Everyone received an extra hour this weekend - and don't forget that Friday the bond market is closed in the U.S. So if any company is generating a rate sheet and taking locks on the 11th, don't expect sharp pricing - the usual procedure is to take Thursday's close, see what happened in Europe, and then back things off .250 or more.

Sometimes I joke about a board game titled, "Mortgage Banker Scrabble," where one draws three words out of a bin and creates a company name from them. Words like union, financial, home, first, united, mortgage, lending, funding, associates are all good ones to combine. "Allied" is another very common name, and the problems that Allied Home Mortgage Capital of Texas is going through is impacting other Allied's around the nation. For example, Allied Mortgage Group, Inc. of Bala Cynwyd, PA is not associated or connected with Allied Home Mortgage Capital of Texas, and never been associated or connected with Allied Mortgage Capital of Texas. The Pennsylvania Allied has been in business for 17 years in the Philadelphia tri-state area - don't confuse them!

Mortgage companies should pay attention to the Allied lawsuit. The government is seeking triple damages from Allied under the federal False Claims Act, also known as the "Lincoln Law." Originally written in 1863, the federal law imposes liability on persons and companies who defraud governmental programs (and was a result of unscrupulous contractors selling the Union Army decrepit horses and mules in ill health, faulty rifles and ammunition, and rancid rations and provisions during the Civil War). The government uses it against businesses or individuals who knowingly make, use, or cause to be made or used, a false record or statement material to a false or fraudulent claim. In Allied's case, apparently, because among other issues the government found examples of Allied not adhering to its published quality control policies and procedures, it is able to pursue this remedy. Observers say that this is very dangerous: whether it admits it or not, what company, mortgage or otherwise, follows its QC procedures 100% of the time on every loan?

We have less than a week until the new version of Freddie's LP comes out (11/13). The new version includes information on MI feedback message for second home manufactured home mortgages with LTV ratios greater than 85%, and adding and updating LP feedback messages. As always it is best to read the actual bulletin. Freddie also sent news on some updates and revisions to its selling requirements, including changes to mortgage eligibility and credit underwriting, income, appraisal requirements, repurchase late fee remittance, and so on. Here is Freddie's latest bulletin.

One date that will be here before we know it is 12/1: the Uniform Collateral Data Portal (UCDP) and Uniform Appraisal Dataset (UAD) deadlines are right around the corner and with the constant changes in appraisal regulations over the past years it's easy to get lost in it all and just say, "My Appraisal Management Company is taking care of this." We don't want any lenders to be caught unaware of these new UCDP and UAD changes - make sure you are ready at: http://www.freddiemac.com/sell/secmktg/uniform_collateral_data_portal.html and https://www.efanniemae.com/sf/technology/commitloandel/ucdp/.

And if you have to ask what "UMDP" stands for, maybe you should consider a new career: https://www.efanniemae.com/sf/lqi/umdp/pdf/umdpyardstick.pdf.

Friday afternoons are the typical time that the FDIC, as receiver, shuts down banks and finds healthier institutions to assume the deposits. Up in Nebraska, Mid City Bank was closed its depositors will be seeing Purdum State Bank on their statements. And in Utah SunFirst Bank was closed with most of the deposits going to Cache Valley Bank. The FDIC also released the "Monthly list of Banks Examined for CRA Compliance": http://www.fdic.gov/regulations/community/monthly/

Chase turned some heads when it revised its correspondent net worth eligibility requirements. "The new requirements apply to: New Correspondent approvals, Existing Correspondent annual recertifications, and all extended authority requests." The announcement noted the new HUD Adjusted Net Worth (HANW) requirements for existing Correspondents maintaining their current level of authority. "The HANW is based on the Program and the Fiscal Year End of the Correspondent" and are based on Agency delegated and non-agency delegated, non-agency non-delegated, and FHA/VA, raising them by $250-500k. "To maintain an authority, Correspondents must maintain the program's minimum HANW throughout the year. If a Correspondent drops below the minimum, they are no longer eligible for that program.
Chase policy for Quality Control Plans requires the Correspondent's senior management to receive results of reviews within 30 days of a completed review."

Last week Radian announced changes to LPMI, Split MI, and Single Paid BPMI (Cash or Financed). "LPMI & Single Paid (Cash or Financed) minimum credit score reduced from 680 to 620. Split MI minimum credit score reduced from 720 to 680.

For company news, in South Carolina FirstBank has entered into an asset purchase agreement with StellarOne through its banking subsidiary, StellarOne Bank, to sell it wholesale mortgage banking business. The newly formed wholesale department at FirstBank will absorb StellarOne's biz. Those in the area probably know that FirstBank is Tennessee's largest independently owned and operated bank, with 45 locations across the state and more than $2 billion in total assets.

For national news, CitiMortgage spread the word that in its extensive post-purchase due diligence on a sample of correspondent loans, the calculation of non-reimbursed business expenses has been identified as a top post-purchase defect. "When a borrower has non-reimbursed business expenses, such as classroom supplies, uniforms, meals, gasoline, auto insurance and/or taxes, a recurring monthly debt obligation should be developed based on a 24-month average of the expenses (from Schedule A and IRS Form 2106 from the tax returns). Automobile depreciation may be netted out. The 24-month average should be deducted from the borrower's stable monthly income. If there is not a full 24-month history, the underwriter should develop an annualized monthly average."

Citi also posted the latest changes to its Ineligible Originator list (posted on the Citi Correspondent website in the eInfo section), and is also in the middle of a special price incentive drive for many states. Although California and Nevada are not included, there are .2-.250 bonuses for November for states such as AZ, MI, CT, FL, GA, OH, TX... - 24 total.

Plaza reminded clients that, "The Flood Disaster Protection Act (FDPA) requires lenders to ensure that adequate flood insurance coverage is in place for any property used as collateral for a loan that has a building (dwelling, structure, or improvements) located or to be located in a Special Flood Hazard Area (SFHA). Special Flood Hazard Areas are defined by FEMA as any flood zone A or V. When a transfer of servicing occurs the new lender may send a letter to the borrower requesting that they increase the flood insurance to satisfy the maximum coverage requirement of that lender." Be sure to include the Notice of Special Flood Hazards (NSFH), and Servicing Disclosure Statement Notice, which include specific new language for all loans originated after 1/1/12 whether or not the property is located in a flood zone.

PHH released a series of underwriting updates to its correspondent clients focused on FHA projects. Items included pre-sale requirements (for new construction, at least 30% of the total units in the project must be sold prior to endorsement of a mortgage on any unit), owner occupancy ratios (for projects that are proposed, under construction, or existing less than 12 months, the owner occupancy amount must be at least equal to 30% of the number of declared units. Existing projects will continue to require a minimum of 50% of the units in a project to be owner occupied or sold to owners who intend to occupy the unit), FHA-insured concentration (50%), ineligible projects, site condominiums, etc.

Who needs U.S. economic news when we have all the excitement in Europe? The Greek situation should make clear that there are only two issues: 1) who is going to take the loss and 2) when? Most politicians in Europe are doing everything possible to avoid making these two decisions. The big news overnight was that the leaders of Greece's two biggest parties are due to resume talks Monday to agree on who should be the country's new prime minister, after reaching a historic power-sharing deal to push through a massive financial rescue deal and prevent imminent bankruptcy.

But economic news here in the U.S. still comes out, regardless, although this week is pretty light as there is nothing of substance until Thursday. On the 10th we'll have Jobless Claims, Export & Import prices, and the Trade Balance, and on Friday all we have is a Michigan Consumer Sentiment number. Here is this country, the 10-yr closed Friday at 2.05%.


"OLD" IS WHEN....
Your sweetie says, "Let's go upstairs and make love," and you answer, "Pick one; I can't do both!"
Your friends compliment you on your new alligator shoes, and you're barefoot.
A sexy babe or hunk catches your fancy, and your pacemaker opens the garage door.
Going braless pulls all the wrinkles out of your face.
You don't care where your spouse goes, just as long as you don't have to go along.
You are cautioned to slow down by the doctor, instead of by the police.
"Getting a little action" means you don't need to take any fiber today.
"Getting lucky" means you find your car in the parking lot.
An "all-nighter" means not getting up to use the bathroom.
AND 'OLD' IS WHEN...
You are not sure these are jokes!!

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog takes a look at the impact of HARP 2.0 and the differences in the agency's programs. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.