Wells’ Mortgage Earnings Indicative of Industry? HUD to Limit Appeals?; CFPB Appraisal Fees

Federal Reserve does other things besides keep overnight Fed Funds at 0% for
years at a stretch. It releases some interesting stats on mortgages that, if
you need a filler for a presentation you’re doing, might come in handy – you’ll
notice mortgage debt dropping.

I don’t think that many in the business have an awareness of how Basel III will
impact banks
, and therefore mortgages and servicing, and therefore mortgage pricing for consumers.” I
tend to agree, although I am trying to alert folks about the possible

Basel III
is expected to be the norm for banks around the world, which brings up the
question, “How do borrowers finance
their homes in other countries?
” There is an in-depth look at this –
click on the link near the top right of this page.

Yesterday Citigroup missed estimates, reporting
disappointing earnings although net credit losses fell 40% as full-year net
income grew 6%. Citi Holdings (the bank’s operation set up to handle its toxic
debt remnants) saw its revenue fall $6.4 billion, but Citi released $1.5
billion in loan loss reserves, a 35% decrease from 2010 – nice to see.

Wells Fargo beat estimates with a 2011 net income
up 28% from 2010, helped by a release of $600 million from loan loss reserves
during the 4th quarter. Wells has tended to focus on the consumer
(as we’ve all noticed, given its 30%+ mortgage market share) and not on
investment banking as other banks have done. Wells Fargo said its bucket of
nonperforming loans in the fourth quarter declined roughly 20% from the period
a year earlier. Its loan total grew to $770 billion in 2011 from $757 billion at
the end of 2010, and profit in the
community banking division, which includes Wells Fargo’s retail branches and
mortgage business, soared 30 percent
. New mortgages rose 35% to $120
billion from the prior quarter, and net interest margin, the difference between
what the bank pays for funds and what it earns on loans and securities, climbed
to 3.89% from 3.84%.

banking non-interest income stood at $2.4 billion for Q4, up $531 million from
third quarter 2011, on $120 billion in originations, compared to $89 billion in
originations in Q3. Mortgage banking non-interest income in Q4 included a $404
million provision for mortgage loan repurchase losses, compared with $390
million in the third quarter (included in net gains from mortgage loan
origination/sales activities). Net mortgage servicing rights (MSRs) results
were a $201 million gain, compared to a $607 million gain in Q3 of 2011. The
ratio of MSRs to related loans serviced for others was 76 basis points and
the average note rate on the servicing
portfolio was at 5.14 percent
. Wells Fargo’s unclosed pipeline as of Dec.
31 was $72 billion, compared to $84 billion at Sept. 30, 2011.

Wells is seeing what many mortgage
banks are seeing in the FHA/VA sector
Yes, government loan production has increased, but so have delinquencies. By
the end of the fourth quarter, $19.2 billion of these loans were more than 90 days
past due, up from $16.4 billion the previous quarter and $14.7 billion at Dec.
31, 2010. (Wells became the top FHA and VA mortgage originator in the country
after 2010 and originated more than $112 billion worth of these guaranteed

Here is an
interesting note related to Wells’ FHA update. “Rob, I have a quandary that maybe you or one of the readers can help with.
We are a small mortgage broker shop incorporated in 1991. Up until recently we
were a mini-eagle when HUD/FHA eliminated that particular category. This is the
first part of the problem. We are no longer able to track the loans we
originated. We can see the general numbers up to last year when we were no
longer able to order case numbers with our ID. The previous loans’ performance,
however, is still being tracked within the two year time frame. And here is the
issue: our compare ratio is way out of
. As you know the compare ration is the percentage of loans that are
delinquent compared to the total number of loans originated. The problem has two parts. First the
lenders want explanations for the loans that are being shown as in default but
we can no longer find out who they are. So there is no way to do an
explanation. Second, the compare ration is only comparing the loans upon which we
ordered the case number, so the list for the last two years is becoming smaller
and smaller every month as the loans form this year are not being added, but of
the three loans one was late last year. So my compare ratio has gone from under
100 to 100 to 150 to 200 and is now 250! Eventually, just before they are all
over 2 years old it will be over 1,000. I
can’t be the only broker that this is happening to!
Multiple calls to the
FHA resource center have only ended in frustration as all they can tell me is
how to get the number. What should I do?”

One list
that neither Wells or Citi find themselves on is the list of four Wall Street banks who will be bidding
on the $7 billion mortgage-related securities previously owned by AIG
are due to be auctioned tomorrow by the Federal Reserve Bank of New York. Goldman Sachs, Barclays Capital, Bank of
America and Credit Suisse will bid on the debt
, which was acquired by the
New York Fed as part of the bail-out of AIG in 2008. The auction is being
managed by BlackRock Solutions. The $7 billion is part of a $20 billion portfolio
housed in a special purpose vehicle called Maiden Lane II. If the Fed obtains a
good price, subprime debt could rally because the sale will remove a
significant amount of supply that has been hanging over the market, investors
said – prices of subprime debt fell last week as rumors of the Maiden Lane II
sale circulated among traders and investors. Stay tuned…

All these
loans began their lives as applications, and the MBA’s study, representing 75%
of retail originations, showed that apps
were up 23% last week
. Purchases were up over 10% and refi’s were up over
26% – accounting for over 82% of all applications (the highest refinance share
since October 2010).

If you want to complain about HUD loan limits, you’d better hurry. HUD has proposed eliminating maximum loan
limit appeals.
Late last week HUD published a proposed rule to eliminate
the process by which interested parties may appeal the maximum allowable loan
limit for a geographic area. Noting the modern availability of
sales-transaction data at the county level, HUD states that there is no longer
a need to allow requests for alternative limits. Further, the appeals disrupt
HUD’s overall loan limit determination process, and, by eliminating appeals,
HUD will be able to release annual loan limits earlier, thereby providing more
certainty to the market. HUD also noted that, because of the availability of
transaction data, it received zero requests for appeal of the 2011 loan limits. Copy of the proposal

Have you ever wanted to see how a rating agency looks at a residential MBS? Kroll recently rated one of Redwood Trust’s
, and here is all the nitty-gritty.
The mortgage loans were originated by First Republic Bank (55%), PrimeLending
(19%), PHH (11%), Wintrust (3%), Flagstar (8%), Sterling Savings Bank (2%),
Cole Taylor Savings Bank (1%) and Guardhill Financial Corporation (1%). 
The mortgage loans will be serviced by First Republic Bank (55%), Cenlar (19%),
PHH (11%) and Select Portfolio Servicing (15%).

news, its “Rule” appears to “have eliminated
the commentary language included in the Fed’s version which allowed appraisal
management companies (AMCs) to include the fees
they have been paying
appraisers to comply with Dodd-Frank’s “customary and reasonable” appraiser fee
requirement. ASA has repeatedly stated its belief that the Fed’s interpretation
and the massive loophole it created ran contrary to the plain language and
clear intent of Dodd-Frank.” Maybe it is a deliberate decision by the Bureau to
reject the Fed’s dubious and troubling interpretation, maybe not.
Fortunately with all this, rates are doing very little. The 10-yr T-Note seems
content around 1.85%, mortgage prices did very little yesterday while Thomson-Reuters
reported that mortgage banker selling appears to have been between $1.5 and
$2.0 billion, which was partially offset by the usual Fed support. Perhaps mortgages
may struggle a bit more than they have so far this year as some investors
believe that much of the tightening in the event of QE3 has been priced in.

morning we’ve already seen the Producer Price Index for December -.1%, ex-food
& energy +.3%; the -.1% is better than expected. At 9:15AM EST are
Industrial Production and Capacity Utilization, expected +0.5% and 78.1%
respectively, and finally at 10AM EST homebuilder sentiment is gauged with the
NAHB Index (Jan) called unchanged at 21.0. After
the PPI interest rates are basically unchanged from Tuesday’s close.

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Robosigning is Focus of New York Fraud Legislation

The New York State Assembly will soon consider
a bill that, if passed, would broaden the definition of mortgage foreclosure
fraud to include “robosigning”
and enact tough new criminal penalties including
jail time for violators.  The introduction
of the Foreclosure Fraud Prevention Act of 2012 was announced today by New York
Attorney General Eric T. Schneiderman.

The bill, sponsored by Assemblywoman
Helene Weinstein of Brooklyn, makes it a Class A misdemeanor for an employee or
agent of a residential mortgage business to “knowingly authorize, prepare,
execute or offer for filing false documents in a pending or prospective
residential foreclosure action.”   A violation is punishable by up to a year in
jail and a $1,000 fine.

The bill makes it a class E felony for
the same employees to engage in multiple acts of foreclosure fraud
(robosigning) and for a “high managerial agent” of a residential mortgage
business to “recklessly tolerate” such conduct on the part of any agent or
employee.  Such a felony carries a
penalty of up to four years in state prison.

“For many middle class New Yorkers,
their life savings is in their home. To take away people’s homes under
fraudulent circumstances is a crime deserving of jail time,” Schneiderman said.  “By treating foreclosure fraud as the serious
crime that it is, we can deter future abuse and spare untold numbers of
families the trauma of wrongful foreclosure. This legislation will ensure that
employees involved in these fraudulent and abusive practices, and their supervisors
who allow the misconduct to continue, will be held accountable for their

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Real Estate News: Freddie, Fannie Departures Escalate

Marla Lopez
House of the Day: Featuring a 300-year-old fireplace and a wood-burning pizza oven, this lakefront home in northern Idaho reflects the owners’ take on Italy by way of Nevada.

Here is a look at real-estate news in Tuesday’s WSJ:

Freddie, Fannie Departures Escalate: The latest sign of unrest at the  mortgage giants came Monday when Freddie said that Anthony Renzi—the executive who oversees the single-family mortgage business, by far the company’s largest and most complex division—would leave this month to take another job in the industry.

Housing’s Attractive Formation: The kids are finally getting out of the house. More of America’s excess housing inventory got sucked up in the first quarter, the Census Department reported Monday. The share of rental units that were empty fell to 8.8%, from 9.7% a year earlier and the lowest level since 2002.

House of the Day: Featuring a 300-year-old fireplace and a wood-burning pizza oven, this lakefront home in northern Idaho reflects the owners’ take on Italy by way of Nevada.

Europe House of the Day: This five-bedroom house in Esher, England, stands on the site of the bungalow where musician George Harrison lived throughout most of the 1960s.

Greater New York:

Pricey Co-Ops Find Buyers: One bidding war is begetting another on the Upper East Side, as New York billionaires compete for the most expensive co-ops in a heated rebound of the high-end co-op market.

The Assessor: A housing snapshot of New York’s Washington Heights.

A Few Good Mortgage Studies; One Wholesaler Rolls Out HARP 2.0; Investors’ Thoughts on 2.0’s Impact

Who says
that folks in the mortgage business can’t rhyme?

If you’re away from your home, and you come back and find that a pipe has
burst, and the place is flooding, do you a) fix the leak, or b) raise the roof?
I realize that the situation is more complex than that, but the White House
plans to ask Congress for an increase in
the government’s debt ceiling
to allow the United States to pay its bills
on time. Didn’t we just go through this? The approval is expected to go through
without a challenge, given that Congress is in recess until later in January
and the request is in line with an agreement to keep the U.S. government funded
into 2013. The debt is projected to fall within $100 billion of the current cap
by December 30, when the United States has $82 billion in interest on its debt
and payments such as Social Security coming due. President Barack Obama is
expected to ask for authority to increase the borrowing limit by $1.2 trillion,
part of the spending authority that was negotiated between Congress and the
White House this summer. Under the agreement struck in August during the
showdown over the government’s debt limit, the cap is automatically raised
unless Congress votes to block the debt-ceiling extension.

I mentioned this before, but wanted to mention it again: it seems that MI will stop being deductible in 2012
unless Congress acts – and they’re on recess into January. I received this note
from a reader on the west coast: “From my understanding, the PMI deduction
will be completely eliminated and will not be available to any taxpayer. 
This is definitely something I have an issue with, as it next to impossible for
a first-time buyer to get a home anywhere without paying PMI, but
unfortunately, I don’t make the rules. Since there doesn’t appear to be any
last minute tax battles in Congress like there was last year, I don’t foresee
this changing at least for the 2012 tax year.”

speaking of Congress, a year and a half has gone by since the Dodd-Frank financial reform act was
signed into law, “but barely a quarter of the rules in the legislation have
been finalized, though federal regulators are rolling out key components of the

financial counseling – counseling that
focuses on a borrower’s entire financial situation
– can prevent both
foreclosures and re-defaults, according to a recent White Paper study sponsored
by Florida-based special servicer, Outreach Financial Services, and authored by
STRATMOR’s Dr. Matt Lind. According to the white paper, servicers avoid net
losses of about $3,894 on an average $210,000 loan for each borrower who
receives basic counseling. However, this figure increases to between $5,754 and
$7,147 when borrowers receive holistic counseling aimed at their total debt and
spending patterns. Read it here 
or contact Matt Lind at Matt.Lind@Stratmorgroup.com
if you have questions.

And here’s
another study to read over the upcoming 3-day weekend: the MBA and the Research
Institute for Housing America (RIHA) released of a new exclusive report: “The Great Recession and Attitudes
Toward Home Buying.”
“The report finds that almost 80 percent of
American households believe that now is a good time to buy a home, despite high
unemployment, slow economic growth and problems plaguing the economy. This
positive attitude is attributable to low house prices and low mortgage interest
rates. The data shows that the pattern of home-buying sentiment during the
current recession looks similar to that of past recessions and is consistent
with the long-run average level.” This is good to know, and it is good to know
that it is free at and available for download at www.housingamerica.org.

lenders have resigned themselves to not seeing any HARP 2.0 business until March (although see below!), when it is
incorporated into the automatic underwriting systems and the market figures out
where the loans should be priced. But investor chatter continues, with some
examining the exact percentage of loans
being processed through DU Refi Plus, and whether rep and warrants related to
“ability to repay” falls under “underwriting” or “employment/income”.
know that Fannie Mae has reported that around 30% of their HARP refinancings
have used automated appraisals, which were only available through DU Refi Plus
until recently. Given this statistic, it is reasonable to assume that DU Refi
Plus applications consist of at least 30% of HARP refinances but the true
number is actually higher since the coverage for automated appraisals for
Fannie Mae is somewhat limited. Although it is difficult to gauge the exact
number, analysts put the number at around 30-50% of total HARP refi

The second question investors are interested in answering is whether the
“ability to repay” putbacks would fall under “underwriting” or
“employment/income”. Note that buyback statistics are not restricted to HARP
putbacks and trends across originators may vary. In the context of this
information, the Mortgage Bankers Association states the following trends in “Employment/Income”
related claims: both Fannie and Freddie verify employment (VoE) on stated
income products, Fannie makes use of
bankruptcy documents to identify income issues, and Freddie uses outside
investigators to locate past employers
. So the “employment/income” related
claims are related to employment verification (whether the borrower has a job)
or income inconsistencies (i.e., reported and actual income are different). The
“ability to repay” is ascertained after income and employment information is gathered
and buyback requests related to this specific issue thus falls under

United Wholesale Mortgage (http://www.uwmco.com/)
has announced that it has successfully implemented the government’s
enhancements to the HARP 2.0 that went into effect Dec. 1, 2011. Mat Ishbia,
president of UWM said, “There are very few lenders that have implemented HARP
2.0 thus far, and we don’t expect to see immediate adoption because of the
technology, staffing and liquidity implications. At UWM, we are committed to
offering our customers the products they need to satisfy marketplace demands
and grow their business.” The press release noted, “UWM added HARP Phase II to
its broker portal, EASE (Easiest Application System Ever), where brokers can
price and determine eligibility via EQ (Easy Qualifier). The primary changes to
HARP are the reduction of pricing adjustments on all HARP loans which allows
borrowers to save more money than they could have before, removing the 125
percent CLTV restriction, and the ability to not require appraisals on many
loans. Notable is that Fannie Mae and Fannie Mae’s Desktop Underwriter (DU)
system will not be updated to accept unlimited loan-to-value applications until
March of 2012, and UWM will roll out that enhancement once Fannie Mae’s system
is ready.”

And rates are certainly good! Yesterday the yield on the 10-yr shot
down through 2.00% and closed at 1.91% on thin holiday volume and a lack of
economic news. Numerous investors had price improvements, certainly helped by
continued Fed MBS buying. Thomson Reuters noted, “When volume is as low as it
is, fewer people (and fewer dollars) are required to move market levels such as
stock indexes, bond yields, or MBS prices.”

economic calendar for today includes Jobless Claims at 8:30am (expected higher
to +375k but came in +15k to 381k), 9:45AM EST brings December Chicago
Purchasing Managers index (expected 61.0 vs. 62.6 previously) and 10AM EST Pending
Home Sales for November (only +1.5 vs. +10.4 prior print). Ahead of all that rates are pretty much unchanged from Wednesday’s
close with the 10-yr at 1.92% and MBS prices “unched”

A man had just settled into his seat next to the window on the plane when
another man sat down in the aisle seat and put his black Labrador Retriever in
the middle seat next to the man.
The first man looked very quizzically at the dog and asked why the dog was
allowed on the plane.
The second man explained that he was from the Police Drugs Enforcement Agency
and that the dog was a ‘sniffing dog’.
“His name is Sniffer and he’s the best there is. I’ll show you once we get
airborne, when I put him to work.”
The plane took off, and once it has leveled out, the Policeman said, “Watch
He told Sniffer to ‘search’.
Sniffer jumped down, walked along the aisle, and finally sat very purposefully
next to a woman for several seconds.
Sniffer then returned to his seat and put one paw on the policeman’s arm.
The Policeman said, ‘Good boy’, and he turned to the man and said, “That woman
is in possession of marijuana, I’m making a note of her seat number and the
authorities will apprehend her when we land.”
“Gee, that’s pretty good,” replied the first man.
Once again, the Policeman sent Sniffer to search the aisles.
The Lab sniffed about, sat down beside a man for a few seconds, returned to its
seat, and this time he placed two paws on the agent’s arm.
The Policeman said, “That man is carrying cocaine, so again, I’m making a note
of his seat number for the police.”
“I like it!” said his seat mate.
The Policeman then told Sniffer to ‘search’ again.
Sniffer walked up and down the aisles for a little while, sat down for a
moment, and then came racing back to the agent, jumped into the middle seat and
proceeded to defecate all over the place.
The first man was really disgusted by this behavior and couldn’t figure out how
or why a well-trained dog would behave like that. So he asked the Policeman, “What’s
going on?”
The Policeman nervously replied, “He’s just found a bomb.”

If you’re interested, visit my twice-a-month blog at the STRATMOR Group web
site located at www.stratmorgroup.com. The current blog discusses the time
frames for borrowers returning to A-paper status after a short sale or
foreclosure. 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.

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GE De-banks MetLife; Bank of America and Turbulent Times; PHH’s Financial Condition; Two Banks’ Housing Market Forecasts

recently: “I love Christmas lights – they remind me of some co-workers.
They all hang together, half of them don’t work, and the ones that do aren’t
that bright.” But there lots of very bright people in the mortgage
business, and some wonder about the general common sense level of those in
Washington. Take HR 2055 for example. The While house signed HR 2055 which gives $1 trillion to extend
the National Flood Insurance Program through May 31, 2012
, which should
give Congress enough time to put a permanent law in place. That is good news. But
can they really put something in place prior to May 31 that helps the program?
Or will the American public, which includes those to whom flood insurance is
very important, witness another last minute compromise, see an approval tied to
a totally unrelated bill, or see “the can kicked down the road” yet
again? Let’s hope it is the first.

Bank of America’s problems are well
. I did not have the time or inclination to go back and check
famous CEO quotes from Countrywide, WAMU, Lehman, Taylor Bean, and so on, but
“We’re prepared for turbulent times” seems to ring a bell.
Marty Mosby, managing director at Guggenheim Securities, said Bank of America
might have to raise $45 billion over the next several years to de-risk its
balance sheet. “The real risk really comes from the overhang we get from
Countrywide,” Mosby said, noting that mortgage putbacks and home-equity
products could be among the biggest risks for the lender. “Those are
products that are still here domestically, the ones that have the most potential
stress if we were to dip into another recession,” he said.

industry vet A.B. writes, “Conduit margins are high right now, leaving
sellers with the choice of either investing in the servicing assets they create
or selling them cheaply, at least by the standards of the last ten years or
so.  I believe the primary reason
that conduit margins have widened to the extent that they have stems from BAC’s
decision to exit the correspondent and wholesale channels.
to my thinking the corollary statement is that by exiting these channels and
allowing Wells, Chase and others to book extra-normal profits, it may well be
that the net effect of BAC’s decision to exit will be to set-up yet another
situation in which it will appear to materially under-perform its competitors.
The competitive dynamic has changed, with BAC in the conduit space margins were
normal and no one competitor got rich; without BAC the remaining competitors
get to juice up their profit margins by paying less for purchased assets and by
becoming more selective about the assets that they will purchase.  By
exiting, BAC made the strategic misstep of ceding higher margin business to its
competitors because it apparently didn’t expect that margins would expand upon
its exit or, if it had such expectation, it underestimated the magnitude and
persistency of such margin expansion.  In the dead pool that I am in, I
have Brian Moynihan being ousted one day prior to BAC’s next quarterly earnings

& GE, sittin’ in a tree…” General
Electric Co.’s finance arm agreed to buy the U.S. retail-deposit business of
insurer MetLife
, in a deal that matches the life insurer’s desire to get
out from under federal regulation with GE’s pursuit of a more-reliable funding
source. The acquisition will bring GE Capital $7.5 billion in deposits as well
as MetLife’s online-banking platform. The deal, expected to close in mid-2012,
will speed GE’s new effort to attract more individual savers and further reduce
its reliance on potentially volatile financial markets for funds. As we know, MetLife
put its banking operations on the block in July in hopes of getting out from
under the regulation of the Fed. GE considers its current lending channel to be
a core business. The deal with MetLife will boost GE Capital’s existing U.S.
deposit base of $23 billion by about a third and help support its commercial
lending business. GE Capital paid less
than $100 million for the MetLife operation,
at the low end of the usual
range for such deals, which typically command a price equal to 1% to 3% of
deposits. Here is the scoop on the banking deal, although I don’t know any
specifics on the mortgage operation.

How are
mortgage folks and Realtors supposed to reconcile headline stories like,
“Sales of newly built, single-family homes edged up 1.6% to a seasonally
adjusted annual rate of 315,000 units in November – the third consecutive
monthly gain in new-home sales and the fastest pace of such activity since
April” and “The Office of the Comptroller of the Currency (OCC)
reported that the number of new foreclosures increased by 21.1% during Q3, as
servicers lifted voluntary moratoria implemented in late 2010 and exhausted
alternatives to foreclosure for the large inventory of seriously delinquent
mortgages working through the loss mitigation process. The increase in new
foreclosures and the increase in average time required to complete foreclosures
sales has resulted in the number of foreclosures in process increasing to 4.1%
of the overall portfolio, or 1,327,077 loans, at the end of the third quarter
of 2011”?

Comerica Bank takes a stab at it. “Residential real
estate markets are looking a little better as both construction of new homes
and sales of existing homes ticked up in November.  Improving consumer
confidence and gradually tightening labor markets look like they are helping to
build a foundation under housing. Of course the firmest support to the
foundation would be improving sales prices and that has not happened yet. 
Prices still look soft for most market
areas, sagging under the weight of bloated inventories of distressed homes for

Over at Wells Fargo, according to the National
Association of Homebuilders/Wells Fargo Housing Market Index (HMI), builder
confidence continued to show gains in December, the third consecutive monthly
increase and the highest level since May 2010. Starts and permits have also
perked up, with single-family starts up 4.6 percent on a year-ago basis in
November and permits up 3.6 percent over the same period. “The increases mirror
improvement in construction outlays and sales, which have also seen gains in
the past few months. While the increases are promising, we do not believe a ‘genuine’ recovery in housing activity has begun.
Indeed, the major obstacles that have troubled the housing market over the past
few years still remain intact, including the oversupply of single-family homes
and mounting distressed transactions.  We
expect home prices to come under additional pressure this winter, as more
foreclosures come on the market during the seasonally slow sales period.
Appraisals are likely to remain conservative for at least the next year, or
until the mountain of foreclosures hanging over the market finally clears.”

By the
way, anyone looking for the MBA
application index
today will be disappointed: the MBA offices are closed
all week and next Monday, so the survey results will next be released on
1/4/2012 and cover two weeks.

Yes, PHH was downgraded by S&P,
and has seen its stock price falter. But the company has capital and financing
in place, as noted in its SEC 8K filing yesterday
. Excerpts include, “PHH has $9.8 billion
of financing arrangements in addition to revolving credit facility as of
December 21, 2011…PHH projects sufficient liquidity to retire its debt
obligations maturing in 2012 and support its ongoing business operations…With
the exception of the Fannie Mae early funding committed facility, none of the
Company’s committed financing facilities are subject to termination,
acceleration, modification,  collateral posting or adverse price changes
solely as a result of a downgrade of the Company’s unsecured debt ratings below
investment grade.”

The 8k
goes on. “The mortgage operation has $6.5 billion of financing facilities and currently
maintains 13 separate mortgage-related financing facilities.  The Company
primarily uses warehouse and gestation facilities to fund closed loans that
have been pre-sold on a committed basis to, or sold pursuant to programs
sponsored by, Fannie Mae, Freddie Mac and Ginnie Mae. Mortgage warehouse
facilities are generally structured as 364-day repurchase agreements and are
essentially collateralized borrowings with loans originated by the Company
serving as the underlying collateral.  As secured financings, the advance
rate and financing cost under such facilities are primarily based on the historical
quality and performance of the Company’s loan originations rather than the
Company’s unsecured debt ratings…Due to the recent Standard and Poor’s ratings
action, Fannie Mae may terminate or modify its $1 billion committed early
funding facility or waive its termination rights and continue to provide such
funding on a committed or an uncommitted basis.”

Have you
ever heard of Wallick & Volk? I
must admit that I had not, although the mortgage company has been around a long
time, and is expanding in the western U.S. Although it has a fair amount of
fluff, here is the PR piece.

Above the
commentary discussed the expected continued rocky housing market, and this was
supported yesterday by the S&P/Case-Shiller 10-City Composite falling 1.1%
in October, and dropping in 19 of 20 cities tracked for another index.
Optimists suggest that at least the downward trend may be slowing, if only by a

markets were pretty much dead in the water yesterday, although there is
continued concern about Europe, which will be with us for months if not years. There
was “solid” origination from mortgage banks which was easily absorbed through
Fed buying and insurance company, REIT, and money manager buying. With no news
today it could be pretty quiet.  MBS have moved up in morning trading.

If you
were going to be hiking in Bear Country up in the mountains what size pistol
would you carry? What is the smallest caliber you trust to protect yourself?
My personal favorite bear defense gun has always been a little Beretta Jetfire
in .22 short!
I’ve found over the years when hiking in bear country I never leave without it
in my pocket.
Now you might think you need some huge cartridge gun like a .357 magnum. Nope –
a little .22 will work just fine.
I remember one time hiking with my brother-in-law in northern Montana.
Of course we all know the first rule when hiking in the wilderness is to use
the “Buddy System”.
For those of you who may be unfamiliar with this it means you NEVER hike alone,
you bring a friend or companion, even an in-law, that way if something happens
there is someone to go get help.
Out of nowhere came this huge brown bear and man was she MAD! We must have been
near one of her cubs.
Any way if I had not had my little Jetfire I’d sure not be here today.
That’s right, one shot to my brother-in-law’s knee cap and I was able to escape
by just walking at a brisk pace.
That’s one of the best pistols in my safe!

If you’re interested, visit my twice-a-month blog at the STRATMOR Group web
site located at www.stratmorgroup.com. The current blog discusses the time
frames for borrowers returning to A-paper status after a short sale or
foreclosure. 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.

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