SAFE Act Requires Credit Worthy Originator; RESPA Impact on VA Loans; Reverse Mortgage REMIC; 1st Right of Rescission Holiday;

A man in New Jersey is accused of having sex with five cows...

Or as he is known in Wisconsin: a player

I can't believe that I heard a comedian use that line - Wisconsin folks are fine folks. In an unrelated incident, an originator from Wisconsin wrote to say that the State of Wisconsin's Department of Financial Institutions take on the SAFE Act is they won't give a license to anyone who has had a foreclosure or non-medical bankruptcy in the last three years. Any originator with open judgments is iffy for licensing. And it appears that this is not only Wisconsin.

Another originator wrote, in response to RESPA and the new GFE, "If a broker understands how to do the new GFE, they are still able to make the same point structure as always - but everyone's going to have to eat the escrow and processing fees on RRR's." As I have said all along, it is a controversial topic, but it appears that, once again, most firms are adjusting and moving forward. FEEDBACK APPRECIATED

But how many companies out there won't be able to do FHA loans if HUD moves toward a minimum $2.5 million net worth to do FHA loans? Some estimates peg the loss at 70% of all current lenders! HUD estimates that about 40% of all currently approved lenders have less than $1.0 million net worth. Maybe they'll grandfather small companies in... maybe not...

Anyone originating VA loans knows about "Circular 26-10-01", issued last week and reiterating that the 1% cap on origination fees would continue, stating new documentation requirements and the elimination of the interest rates and discount disclosure statement. The fees a veteran may pay are limited when obtaining a VA guaranteed home loan: the lender/broker may only charge the veteran a flat fee up to one percent (1%) of the loan amount to cover the lender/broker's costs and services, which are not reimbursable as "itemized fees."  For an IRRRL, the 1% origination fee may not exceed one percent (1%) of the existing VA loan balance of the loan being refinanced plus the cost of any energy efficient less any cash payments from the veteran, and if an origination fee is charged, lenders/brokers may NOT assess veterans any other fees other than the allowable fees shown below (as long as they are reasonable and customary).

Colony Capital Acquisitions is not a household name, but they just inked a deal with the FDIC to form a limited liability company to hold certain assets out of 22 failed bank receiverships. Colony owns 40% which it got for $90 million, the FDIC owns 60% of a company that owns $1.02 billion in commercial real estate loans (1,200), 70% of which are delinquent, and 75% of the properties are in GA, CA, NV, and FL.

Reverse Mortgage specialists carefully watched GNMA, who issued the first REMIC based on reverse mortgages: $130 million. It is made up of home equity conversion mortgage-backed securities (HECM MBS or HMBS). It helps that it is backed by the full faith and credit of the US. READ MORE ABOUT HECMs

The first bank to fail this year is Horizon Bank (WA), with 18 branches that are now being run by Washington Federal Savings and Loan Association, who also assumed all of Horizon's $1.1 billion of deposits.

Flagstar told clients that "any and all escrow/settlement agent companies involved in a loan transaction in any capacity must be approved by Flagstar and published on Flagstar's eligible agent list. This includes transactions in which the escrow/settlement agent company does or does not receive funds directly from Flagstar." And starting today, "correspondents requesting a warehouse advance for properties located in an escrow state will be required to systematically select both an eligible settlement and escrow agent." Flagstar also reduced the maximum CLTV on all Freddie Mac 1-unit primary residences, cash-out transactions to 80%.

Are you a client of Plaza Home Mortgage? Then you probably know that Plaza does not accept transferred or assigned appraisals, nor do they allow the name on the appraisal to be changed to Plaza. Appraisals must be ordered in Plaza's name, plain and simple.

Freedom Mortgage Corporation requires an executed 4506T (form sent to the IRS and tax transcripts obtained) for all loan transactions, with the exception of VA IRRRLs. But cross your "i's" and dot your "t's", or something like that, since "all vendors and the IRS have sent out notification that they will be unable to complete 4506T requests without all applicable fields completed on the form prior to the borrower's signature."

As you can imagine, the economists spent the weekend dissecting the job's number, and the other economic releases, from last week: that's what economists do. In December the US lost 85,000 jobs, but November showed a gain for the first time in two years. Still, the markets believe that the Fed will keep overnight rates close to 0% for quite some time - we're not out of the woods yet. November Pending Home Sales fell 16% from October, but the decline followed nine straight months of increases and November Pending Home Sales were 15% higher than one year ago.

So what are brighter minds than mine saying about the economy? Well, private payrolls are still contracting, the Fed has not changed its stance too much in several months, manufacturing is picking up a little as opposed to construction spending which is not, and auto sales are picking up a little, as is service sector activity. Most believe that rates will move up, but not much, in the first part of 2010 - maybe with the 10-yr going above 4.00%. This will push the dollar higher somewhat, but will also bring investors in to the fixed income market, helping mortgage rates.

This week the economic calendar is pretty light until later in the week, and currently the 10-yr is at 3.82% and mortgage prices are about unchanged. Until then we have tomorrow's Trade Balance figures (usually not a big deal for interest rates) and the Fed's Beige Book on Wednesday. But on Thursday we have Jobless Claims, Import Prices, and Retail Sales. And on Friday we have the Consumer Price Index (CPI), Industrial Production, Capacity Utilization, Consumer Sentiment, and the Empire State Index. Throw in $84 billion of Treasury auctions Tuesday through Thursday and we could see some volatility ($40 billion of 3-yr tomorrow, $21 billion in 10-year notes and $13 billion in 30-year bonds, as well as $10 billion in 10-year Treasury inflation-protected securities). On the plus side, besides the fact that the volatility could work to lower rates, is that with the Treasury supply and the supply of mortgages sliding lower (but still about $2 billion a day), mortgage prices could do well on a relative basis.

A week from today is a federal holiday - the first one since the new RESPA rules came into being. Many companies are treading lightly. This date cannot be included in counting the seven business day waiting period from when the initial TIL was provided to consummation. When re-disclosure of the TIL is required, this date also cannot be included in counting the three business day period from when a revised TIL was provided to a borrower to consummation. So next Monday cannot be included in the rescission period for rescindable loans.

After being interviewed by the school administration, the prospective teacher said, "Let me see if I've got this right."

"You want me to go into that room with all those kids, correct their disruptive behavior, observe them for signs of abuse, monitor their dress habits, censor their T-shirt messages, and instill in them a love for learning.

"You want me to check their backpacks for weapons, wage war on drugs and sexually transmitted diseases, and raise their sense of self esteem and personal pride."

"You want me to teach them patriotism and good citizenship, sportsmanship and fair play, and how to register to vote, balance a checkbook, and apply for a job."

"You want me to check their heads for lice, recognize signs of antisocial behavior, and make sure that they all pass the final exams."

"You also want me to provide them with an equal education regardless of their handicaps, and communicate regularly with their parents in English, Spanish or any other language, by letter, telephone, newsletter, and report card."

"You want me to do all this with a piece of chalk, a blackboard, a bulletin board, a few books, a big smile, and a starting salary that qualifies me for food stamps."

"You want me to do all this and then you tell me. . . I CAN'T PRAY?"