Among other debt instruments the U.S. Treasury issues (auctions/sells) T-Bills (maturing in one year or less), T-Notes (2-10 year maturities), and T-Bonds (maturing further out than 10-years). All three are sold by the government to pay off maturing debt and to raise the cash needed to run the federal government. I mention this because the net issuance of Treasury notes and bonds will likely drop significantly next year. "Longer-term yields will be slower to move up next year because the Treasury will be funding more with bills." I mention this because the topic often comes up during my speeches to groups about how mortgage rates are set, and this news could actually benefit mortgage rates on a relative basis.

According to James Brody, Managing Member of the American Mortgage Law Group, P.C. ("AMLG"), the Federal Deposit Insurance Corporation ("FDIC"), as receiver for AmTrust Bank, began rapidly filing a number of lawsuits on December 2, 2015 - currently 34 in all -- against lenders nationwide. "So far, these lawsuits have been filed in federal courts of varying jurisdictions, including the Northern District of Ohio, the Central District of California, Northern District of California, Eastern District of California, District of Massachusetts, District of Minnesota, District of Arizona, Middle District of Florida, and Southern District of Florida. In each lawsuit, the FDIC alleges that the defendant(s) breached certain loan purchase agreements by selling to AmTrust defective mortgage loans and refusing to repurchase the loans. It appears the FDIC filed all of these lawsuits en masse at the end of last week to ensure they would meet the statute of limitations. When acting as Receiver, the FDIC is subject to a unique statutory provision (12 U.S.C. § 1821(d)), providing a statute of limitations which is the longer of 6 years or the time provided by applicable state law, and accrues from the date of receivership. FDIC took receivership of AmTrust on December 4, 2009.  As AMLG is presently defending several lenders that were named in connection with the FDIC lawsuits, please contact Mr. Brody, by clicking here, if interested in learning more about the current wave of FDIC litigation."

Legal fees can add up. Just ask your local FDIC insured institution, which saw collectively a $40.4B net income in 3Q15. Why the robust quarter, you ask? Part of this was due to legal fees decreasing YoY from 2014. The FDIC writes, "Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $40.4 billion in the third quarter of 2015, up $1.9 billion (5.1 percent) from a year earlier. The increase in earnings was mainly attributable to a $3.2 billion decline in noninterest expenses, as itemized litigation expenses at large banks were $2.7 billion lower than a year ago. Financial results for the third quarter of 2015 are included in the FDIC's latest Quarterly Banking Profile released today."

If you think that wrongdoing in settlement services won't land you in prison, think again. How about 11 years?

It pays to be truthful. The NMLS has published a reminder to course providers that it is prohibited to make deceptive or inaccurate statements about course content, delivery or make negative statements about another course provider. Every CE course has an end-of-course assessment, and advertising that a course does not have this component is misleading. All advertising is to be conducted in a manner that is free of disparaging and/or negative language of any individual, organization, entity or federal/state licensing requirement. All advertisements are to include the name of the course provider and the name of the course and course ID number approved by NMLS.

State-licensed mortgage loan originators (MLOs) are being reminded by the Nationwide Mortgage Licensing System and Registry (NMLS) to complete the annual SAFE Act-required minimum eight hours of NMLS-approved continuing education (CE) as soon as possible. CE must be completed in the 2015 calendar year to renew an MLO license for 2016. The license renewal period begins on November 1st. Provident Funding, for example, is encouraging clients to renew company and individual licenses early to prevent any unnecessary delays. To save time, Provident Funding will no longer require uploaded proof of renewed licensing. Provident Funding will verify company and loan officer renewals directly with NMLS.

The NMLS has posted a reminder regarding state-specific CE due to an increase of inquiries coming from MLOs stating they can't file for renewal because they completed the 8 hours of CE but did not complete the state-specific education, as 22 states now require state-specific CE. To identify a state specific course, each course will have the 2 letter state abbreviation code in the title: 8 Hours PA SAFE Comprehensive Annual CE Review. If the course does not have that state abbreviation in its title then it's not state-specific.

NMLS publishes Education Notices to inform providers of state-specific course content requirements and to provide an agency-approved references list. NMLS approved course providers are advised that updated State-Specific Education Notices have been posted for NE (reference list update), VT (reference list update), and MI (course content change and updated reference list). 

IMF reports that a credit union in San Francisco rolled out a no money down, $2 million jumbo loan program that doesn't require mortgage insurance. Called the Poppyloan, critics immediately used terms such as "we're in another race to the bottom" but it certainly turned some heads. Brandon Ivey reported that, "San Francisco Federal Credit Union on Tuesday announced that it is offering no-down payment purchase mortgages with loan amounts of up to $2.0 million. The loans are available to borrowers who work in San Francisco or San Mateo County. The loans are structured as 5/5 adjustable-rate mortgages with 30-year terms. The credit union is quoting an initial interest rate of 4.00 percent for some qualified borrowers. Private mortgage insurance is not required. The origination fee charged on the loan varies based on the loan-to-value ratio, with 100 percent LTV ratio loans having a fee of 1.0 percent of the loan amount. Steven Stapp, president and CEO of San Francisco Federal Credit Union, said, 'We studied the problem and realized that there was no reason our credit union couldn't offer up to 100 percent financing without requiring private MI...Other credit unions have had success with similar programs and we built the Poppyloan as the best possible solution we could offer to our members.' Poppyloan is the acronym for the mortgage, which SFFC calls 'Proud Ownership Purchase Program For You.'"

While we're talking about jumbo programs, Mount West Financial's Jumbo R product matrix now shows alimony payments as deductible from income rather than included as a liability in the debt-to-income ratio. In addition, its FHA matrix states that a purchasing Spouse with "no FICO" score must have non-traditional credit. All non-traditional guidelines must be followed for purchasing spouse with "no FICO." Also, changes have been made to its Jumbo 2 product regarding Departure of Primary Residence when the Current Residence is Pending Sale.

After last week's volatility this week has seen a reduction in volatility in the bond market - at this point driven by oil prices. Tuesday U.S. Treasuries ended the day mixed although the selling of short term Treasury bills did continue with the 1-year Treasury yield jumping 3 bps to 0.69%. Not much happened in MBS-land, price-wise. West Texas Intermediate crude touched another post-crisis low of $36.64/barrel. The $24 billion 3-year note auction was met with strong demand.

This morning we're seeing the same quiet. We saw the MBA's application index (last week apps were +1.2%, purchases were unchanged and refis +3.5%) and there is no market-moving news until possibly the $21 billion 10-year T-note auction. Speaking of the 10-year we had a 2.24% close on Tuesday and this morning it is sitting around 2.25% with agency MBS prices worse about .125 versus Tuesday's close.

Jobs and Announcements

If your company wants to have a jumpstart in the correspondent channel, or receive a quick bump in correspondent fundings, a seasoned and fully functional Correspondent platform is up for sale. All aspects of the correspondent platform including approved lenders, existing pipeline, sales team and operations staff are available. For those firms seriously interested (principals only, please) contact me.

Mason-McDuffie Mortgage Corp is looking to add a Corporate Trainer to its Prime Services Group in San Ramon, CA. The Prime Services Group is the concierge support team dedicated to the success of their Loan Officers and are responsible for innovation in the areas of technology, marketing, training, social media, multimedia marketing, and on-boarding for the company. With its roots in Silicon Valley, the group embodies the company's "Be Different" philosophy.  The successful candidate will be passionate about training, using technology, highly creative, and be customer service focused. Mason-McDuffie Mortgage was voted top "50 Best Mortgage Companies to Work For", "Top 100 U.S. Mortgage Companies", and Top Work Places" by the Bay Area Newsgroup. You can read more about Mason-McDuffie Mortgage by reading its latest profile. If you are interested please contact Jason C. Frazier. One can also see other job openings here. 

National MI is growing its sales organization and is pleased to announce the promotion and addition of several new sales advisors across the country.  In promotion news, TJ Lile has been promoted to National Account Manager, responsible for managing key national accounts primarily headquartered on the West Coast. Donna Varnell has been promoted to Regional Team Leader for the Southwest region. National MI has also added several seasoned mortgage insurance industry professionals with the ability to build strong relationships, implement effective solutions for customers, and deliver exceptional customer service. They include: CO/WY: Erica Hynek, Account Manager and Diana Wening, Account Representative; MA/RI: Rick Renna, Account Manager; NY: Amy Rozmus, Account Manager for Long Island, NYC and the Boroughs; Nor CA: Pam Riddell, Account Manager, Traci Nordell and Elaine Till, Account Representatives; So CA: Stephan Poulson, Account Manager and Monica Lucio, Account Representative. National MI welcomes these talented individuals to its team; to find other sale advisors use the Sales Advisor tool.

In personnel news industry veteran Daniel Jacobs joined MiMutual Mortgage as EVP and Managing Director of National Retail Production. MiMutual Mortgage is the national distributed retail brand of Michigan Mutual, Inc., a growing multi-channel, agency-direct Mortgage Company. (By the way, Michigan Mutual, Inc. is currently seeking to add like-minded retail mortgage professionals to its team: call 800.700.5839 or visit www.MiMutual.com.)

And SecurityNational Mortgage Company is proud to announce the appointment of Jim Zures as Pacific Division Manager, Reverse Mortgages.  Jim brings to SNMC a long history of working in the reverse mortgage arena and will be responsible for recruiting and managing reverse loan officers in California, Oregon and Washington. He is an expert in training real estate professionals in all aspects of financing, with an emphasis on utilizing a reverse mortgage to purchase a home.  He's looking for originators that are currently specializing in reverse mortgages. Jim can be contacted at 909-342-2350 or email him at James.Zures@snmc. com.

Tis the season to get a year-end MSR valuation, and MountainView Servicing Group is offering a discounted fee for new clients to illustrate the MountainView difference. Over the last 25 years, MountainView has invested heavily in its analytic capabilities to become the leading MSR valuation and brokerage firm in the nation. So far in 2015, MountainView has completed more than 1,200 MSR valuations and successfully brokered $74 billion of MSRs on a flow or bulk basis. MountainView's market depth creates unique insight on how small and large MSRs holders as well as active MSR buyers model the asset. "You'll never hear us say that our cash flows are wrong but our pricing is right," said Matt Maurer, Managing Director at MountainView. "Producing a MSR value is easy. Creating a good, defendable MSR value with good cost, ancillary income, float, and speed assumptions that creates meaningful pricing in different rate environments is hard," added Maurer. For a very affordable and competitive price, MountainView provides a more robust report set in a timely fashion that will help teach you the why and how of MSRs. If interested in taking advantage of this discounted year-end pricing offer, please contact your MountainView sales representative or Art Yeend (303-633-4758).