REIT's (2%) and Sovereign Funds (2%).

Turning to the markets we had a bit of a rally Tuesday, if for no other reason than Fed governors Brainard and Tarullo making some very dovish public remarks, suggesting that they would oppose rate hikes before the end of 2015 without more evidence that the inflation half of the Fed's dual mandate is going to be satisfied soon. Much ado about nothing - there was no other news of substance.

Today we've had some, however. The MBA told us what lock desks around the country knew from last week: apps dropped 28% with refis -23% and purchase applications -34%. We've also had the September PPI and core PPI (-.5%, core -.3%) and September Retail Sales and Retail Sales ex-auto (+.1% but with serious back month revisions). Later on we can look forward to the Fed's Beige Book for October. We wrapped up yesterday with the 10-year at 2.05% and we're at 2.01% with agency MBS prices better by .125 after the weak numbers.

Jobs and Announcements

In job news, AOHL is currently seeking an Operations Team Manager to join its senior leadership team in Atlanta, GA. The position will be responsible for overseeing loan set up, appraisal desk, training and processing departments for an established mid-size direct lender with goals of 40 state originating and ultimate goal of $1 billion of monthly production. Primary responsibilities will include developing and maintaining departmental policies and procedures, new business strategies, monitoring staffing levels and acting as a liaison between sales, processing, underwriting & closing departments. This position reports directly to the President of Angel Oak Home Loans. Angel Oak Home Loans LLC (AOHL) is located in the financial district of Atlanta, and its retail division is a traditional, relationship-based platform that earns its business from the recommendations of a loyal referral network. They are currently licensed in 15 states with growth initiatives into 25 additional states planned for 2015-2016. Who is Angel Oak Home Loans? Resumes can be sent to Cheryl Dilworth.

Radian, one of the largest Private Mortgage Insurance companies, is growing its Dallas/Ft Worth team and has an excellent opportunity for a seasoned Senior Account Manager. "This position is responsible for growing an existing assigned territory and we are looking for a dynamic individual who can handle multiple tasks, communicate and build relationships at all levels and is driven by success. If you are interested in joining the Radian team we would welcome the opportunity to speak with you - please send your confidential inquiry/resume to Sarah Keene."

"Are you a retail mortgage loan officer looking to join a successful bank with a strong product offering, competitive pricing, and significant income potential? Nationally chartered MB Financial Bank currently has opportunities in several states for retail branches, loan officers, and producing teams. If you're hungry and are looking for a chance to grow in your lending career, we are the place to do it! Contact Mike O'Brien, Mortgage SVP, to see how you could become a part of MB. Our leadership team has extensive retail branch experience, and is dedicated to growing and nurturing MB's retail presence nationwide. We provide you competitive compensation, quality benefits, internal training, marketing support, servicing portfolio leads, and generous tiered commission compensation plans - all to promote your success." MB Financial Inc. is the Chicago-based holding company for MB Financial Bank, N.A., which has approximately $16 billion in assets and a 110-year history of building deep and lasting relationships with middle-market companies and individuals. We are proud to be an Equal Employment Opportunity/Aff. Action employer (Minority/Female/Disabled/Veterans). Equal Housing Lender and Member FDIC. NMLS#401467

Over at AmeriHome Mortgage "they continue to grow the right way, with quality and high levels of client service. After another record lock and funding month, fast loan fundings with low conditions remains priority one (with a high % of all loans funding with zero conditions!). This level of personalized service coupled with great pricing continues to differentiate AmeriHome in the marketplace." If interested in a meeting at the MBA's Annual Convention & Expo in San Diego next week email sales.support@amerihome. com. Additionally, to support their growth AmeriHome is actively searching for a Senior Operations Manager to be based out of their Woodland Hills, CA location. This role will manage 3-5 production teams performing the pre-purchase review on correspondent loans. If you are interested please visit AmeriHome Careers.

At the other end of the spectrum, unfortunately, "after serving borrowers in the Western United States for over 40 years, First Mortgage Corporation (FMC) located in Ontario, California is ceasing operations. FMC stopped originating loans in July 2015 and will shortly have sold off or otherwise liquidated its loan and servicing portfolios and its loan origination offices. FMC focused on making home loans to first time home buyers, persons with lower credit scores, the working poor, and other persons otherwise underserved by America's large financial institutions.  Even though FMC focused on a less-wealthy segment of the home buying public, over the course of its history FMC maintained low delinquency rates for its servicing portfolio of over 30,000 loans. If you have questions contact President Clem Ziroli, Jr.: 909.983.4141, ext. 335.

United we stand, divided we fall? The Mortgage Collaborative, an independent mortgage lending cooperative, announced the formal approval of six new lenders to their national network of originating members: American Mortgage Service Company - Cincinnati, OH, First Commonwealth Bank - Indiana, PA, FirstBank - Franklin, TN, Independent Mortgage - Newtown, MA, MegaStar Financial Corp - Denver, CO, Norcom Mortgage - Avon, CT, and Northpointe Bank - Grand Rapids, MI. (The addition of these companies increases the aggregate origination volume of The Mortgage Collaborative' s lender members to over $62 billion annually.)