On Friday, as thousands of offices and families across the United States debated whether the 3 colors of traditional candy corn tasted any different, the FDIC was busy.

The press releases all had pretty much the same verbiage: "(Name of Bank, State) was closed today by the (State) Office of Financial Regulation or OCC, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with (Rescue Bank)." Progress Bank of Florida, FL is now Bay Cities Bank (FL). First Bank of Jacksonville (FL) is now Ameris Bank (GA). The Gordon Bank (GA) is now Morris Bank (GA). The First National Bank of Barnesville (GA) is now United Bank (GA). First Suburban National Bank (IL) is now Seaway Bank and Trust Company (IL). Hillcrest Bank (KS) is now Hillcrest Bank (KS). Lastly, the FDIC approved the payout of the insured deposits of First Arizona Savings (AZ).

"Say all you want about the market being robust - it's only a boom for FNMA/FHLMC/FHA Conforming Product.  Where's the non-agency secondary market?  My space is Jumbo & Second Homes.  I've been in this business for 20+ years & have never had such a lack of common sense underwriting in my entire career.  We need to get back to Old School Mortgage Banking (i.e. will the loan pay?) and underwriting based on performance & risk."

"The government and the press can say all they want about QE 2, or QE whatever. Eventually I am sure that it will help companies lower their cost of borrowing, and maybe they'll pass it along to their employees, who will feel better about spending money. But for now, if my borrower can't qualify at 4%, they are not going to qualify at 3% either - banks have not passed their cash on to the borrowers quite yet."

Thomson Reuters, who has a larger research staff than I do, said U.S. mortgage-backed securities (commercial and residential) issuance totaled $91 billion last quarter and $328 billion through the third quarter, up from $207.2 billion in the same period a year earlier, a rise of 58%. Only 5% was non-agency production, which means that 95% of it was Ginnie, Fannie, and Freddie. Bank of America was the top underwriter of U.S. mortgage-backed securities in the first nine months of 2010, clocking in at $68 billion for 21% of the market. Royal Bank of Scotland came in at #2 with a 10% market share, and Barclays was #3. Ginnie Mae issuers securitized $413 billion of government-guaranteed residential loans in fiscal year 2010.

Bank of America publicly admitted that it found some mistakes in foreclosure files. The problems included improper paperwork, lack of signatures, missing files, and in certain cases information about the property and payment history didn't match. There was an address missing one of five digits, misspellings of borrowers' names, a transposition of a first and last name and a missing signature on one document "underlying" an affidavit. Some of the defects seem relatively minor, according to the bank, and bank officials said they haven't uncovered any evidence of wrongful foreclosures.

What are scratched & dented loans worth these days? If you're Fifth Third Bank, the loans are worth a price of 44 cents on the dollar. The bank released earnings late last week, earning $238 million in the 3^rd quarter versus losing $97 million a year ago. The gain included the sale of $228 million in nonperforming residential mortgage loans, roughly half of its troubled mortgage portfolio, for $105 million in the third quarter, or 44% of what the loans were originally worth. Mortgage banking revenue at Fifth Third was $232 million in the third quarter, up 152% from the $92 million earned a year ago on $5.6 billion in mortgage originations, up 21.7% increase from a year ago.

What is an allonge? "It is a slip of paper affixed to a negotiable instrument, as a bill of exchange, for the purpose of receiving additional endorsements for which there may not be sufficient space on the bill itself. An endorsement written on the allonge is deemed to be written on the bill itself." But they soon won't be for SunTrust: "Effective with Notes received by SunTrust dated on and after November 1, 2010, SunTrust will require that all Notes be endorsed to SunTrust Mortgage, Inc. An allonge was only acceptable for the endorsement if there was insufficient space available on the signature page of the Note for the endorsement and were only acceptable on certain loan programs. Effective for loans closed on or after November 1, 2010, SunTrust will no longer accept Allonges on any loan program. If there is insufficient space for the endorsement on the last page of the Note, the Correspondent client may place the endorsement on the back of the last page."

SunTrust announced this, along with eight other bulletins on Friday. The eight bulletins covered information such as a change in its cash reserve requirements for 2-4 unit primary residence non-AUS transactions ("has increased from 2 months PITIA to 6 months PITIA"), and a requirement for correspondent clients, "when submitting a corrected or amended document, to notate "correction" or "amendment" on the face of the document so that these documents are easily identified - having this information accurately reflected on the Correspondent Final Document Exceptions Report, should assist each client with determining any outstanding issues on their loans. Starting today, for the DU Refi Plus loan program, as well as the Subordinations for DU Refi Plus guidelines, "borrower(s) may be removed from the original loan being refinanced, or added to the new loan, when a SunTrust second mortgage is subordinated, and the SunTrust second mortgage cannot be modified, regardless of whether borrower(s) are added to, or removed from, the first mortgage, and borrower(s) currently obligated on the SunTrust second mortgage must remain." (SunTrust listed appraisal requirements for this situation.)

GMAC Bank Correspondent Funding gave some good news to vets out there: "with the recent enactment of Veterans' Benefits Act of 2010 on October 13, 2010, the eligibility for the VA Funding Fee exemption has been expanded to include veterans who were previously receiving VA disability compensation for a service-connected disability, but because they have reenlisted or were recalled to active duty service, they are now receiving active duty pay in lieu of disability compensation."

If you've ever wondered how long it takes, and how expensive it is, to cure documentation, Chase correspondent clients learned that when a closed loan package "is reviewed by the Chase Prepurchase Credit Risk Review and/or Funding Review team, and it is determined the loan file has missing and/or incorrect documentation, the loan file is suspended, and Chase Funding Coordinator/Advocate notifies the Correspondent by faxing a Loan Status Report that identifies the missing and/or incorrect documentation and the deadline for submitting corrections. The Loan Status Report specifies a "cure by date", which is the last day the Correspondent may cure document deficiencies and not be subject to the cost of an extension or relock fee." Chase modified the fees applied to loans that are suspended and not cured within 25 days after the lock expiration date for best efforts and standard mandatory delivery. But for AOT/Direct Trade execution, "if all information requested is not received by the end of the third business day/cure by date and the lock expiration date has passed, then a -0.125 "Cure By Extension fee" is applied and the loan is repriced according to the delivery schedule based on the date the last condition is received.

Friday the overall bond market opened up down (worse) and pretty much stayed there all day. Rate sheet mortgages were worse by about .250 with $2.8 billion leaving the hands of originators. Relative to Treasury yields, mortgages have spent the entire day trading between unchanged and a couple ticks tighter.

Ahead of us this week for economic news... well, will any of it change the path we're heading on toward future increased Fed involvement? Probably not, but today we will have some Chicago Fed numbers with Existing Home Sales later on. Tomorrow we'll have the series of S&P/Case-Shiller Home Price Indexes, Consumer Confidence (are you more confident about the future?), and some manufacturing and additional housing numbers. Wednesday is Durable Goods - usually a volatile number, and Existing Home Sales. Thursday is Jobless Claims, and Friday is the Employment Cost Index, GDP, some ISM numbers, and another Univ. of Michigan Consumer Sentiment Survey. The Treasury will also be selling $35 billion 2's; $35 billion 5's; and $29 billion 7's. This morning, so far, stocks are pointing higher and the 10-yr yield is down to 2.53% with mortgages a shade better depending on investor and coupon.  FULL CALENDAR

Comments made in the year 1955 - "only" 55 years ago.

"I'll tell you one thing, if things keep going the way they are, it's going to be impossible to buy a week's groceries for $10.00."

"Have you seen the new cars coming out next year? It won't be long before $1,000.00 will only buy a used one."

"Did you hear the post office is thinking about charging 7 cents just to mail a letter?"

"If they raise the minimum wage to $1.00, nobody will be able to hire outside help at the store."

"When I first started driving, who would have thought gas would someday cost 25 cents a gallon. Guess we'd be better off leaving the car in the garage."

"Did you see where some baseball player just signed a contract for $50,000 a year just to play ball? It wouldn't surprise me if someday they'll be making more than the President."

"I never thought I'd see the day all our kitchen appliances would be electric. They are even making electric typewriters now."

"If they think I'll pay 30 cents for a haircut, forget it."

"It's too bad things are so tough nowadays. I see where a few married women may have to work to make ends meet."