Aside from not having to wear ties on Fridays, or even collared shirts for that matter, the boys and girls over at Barclays have released their 3^rd Quarter Regional Housing Update. Their forecast: US housing prices will ultimately rise by 11.0% in 2013, with an additional +7.0% in 2014; prices are up 7.6% and 7.2% YTD through June (seasonally adjusted) on CoreLogic aggregate and distressed-excluded indices, housing prices are up 11.8% year-to-year, and the price-to-income ratio (or "affordability index") has rapidly returned to its long run average, standing just 0.4% below the 1976-2000 average. Must be those all-cash buyers...

Whether it is in your checking account, leaving earnings in your company to bolster net worth and gain investor approval, or a big bank that is critical to the world, capital is critical. This week the Financial Stability Board (has it looked at our government?) released the list of banks that must hold extra capital.

When a small lender trade group AND a consumer group voice the same frustration with a Senate bill, something must be up: Community Mortgage Lenders of America (CMLA) and the Center for Responsible Lending (CRL) have independently come to the same conclusion: without major changes, the small lender co-op in the Corker-Warner GSE Reform bill will not prevent Too-Big-To-Fail banks from gobbling up more market share. Here's the CMLA letter. And the CRL quote in its recent white paper: "These disadvantages would prevent the FMIC Mutual Securitization Company from effectively competing in the marketplace. As a result, smaller lenders could end up still selling their loans to larger competitors who could aggregate these loans. This approach ends up back at square one with smaller lenders in jeopardy of losing access to a cash window, getting less favorable pricing, and not having the option of retaining servicing rights." 

Speaking of banks & capital, I'm pretty sure we've all received the occasional mailer from our banks offering overdraft protection on our checking accounts. I'm also pretty sure, in today's banking environment, that what worked in the past will work slightly differently in the future once the CFPB forces their input. So it is with some interest when I read the American Bankers Association recent letter to the CFPB responding to the agencies June 2013 white paper reporting its initial data findings on overdraft programs. In its letter, the ABA cautions the CFPB that "unnecessarily complicating the process will only result in increased confusion and add unnecessary regulatory costs which, in turn, will limit the availability of overdraft services for those who value them most and may ultimately push more consumers out of the banking system." The ABA's letter outlines the value and benefits that overdraft services provide, the ability of responsible consumers to avoid overdraft fees, and the protection provided by existing regulations. They also challenge the need for the CFPB to regulate payment order or require detailed disclosures about presentment and settlement. (It came out last month, but is still very relevant.)

But back to mortgages! The CFPB and HUD are probing Walter Investment Management Corp.  "The Tampa-based mortgage firm (NYSE: WAC) has set aside millions of dollars to deal with the issues...staff with the CFPB are considering recommending the agency take action against Walter subsidiary Green Tree for alleged violations of federal consumer laws, the company said."  Don't take my word for it. (More on Walter, Green Tree, and EverBank below!)

We have 39 business days until January 10^th's QM - as a reminder, the CFPB released a bulletin and interim final rule last week to provide greater clarity to the market concerning mortgage servicing rules that take effect in January 2014. In the letter, they provide clarifications, and respond to requests for further explanation on three servicing issues: home retention efforts after a borrower dies, early intervention requirement to contact delinquent borrowers, and interplay between the servicing rules, bankruptcy code and the Fair Debt Collection Practices Act (FDCPA). The interim final rule also clarifies regulations issued by the Bureau in January to implement a provision of the Dodd-Frank Act that requires consumers to receive housing counseling before taking out a high-cost mortgage. The rule specifies which federally required disclosure must be used as the basis for counseling for a small subset of closed-end loans that are not subject to the Real Estate Settlement Procedures Act. The official release from a couple weeks ago can be found here.

Let's continue playing catch up with investor & agency updates to gain a sense of the rhyme and reason out there...

Kinecta will accept new applications for the Interest Only Jumbo ARM product through Thursday 11/14/13. Beginning Friday 11/15/13, Kinecta will no longer accept new applications for the Interest Only Jumbo ARM product.

MSI is offering 15-year terms on FHA Streamlines and is accepting FHA and Agency Conforming loans on single-unit primary residence and second homes in Bronx County, NY.

Walter Investment Management Corp. announced that it has entered into a series of definitive agreements through its Green Tree subsidiary with EverBank Financial Corp. The definitive agreements cover the following key items: Purchase of approximately $10.2 billion unpaid principal balance ("UPB") of Fannie Mae and Freddie Mac backed residential servicing assets and related advance receivables, purchase of approximately $3.3 billion UPB of private label residential servicing assets and related advance receivables, rights to subservice an approximately $5.2 billion UPB Ginnie Mae forward portfolio and a $1.7 billion UPB whole loan portfolio, and assumption of their default servicing platform and offer of employment to a significant number of related employees.

Additionally, Walter expects to finalize in the near term the establishment of a delinquency flow outsourcing arrangement wherein the Company will provide outsourced default servicing on a flow basis to EverBank from its mortgage portfolio. The portfolio of assets acquired and subserviced consists of over 179,000 loans that are projected to be approximately 75% current at transfer. The transaction will have an economic closing as of October 30, and the bulk of the servicing transfers will take place during the first quarter of 2014. Mark J. O'Brien, Chairman and CEO of Walter Investment said, "We are pleased to announce this transaction with EverBank, which will add over $20 billion of UPB and 179,000 accounts to our serviced portfolio, and extends our complement of serviced product to Ginnie Mae forwards.

Provident Funding reminded clients that "beginning November 1, all licensees will be allowed to start their license renewal process through the Nationwide Mortgage Licensing System (NMLS). Provident Funding encourages that you renew your license early and submit proof of renewal to Provident Funding as soon as possible. If we do not receive notification that your license has been renewed prior to December 31st, 2013 loans in your pipeline will not be able to move forward."

EverBank has revised a number of its Non-Conforming guidelines, including raising the maximum loan amount to permit up to $2m on transactions with LTV/CLTVs of 80% and below, while the minimum loan amount for Fully Amortizing ARM products has been reduced to $250,000 (the Fixed Rate minimum loan amount remains at $417,001).  In addition, business assets may now be used for the entire amount required for the down payment and reserves.  For S Corporation partnership assets, the borrower and/or co-borrower must own 100% of the business entity (the percentages held by the borrower and co-borrower are irrelevant so long as they add up to 100%); for Schedule C assets, the borrower or co-borrower must own 100% of the entity.  All relevant loan files should contain a letter from an independent third party stating that withdrawal will not have a material impact on the viability of the business entity, that funds are not an advance on future earnings, that no repayment of the funds is required, and the dollar amount of the funds available.  A 12- or 6-month cash analysis may be used for S Corporation partnership assets and Schedule C assets, respectively.  All of the above updates take immediate effect.

Effective immediately, EverBank has updated the requirements for using asset amortization when generating a monthly income stream.  The retirement age requirement of 59 ½ has been removed, as has the 70% maximum for primary residences and second homes, for which there is no longer any LTV restriction.  The previous requirement to calculate the eligible asset amount as being amortized over 360 months has been clarified such that the amortization period is still 360 months for 30-year transactions but has been revised down to 180 months for 15-year transactions.  For ARMs, the rate of return is now calculated as the lesser of 3% or the note rate minus 2% instead of the 1-Year LIBOR index as published in the WSJ.  As a reminder, asset amortization must equal at least 50% of the qualifying total monthly income.

Carol Poupart who has served as President of AmeriSave Mortgage Corporation for the past 7 year has announced her retirement effective November 1, 2013.  During Carol's tenure the company has grown exponentially and added a third party division to its very successful on-line lending program. The company is pleased to announce the promotion of Mark Lively to the President position.  Mark joined AmeriSave in December of 2009 after a lengthy career in the industry with several national mortgage entities.  He joined AmeriSave as Senior Vice President of Credit Risk and was later promoted to Executive Vice President.  He has been an integral part of the senior management team since joining AmeriSave.  He will continue to utilize his experience and knowledge to take the company to the next level. 

Turning to the markets...The traders can say all they want about spreads, swaps, supply and demand (yes, it is always important!), but by the time Tuesday's Happy Hour rolled around, the agency MBS market was basically unchanged from Friday's close, which means that rate sheets were also about unchanged. The U.S. 10-yr T-note, however, worsened by almost .250 in price. For tomorrow's exciting news we have the MBA's application index, confirming what lock desks & pipeline hedging companies around the nation already sense, along with a $24 billion 10-yr note auction. Speaking of which, its yield at the end of Tuesday was 2.77%, and in the early going this morning it is at 2.76% with little change in agency MBS prices.