There are lots of clever folks out there in the advertising business. That, combined with the fact that tonight is Friday night: THIS IS FUNNY

In what could be a sign of things to come, way in advance of Basel III, "The mortgage services division of IBM has taken control of roughly $47 billion in servicing rights from JPMorgan Chase and eventually may increase its contract to $100 billion." The story, from National Mortgage News, indicates what could happen if banks don't want or need or can't keep servicing. May-as-well sell it now, ahead of them required to sell under Basel III capital changes?

It isn't even Thanksgiving yet, and things are on sale - like HUD homes. Pick up a HUD-owned house for 50% of the value? Heck, if I could go to paramedic school, then pick up a $500k house for $250k - that certainly would pay for the training! If you know of any fire fighters, teachers - that type of person employed in that type of occupation, then you should tell them to check out THIS PROGRAM.   "You may use FHA, VA, or conventional mortgages, or cash. HUD requires you to sign a Second Mortgage and Note on the discounted amount No interest or payments are required on this "silent second" mortgage if you live in the home for the entire 36 month occupancy period." Heck, let's hope that appraisers don't use the 50% figure in their comps!

Here's an interesting site - the Congressional Oversight Panel for mortgage irregularities: http://www.cop.senate.gov/

Wednesday I repeated a note from Kate Berry at American Banker about how the chain of title and paperwork flows for a loan. A reader wrote, "Rob this person couldn't be more accurate about the big picture. These loan packages were sliced and diced. Maybe the credit packages were imaged, maybe not, maybe there was no credit package or a collateral-only package. As lenders started going belly-up, borrowers couldn't make their payments, and there were no docs to go analyze to determine why the loans weren't performing, not to mention incomplete legal packets and collateral packages." MND had similar comments on the subject

I also mentioned buying a bank. An ex-mortgage veteran now involved in finding homes for failed banks wrote, "The FDIC doesn't sell failed banks to anyone other than another established bank, or in a few cases, an investor group that has already gotten approved by regulators to operate a bank and received a "shelf charter".  An acquiring bank must be in good capital position and in good standing with the regulators before they are given the opportunity to see potential acquisitions.  Mortgage companies might put their excess capital to work in a good bank first.  With the good bank they might have the opportunity to recapitalize a weak bank before it gets taken over or buy a failed bank.  Well capitalized banks in good standing with regulators get notified of opportunities."

The OCC, the FDIC, FHFA, and the Federal Reserve are probably four entities that you don't want doing a pat-down search on you at the airport. But they are examining two nonbank service providers: MERS and Lender Processing Services Inc. (LPS). At some point one wonders which agency has legal jurisdiction over which companies - in this case the government's Comptroller of the Currency stated that the agencies have the authority to examine these firms under the Bank Service Company Act. The formal goal is to determine the adequacy and effectiveness of governance over the foreclosure process, with the informal goal being to figure out if MERS, which has been listed as the lienholder of record in foreclosure proceedings, has the legal standing to foreclose, and if a subsidiary of LPS forged documents so foreclosures could be processed more quickly. READ MORE

On-site exams of eight major servicing operations and the others will be completed by mid-to late- December: Bank of America Corp., Citibank, JPMorgan Chase, HSBC, MetLife, PNC, Wells Fargo & Co. and U.S. Bank. Folks in the mortgage industry will tell anyone listening that while any process deficiencies are inexcusable and should be corrected, the attention they are getting from regulators and the media is out of proportion to the offense. Process issues don't change the fact that many borrowers simply have not made payments, and are in fact living for free on either the taxpayer's or the servicer's expense. As one analyst wrote, "Any injustices done to borrowers, furthermore, have been inadvertent rather than deliberate, arising out of an extraordinary increase in defaults for which servicers were totally unprepared."

Ambac Assurance's parent company recently filed for bankruptcy, and yesterday Ambac said that banks that assembled a dozen poor performing mortgage bonds that it insured must pay for some of those losses. "Ambac said it was reviewing loans in residential mortgage-backed securities (RMBS) issued by the Countrywide unit of Bank of America and affiliates of Citigroup, among others." Ambac, originally founded to insure muni bonds, insured dozens of billions of MBS's that have gone bad, and is no longer writing any new business. FULL STORY

There are several investor updates - some of them good, none of them terrible.

Freddie Mac wants to help lenders with their appraisals. "To help you proactively develop controls that may strengthen your appraisal management and help determine appraisal quality, Freddie Mac is providing guidance focused on improving the quality and accuracy of collateral valuations for mortgages delivered to Freddie Mac. Any appraisers or anyone who reviews appraisers should check out THIS BULLETIN

In a few weeks, during the weekend of December 11, Fannie Mae will implement DU Version 8.2. In it the Fannie Mae Flexible 97 and the Flexible with Subordinate Financing programs will be retired, along with the Flexible products under the Fannie Mae HomePath and Fannie Mae HomePath Renovation programs will also be retired. With the retirement of the Flex programs, the key elements of these programs will be integrated into Fannie Mae's standard eligibility requirements. Fannie Mae will continue to allow loans with the same characteristics to be underwritten through DU with an LTV up to 97%. Therefore, the LTV will be increased up to 97% on one-unit, principal residence, purchase and rate/term refinance transactions on certain products, per lenders such as Flagstar.

PHH followed the FHA and told clients that its "FHA product has been updated to remove the requirement that the combined amount of the first mortgage and any subordinate lien may not exceed the statutory limit for the area. Only the first mortgage loan amount must be within the maximum permitted for the area."

Flagstar Bank announced the addition a 20-year term to the Fannie Mae DU Refi Plus, but in a separate announcement told clients that "For refinance transactions, all properties that have been listed for sale in the past three months from application date with an LTV equal to or greater than 70% will be ineligible."

U.S. Bank Home Mortgage Wholesale Division removed it's 80% TLTV/HTLTV "tier" level on its  Second Mortgage and Simultaneous HELOC products for maximum total loan to value. The states that were in that bucket (IL, OH, OR, SC, UT, and WA) were moved up to the standard 85% group for certain 2^nd mortgage and HELOC programs. Some states remain at a maximum 75% TLTV/HTLTV on the above mentioned products: AZ, CA, FL, MI, NV, NJ, and NY. USBHMWD (that just rolls off your tongue, doesn't it?) also revised its VA IRRRL guidelines for loans that are NOT refinances of existing USBHM VA loans. More specifically, "loans in all states regardless of loan amount require a full appraisal with interior and exterior inspections and do not have to be done by a VA appraiser but must meet Appraiser Independence Requirements, and the appraisal fee may be charged to the veteran. In addition, the maximum LTV will be restricted to 100% of the new appraisal, exclusive of the VA funding fee.

Wells Fargo Wholesale told its brokers that it has a new option for reverse mortgages, or HECM's, is now available. "HUD announced availability of the HECM Saver option in Mortgagee Letter 2010-34 and Wells Fargo will begin offering the program."

Everbank updated its FHA Streamline requirements in that it no longer accepts a 1003 with No Income, No Asset or No Liabilities products. "All Streamlines will now need to provide a FULL 1003."

MI company PMI alerted clients doing business in Florida that effective January 1, Florida is renewing the Florida Hurricane Catastrophe Fund Emergency Assessment and raising the percentage contribution from 1% to 1.3% on new business only. This assessment applies to mortgage insurance premiums paid on loans for Florida properties.

It was another volatile day, with investors seeming to set prices near the lows, and then repricing when the market improved. Treasuries opened up the New York session lower after a few overnight stories: muni downgrades, talk of China to stop buying Treasuries (but they bought later in the morning), GM, bunds and the continued PIIGS saga. A better-than-expected Philly Fed number turned some heads, and nudged bond prices lower and rates slightly higher. But things quieted down, and traders reported that buyers came into the market, but not before the 10-yr yield hit 2.96%. The Treasury announced next week's auctions, which as expected will include $35B in 2-yr notes, $35B 5-yr notes, and $29B in 7-yr notes, all Monday-Wednesday with Thursday's holiday. When the proverbial dust had settled, $1.4 billion of agency MBS's had traded hands but were still worse by .125-.375.

There is no scheduled news for today, and looking ahead to next week, activity is expected to quiet down with the Thanksgiving Day holiday looming. Besides the auctions there is no economic data out until Tuesday's GDP and Existing Home Sales. So far the 10-yr yield is sitting around 2.88%, and mortgage prices are a tad better than Thursday's close.

A young man shopping in a supermarket noticed a little old lady following him around. If he stopped, she stopped. Furthermore she kept staring at him.

She finally overtook him at the checkout, and she turned to him and said, "I hope I haven't made you feel ill at ease; it's just that you look so much like my late son."

He answered, "That's okay."

"I know it's silly, but if you'd call out "Good bye, Mom" as I leave the store. It would make me feel so happy."

She then went through the checkout, and as she was on her way out of the store, the man called out, "Goodbye, Mom."

The little old lady waved, and smiled back at him.

Pleased that he had brought a little sunshine into someone's day, he went to pay for his groceries.

"That comes to $121.85," said the clerk..

"How come so much ... I only bought 5 items.."

The clerk replied, "Yeah, but your Mother said you'd be paying for her things, too."