Happy New Year!

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(interesting bio) Cleaning Up In Mortgages – by KAREN HUBE – Pine River’s Steve Kuhn made a killing in mortgage securities in 2009 and 2010. Why he thinks 2012 could be another banner year. – Barrons

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(bad deal – 10 years mortgage fees to pay for 2 months of tax cut) Three Big Questions Following The Payroll Tax Cut Deal – Bruce Krasting – … Totals — (two months) — $31.2B — Annualized $181.8B The total cost of $31B is paid for with an increase in mortgage fees to be charged by Fannie and Freddie. Given that these two are providing 90% of new mortgages, most folks who buy a home or refi an old mortgage will get hit with these fees. CBO estimates when these fees will come into the Treasury. – Business Insider Contributors  
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Morgenson on the Sham of the OCC’s Foreclosure Reviews – Yves Smith – Given that the Office of Bank Boosterism Office of the Comptroller of the Currency is the clear first among the highly competitive ranks of bank-friendly regulators, the fact that the OCC launched a program for borrowers to obtain restitution for financial harm suffered due to foreclosures seemed more than a bit sus. Gretchen Morgenson does an admirable job of exposing the multiple shortcomings of this OCC program. She quotes Alys Cohen of the National Consumer Law Center, who nails it: “Not only will it not help people, it could easily harm them.” This is yet another Obama Administration “pretend we are helping ordinary citizens when we are in fact helping the banks” scheme. – Naked Capitalism
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(FF&C means nothing? Who can you trust?) "Full Faith and Credit" of General Obligation Bonds Comes to Critical Test in Alabama Bankruptcy – Michael Shedlock – MISH’S Global Economic Trend Analysis

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Flippers’ role in housing flop larger than thought – By KIMBERLY MILLER – Palm Beach Post – More than 30 percent of Florida homebuyers during the boom year of 2007 had two or more mortgages, evidence of rampant investment that is partly blamed for real estate’s ruination, a recent federal report says. A Federal Reserve Bank of New York study released this fall uses previously undisclosed credit and loan information to show that home flippers played a bigger role than previously thought in bringing down the market. In 1999, just 16 percent of Florida homebuyers had two or more loans.

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Study Finds 38% of Homes Purchased in 2011 Bought with Cash – BY: CARRIE BAY – Despite record low mortgage rates, 2011 has seen a surprisingly high level of cash home purchases, according to the real estate research firm Hanley Wood Market Intelligence. – DS News
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WaPo: "Falling home values mean budget crunches for cities" - by CalculatedRisk – From Brady Dennis at the WaPo: Falling home values mean budget crunches for cities – Because of the time it often takes for property assessments to reflect falling home values, the bust that began in 2007 has just begun to ravage tax revenues in communities from coast to coast. The problem is unlikely to subside soon. …

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Deutsche Bank Among Firms Giving U.S. Plans to Rent Seized Homes – (Bloomberg Businessweek) – … The Federal Housing Finance Agency asked for ideas  … Carrington Holding Co., Barclays Capital Inc., Neuberger Berman Group LLC, Ranieri Partners LLC and UBS AG also were among the financial and investment companies that responded to the FHFA, according to a list of 439 proposals. The agency released the names in response to a Freedom of Information Act request filed by Bloomberg News. … – more
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Banks still waiting on most Dodd-Frank rules – By Danielle Douglas – 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 bill. Regulators released a highly anticipated proposal on capital and liquidity requirements last week, several weeks after issuing a long-awaited rule on bank trading activity. The proposals are subject to comment periods and possible amendments before they take effect. As of Dec. 1, regulators have issued 154 proposals, finalized 74 of them and missed 200 deadlines, according to a monthly progress report by law firm Davis Polk. – Washington Post
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Bank of America Mulls More Asset Sales to Boost Capital – By: Reuters – Bank of America is lagging behind its major U.S. competitors in complying with new capital rules, leading the bank to consider even more asset sales, sources said. – CNBC.com
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(read all of this) The Case For Fully Privatized Mortgage Markets – BY DR. WILLIAM POOLE – The U.S. is the only country with mortgage intermediaries of the form of Fannie Mae and Freddie Mac, … We also have the 12 Federal Home Loan Banks and (FHA) to address. Other countries with well-functioning mortgage markets do not have the mortgage intermediaries of the sort we do. There is no evidence of which I am aware that mortgage markets abroad function less well than ours. Indeed, the failure of Fannie Mae and Freddie Mac, at a taxpayer cost of about $150 billion so far, should be a clear warning to us. – MortgageOrb

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(endrun coming?) Advocates press for recess appointment of consumer bureau chief by Obama – Source: The Hill – Backers of the Consumer Financial Protection Bureau are urging the White House to use whatever means necessary to get a director in place, and argue that “extreme” Republican opposition has made such moves not only acceptable, but necessary. – Housingwire 

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Anyone completing a course in microeconomics would find great difficulty applying what they learned about competition to the home mortgage market. The market meets the major requirement of a competitive market in having many buyers and many sellers, but the benefits associated with competitive markets are conspicuously lacking. Instead of the expected single price that barely covers the sellers’ costs and is available to all buyers, mortgage prices are all over the lot. Some borrowers pay competitive prices, but many pay more.

Why Competition Doesn’t Work

The core reason that competition in the home mortgage market doesn’t generate the benefits that the textbooks lead us to expect is that most mortgage borrowers are required to select a lender before they know the price. No market will function well under that condition.

Some mortgage borrowers are not aware of this condition, and shop different lenders as if they could make a selection based on price. Most mortgage borrowers, however, don’t try to shop; they select or are selected by a single lender, to the dismay of many observers. But the non-shoppers may instinctively realize what many experts have not fully grasped, which is that shopping for price in this market is largely futile. The major function of shopping is not to search out the best price but to curb the rapacity of the lender with whom you are dealing by signaling that you are capable of walking from the deal.

I confess that it took awhile before I realized this myself. Over the years, I wrote several articles on “how to shop for a mortgage” which I am now in the process of revising. The corrected title will be more like “how to minimize the loss from having to select a lender without knowing that lender’s price.”

Why Mortgage Borrowers Can’t Shop Price

Multiple Prices: The micro-economics textbooks assume that there is only one price that covers the buyer’s payment obligation to the seller in full. In the case of mortgages, however, there are at least two prices: the interest rate and total lender fees. On adjustable rate mortgages (ARMs) there are also rate caps, the rate index used, and the margin over the index. An interest rate all by itself means very little.

While multiple prices complicate shopping by borrowers, the difficulties would be surmountable if not for the additional problems noted below.

Changeable Product: The textbook analysis of competition assumes that the product or service being sold can be precisely defined and doesn’t change. If you price a horse but can deliver a mule, as in Fiddler on the Roof, the price doesn’t mean anything.

In the case of mortgages, two critical factors affecting the price are not known with certainty until the borrower has selected the lender and applied for the mortgage. These are the credit score and loan-to-value (LTV) ratio, which are determined by the lender based on a credit report and property appraisal ordered by them.

While a preliminary price quote may be based on estimates provided by the borrower, that price is subject to change. Since the financial crisis, such changes have occurred with increasing frequency, and have been larger, in some cases leading to outright rejection.

Uncommitted Price Quotes: The textbook analysis of competition assumes that buyers can buy at the prices quoted by sellers. In the mortgage market, however, lenders have no obligation to lend at the price they quote until they lock, which may take days or even weeks. In the meantime, the quoted price is very likely to change with the market, which is very volatile. Quoted prices are reset every day and sometimes during the day.

Unsavory Lender Practices

The inability of borrowers to shop effectively is exploited by some lenders using a variety of unsavory practices.

Low-Ball Scamming is the practice of quoting a price to a borrower below the price the lender is actually willing to accept. The purpose is to be selected by borrowers who believe they can shop price. Low-balling is endemic on internet-based referral sites which display price quotes by dozens or hundreds of lenders.

Market-Volatility Scamming exploits borrowers already on-board but not yet locked by taking advantage of changes in the market. If market prices increase, the borrower is charged the higher price, but if market prices decrease, the borrower is charged the price quoted earlier. In the second case, most borrowers are content to receive the price they were quoted earlier.

Property-Valuation Scamming exploits borrowers whose loans have been locked before their home appraisal has been received. If the appraisal comes in lower by enough to raise the loan-to-value ratio past a notch point where the price increases, the lender increases the price accordingly. But if the appraisal comes in higher by enough to reduce the loan-to-value past a notch point where the price should decrease, the original lock price is retained.

The loan origination network that will soon appear on my site will allow borrowers to shop for price without being subjected to these practices.

Jack M. Guttentag, now Professor of Finance Emeritus, formerly Jacob Safra Professor of International Banking, at the Wharton School of the University of Pennsylvania. Earlier he was Chief of the Domestic Research Division of the Federal Reserve Bank of New York, on the senior staff of the National Bureau of Economic Research, and managing editor of both the Journal of Finance (1974-77) and the Housing Finance Review (1983-89).

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(good chart) NAR Revises the Great Housing Decline – by Sold at the Top – …  you can see that what the NAR is purporting to be the trend now looks substantially weaker and shows that the housing decline was notably more severe than previously reported with seasonally adjusted annualize home sales falling from a peak level of 7.25 million units in 2005 to just over 3.45 million in 2010, a level first seen in the early 1990s. … – Paper Economy – A US Real Estate Bubble Blog

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(also risk weighted capital and Basel 3) US MORTGAGE MEMO: NY Fed Buys $8.75B Agy MBS; No Dollar Rolls – By Isobel Kennedy – (MNI) – In the week ended December 21, the New York Federal Reserve bought $8.75 billion agency mortgage-backed securities. The largest purchases in the latest week were in Fannie Mae and Freddie Mac 30-year (TBA 3.5s) for February delivery. Those buys totalled $3.50 billion. The next largest purchases were $3.20 billion …TBAs with 4.00% coupon for January delivery…. 
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Fannie Mae, FHA Approval More Important Than Ever For Condos – By: Jill Urban – … Condominiums … realizing that they need to seek Fannie Mae and FHA approval in order to survive in this real estate jungle. “Buildings are finally figuring out that in order for people to be able to buy units and get financing within them that they actually have to be compliant with guidelines that were issued by FHA and Fannie Mae. There is a mad rush …” says Orest Tomaselli, CEO of National Condo Advisors…. – NY1.com

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(rising rate risk) New Bubble May Be Building in 30-Year Mortgages: Edward Pinto – … This system simultaneously drives down mortgage rates on guaranted loans and permits lenders to back them with minimal capital. This encourages banks and other deposit-taking institutions to hold more mortgage securities than would normally be justifiable, …, these government policies promote a concentration of risk. A single national event, specifically an abrupt increase in interest rates, would adversely affect prices for this entire asset class … – Bloomberg

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(good list) 10 Trends in U.S. Housing in 2011 and What to Look for in 2012 – By ROLAND LI – International Business Times

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Squatters say foreclosed homes beat homeless shelters – By Tina Susman – They may lack heat and a consistent water supply, but the vacant dwellings aren’t as ‘depressing,’ as one New York mother puts it. Advocates say the number of squatters nationwide is rising. – Los Angeles Times

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(lots here) Fed’s Once-Secret Data Released to Public – By Phil Kuntz and Bob Ivry – Bloomberg News today released spreadsheets showing daily borrowing totals for 407 banks and companies that tapped Federal Reserve emergency programs during the 2007 to 2009 financial crisis. It’s the first time such data have been publicly available in this form. To download a zip file of the spreadsheets, go to http://bit.ly/Bloomberg-Fed-Data. For an explanation of the files, see the one labeled “1a Fed Data Roadmap.” – Bloomberg.com

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Foreclosures by major banks increase 21.1% in third quarter - By Jim Puzzanghera – … came as mortgage servicers lifted holds they instituted as authorities investigated faulty paperwork. Separate research showed homes en route to being seized fell 15.8% in October from a year earlier. – Los Angeles Times

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(gives breakdown)  Details of Mortgage Servicing Settlement Between Banks and AGs Begin to Emerge – By MASSIMO CALABRESI – Time Magazine’s Swampland

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Sen. Scott Brown calls for criminal probe of Fannie, Freddie – By Peter Schroeder – … saying recent civil claims filed against former executives do "not go nearly far enough to achieve justice." Brown sent a letter to Attorney General Eric Holder and Securities and Exchange Commission (SEC) Chairman Mary Schapiro on Thursday … "If the investigation uncovers illegal actions, criminal prosecution should be pursued and people should go to jail," he wrote. – The Hill

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Yearly Home Values Decline Nearly $700B, But Rate of Decline Slows – BY: KRISTA FRANKS – As 2011 comes to a close, Zillow anticipates home value declines for the year will total more than $681 billion. The rate of depreciation, however, is slowing. The $681 billion decline this year is 35 percent less than last year’s $1.1 trillion drop in value. – DS News

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Fannie Mae Removes ‘Ability to Repay’ from HARP 2.0 Guidelines – BY: CARRIE BAY – … Barclays Capital explains that ability to pay has traditionally been measured using DTI (debt-to-income ratio) but pursuant to HARP guidelines, no DTI calculation or evaluation is required if the borrower’s payment does not increase by more than 20 percent. A 45 DTI cap applies otherwise. Under the revised guidelines, the ‘borrower ability to pay’ clause is no longer an underwriting requirement. … – DS News

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Increasing borrowing costs will lower house prices – by IrvineRenter – Borrowing costs are likely to increase in 2012 for a variety of loans. The lower conforming limit will push many borrowers to either the FHA or the jumbo market where borrowing costs are higher. The FHA may also raise its borrowing costs again to cover the inevitable losses from the ongoing decline in home prices. … – more – Irvine Housing Blog
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(overlooking appraisals) Foreclosures Remain Huge Problem for Small Banks – By Andy Peters – With the crush of foreclosures, analysts have implored smaller banks to dump bank-owned properties, even if it means taking a big loss. Many bankers agree that’s what they should do, but mandatory appraisals have been a sticking point. Accurate values are hard to come by, so potential buyers are often scared off by appraisals that seem too high, or bankers get skittish that they’re selling too low. As a result, hundreds of community banks still have huge levels of other real estate owned, or OREO, on their books – National Mortgage News

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Payroll tax cut may hurt housing market – Jim Puzzanghera – Los Angeles Times – To pay for the two-month payroll tax cut, a small fee will be levied for a decade on all mortgages sold to Fannie Mae and Freddie Mac. That also makes it harder to overhaul the housing finance system. … "This really complicates what you do with Fannie and Freddie down the road," Ely said. …
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A Blooper in the SEC’s Fannie Mae Lawsuit: The Ticker – By Jonathan Weil – … If you answered that it was an error to say Mudd was on Fannie’s audit committee, give yourself a gold star. Mudd not only wasn’t a member, he couldn’t have been one, under SEC rules and New York Stock Exchange listing standards. That’s because, as Fannie’s proxy statement made clear,  he wasn’t an independent director. Rather, as CEO, Mudd was part of Fannie’s management, which the audit committee was responsible for overseeing. … - Bloomberg
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(not bad for a $2 billion investment!) Bank Of America Could End Up Paying $53 Billion For Countrywide Mess: Bove – Halah Touryalai – Forbes

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• Renewal Period

• Initial Registration Exception

• Missing the Deadline

• Summary

• Further Information

• Registration Renewal Toolkit – Library

LENDERS COMPLIANCE GROUP is the first and only full service, mortgage risk management firm in the country that specializes exclusively in residential mortgage compliance. The firm provides risk management outsourcing to the mortgage industry, offering a full suite of hands-on and automated services in residential mortgage banking.

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FHFA’s DeMarco Considering Backdoor Bankruptcy Principal Modification Program for Freddie and Freddie – Yves Smith – … So it was surprising to read that the acting head of the FHFA, Edward DeMarco, is considering what amounts to a principal mod program implemented through bankruptcy courts. As Shahien Nasiripour reports in the Financial Times: … to allow homeowners in Chapter 13 bankruptcy proceedings who owe more on their housing debt than their homes are worth to pay zero per cent interest for five years, subject to approval by bankruptcy judges  … more – Naked Capitalism

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GSEs Held $2 Trillion in Subprime Loans at Height of Financial Crisis – BY: KRISTA FRANKS – At the height of the financial crisis in 2008, Fannie Mae and Freddie Mac held $2 trillion in high-risk subprime loans, amounting to 42 percent of their single-family portfolios, according to Edward Pinto of the American Enterprise Institute. – DS News

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Ocwen’s Rapid Portfolio Growth Leads To Downgrade From Fitch – BY MORTGAGEORB.COM – Fueled by concerns that Ocwen Financial Corp. is growing too large too quickly, …. The agency downgraded Ocwen’s primary servicer rating for subprime product to RPS3 and its special servicer rating to RSS3.  
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$335 Million Settlement on Countrywide Lending Bias - By CHARLIE SAVAGE – … the largest residential fair-lending settlement in history, saying that Bank of America had agreed to pay $335 million to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers during the housing boom. …- NY Times

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And Now… For The Grand Total Of How Much Countrywide Has Cost Bank Of America – Linette Lopez and Lisa Du – Clusterstock at Business Insider
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(time bomb?) Does FHA Claim Processing Amount To The Next Servicing Nightmare? - BY JOHN CLAPP – … Several recent developments, however, indicate the key threats in FHA servicing could relate to intensified auditing from the U.S. Department of Housing and Urban Development (HUD) and heightened scrutiny of insurance claims. … In an Oct. 3 investor note titled “FHA Claim Denials: The Next Shoe To Drop?” FBR Capital Markets analyst Paul Miller … “We’ve heard anecdotally that FHA can pretty much get whatever they want from banks, because nobody’s doing anything right,” Miller says. He gives as an example the FHA requirement for servicers to make face-to-face contact with delinquent borrowers within narrowly prescribed time frames – something that Miller says few, if any, servicers are doing right now. … – much more – MortgageOrb
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CoreLogic: Shadow Inventory At January 2009 Levels – BY MORTGAGEORB.COM – For every two homes available for sale, there is one home in the shadow inventory, new data shows. … totaled 1.6 million units in October, representing a supply of five months. … The shadow inventory represents about half of the 3 million properties that are seriously delinquent, in foreclosure or in real estate owned (REO) status, CoreLogic explains. … more – MortgageOrb

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For Every Two Homes for Sale, There’s One in the Shadows – BY: CARRIE BAY – DS News
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(NAR downward revisions) MICHELLE MEYER: Here’s The Worst Thing About Today’s Housing Data Revisions – Sam Ro – … In a note to clients today, Meyer writes: An important takeaway from the downward revision to home sales is that the divergence between affordability (low rates/low prices) and home sales is even larger. This means that it may be more difficult to trigger the rebound in housing activity necessary to clear the overhang of inventory sitting in the shadows. … – Money Game at Business Insider
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Risk is Necessary for Adaptation, Innovation and Success – Charles Hugh Smith – … Our entire system is now based on transferring risk to others and severing the feedback from the real world that is expressed as risk, threat, consequence and failure: …, guaranteed loans, guaranteed lifetime employment, bail-outs, stock markets which are never allowed to decline, and on and on. … Due to the corruption of big-money contributions and lobbying, the vast majority of (political) incumbents win re-election. … they don’t feel any threat of losing their power and perquisites if they don’t tackle the really difficult issues. Eliminate feedback and you doom the system to mal-adaptation and thus collapse … – Of Two Minds

also this from CHS –

(interesting take) Risk and the Indentured Servitude of Student Loans – … lenders have little risk of losing money on the loans, unlike mortgages made during the real estate bubble. Congress has given the lenders, the government included, broad collection powers, far greater than those of mortgage or credit card lenders. The debt can’t be shed in bankruptcy. … In effect, students get A Mortgage with Every College Graduation (Dr. Housing Bubble, via Jed H.) with one key difference: there is no way to get out from underneath the student loans. … – Of Two Minds

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Foreclosures Weighing on Prices May Push Housing Rebound to 2013 – By John Gittelsohn – … Prices for resold homes are down 31 percent since the July 2006 peak, based on the S&P/Case-Shiller Index … Values have increased 3.1 percent since bottoming out in March, though more than a quarter of homeowners with a mortgage are “underwater,” … Prices may drop an additional 7 percent, according to Scott Simon, head of the mortgage- and asset-backed securities teams at Pacific Investment Management Co. in Newport Beach, California. … Bloomberg Businessweek
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Investigating the NAR’s Seemingly Incredulous Statement on the Accuracy of Local Housing Data; Discussion with Calculated Risk on "Where to From Here" – Michael Shedlock – summary then this … Where to From Here? In regards to how long this will play out, I think a decade. CR is a bit more optimistic … Once housing prices bottom, it will not be a mad dash to new highs. "Someone who bought a house for $1 Million who can now only get $500,000 will likely not get back to even in our lifetimes" says CR , adding with a presumed grin, "it certainly depends on how old someone is now". … – MISH’S Global Economic Trend Analysis
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(great summary of RM market) Reverse Mortgage Year in Review: 2011 – By Elizabeth Ecker – Reverse Mortgage Daily
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Smaller mortgage originators see surge in demand – by KERRI PANCHUK – Housingwire

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For Rob Chrisman’s latest daily post, click here.

To subscribe to Joe Garrett’s news letter, send an email to  jgarrett at garrettwatts  dot  com

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Nevada AG Sues LPS For Robo-Signing, Fee-Splitting – BY MORTGAGEORB.COM – Nevada Attorney General Catherine Cortez Masto has sued Lender Processing Services Inc. (LPS) and several of its subsidiaries, including DOCX LLC and LPS Default Solutions Inc., for allegedly engaging in deceptive practices against Nevada consumers. (more details) … LPS said it cooperated with the investigation by Masto’s office for more than 14 months, but that its efforts to engage in meaningful discussions with her office were undercut by Masto’s decision to outsource the investigation to Washington, D.C.-based Cohen Milstein Sellers & Toll PLLC. That outsourcing arrangement appears to violate Nevada law, says LPS …

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Opinion: Fannie, Freddie role funding tax cut is perilous - By Daniel Indiviglio – (Reuters Breakingviews) – … details of extending the Social Security payroll tax reduction. But both sides want to pay for it by raising the guarantee fees charged by mortgage giants Fannie Mae and Freddie Mac. That’s a needed change, but siphoning the extra money straight to Treasury sets a perilous precedent. … The latest idea from Congress makes it likely the two behemoths will still be around in a decade. It’s further evidence that lawmakers of all stripes can’t resist deferring hard decisions until there is no easy sleight of hand left. … 

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(on lawsuit vs GSE heads) An Inconvenient Truth - By JOE NOCERA – … Yet these real sins have been largely overlooked in favor of imagined ones. … The truth is the opposite: Fannie and Freddie got into subprime mortgages, with great trepidation, only in 2005 and 2006, and only because they were losing so much market share to Wall Street. ... There is something else missing from the S.E.C. complaint, which Wallison and Pinto also conveniently ignore: default data. The truth is, for all their mistakes, Fannie and Freddie had some scruples about the nonprime loans they did make — and they have the default numbers to prove it. … – NY Times

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Guess who’s paying to defend Fannie and Freddie execs – Loren Steffy – … The former policy adviser for Rep. Alan Grayson writes on the Naked Capitalism blog that the Federal Housing Finance Agency has agreed to pay the legal fees for the six housing executives sued by the Securities and Exchange Commission last week. In other words, the government is using your money defend those who ran companies that have already cost you more than $150 billion in bailouts from the allegations of another government agency that’s using your money to sue them. … – Houston Chronicle

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Legislation Would Maximize FHA Insurance Premiums to Prevent Bailout - by Elizabeth Ecker – Legislation was introduced in the Senate late last week that would reform and recapitalize the Federal Housing Administration in an effort to prevent a taxpayer bailout. The bill, introduced by Senator David Vitter (R-La.) would require the FHA to recapitalize its single-family mortgage insurance fund in two years. – Reverse Mortgage Daily
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Surge in discounted REO expected next year – by IrvineRenter – Irvine Housing Blog

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(2 great charts) New Residential Construction Report: November 2011 – by Sold at the Top – Today’s New Residential Construction Report showed that in November, both single family permits and starts increased from October with both measures continuing to show tepid results when compared on a year-over-year basis. While the traditional business media jumped on this report as an indicator that housing is on the mend, closer inspection shows that the majority of the "strength" was in multi-unit structures, particularly structures with five or more units while single family activity remains historically subdued. – Paper Economy – A US Real Estate Bubble Blog 
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Las Vegas looks to California for home sales demand – 1 out of 3 investment property buyers in Las Vegas came from California. A repeat trend from the mania days although home prices are now down 63 percent from the peak reached 5 years ago. – Dr. Housing Bubble
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Fund ready to place bets on individual mortgages – By Jeff Benjamin – Vertical Capital Income strategy will start investing next month – … new Vertical Capital Income Fund, which will invest exclusively in individual residential mortgages. … “We are looking to purchase discounted mortgages, sometimes as cheap as 60 cents on the dollar,” he said. … – Investment News

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Vertical Capital Markets Group Launches New Fund – By Bonnie Sinnock – Vertical Capital Markets Group, Irvine, Calif., this week launched a new fund that invests primarily in assets of residential performing loans secured by first mortgages or deeds of trust. Gus Altuzarra, CEO of the Vertical Capital Markets Group, told this publication the fund is distinct from others in that it targets performing rather than nonperforming assets. The fund does not seek to own real estate but rather wants assets that produce an income stream, he said. More than 90% of the loans in the fund are performing and are purchased at a significant discount, leaving room to negotiate lower payments for any troubled homeowners, according to the company. – more – National Mortgage News
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(chart and text) We’ll Need To Build A LOT More Houses – Joe Weisenthal – Money Game at Business Insider 

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(explains back door bailout and carry trade) Everything You Need To Know About Tomorrow’s Big ECB Operation That Everyone’s Watching – Simone Foxman – Money Game at Business Insider
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(getting better? – has great charts) What the resale market tells you about new home construction – Scott Sambucci – Altos Research

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New Waves of Foreclosures Due to Hit? - By Rick Sharga – By yearend RealtyTrac reported that  foreclosure activity decreased by 3% compared to the previous month, and by 14% compared to November of 2010, but that a nine-month high in scheduled foreclosure auctions suggested that a “new set of incoming foreclosure waves” may be coming. I’m not so sure I agree. – Mortgage Servicing News
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Kamala Harris, California Attorney General, Sues Fannie & Freddie – California’s attorney general filed lawsuits against mortgage giants Fannie Mae and Freddie Mac on Tuesday, demanding that the companies that own some 60 percent of the state’s mortgages respond to questions in a state investigation. Attorney General Kamala Harris, whose office filed the lawsuits in San Francisco Superior Court, is investigating Freddie Mac’s and Fannie Mae’s involvement in 12,000 foreclosed properties in California where they served as landlords. She also wants to find out what role the companies played in selling or marketing mortgage-backed securities. … – Huffington Post LA

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For Rob Chrisman’s latest daily post, click here.

To subscribe to Joe Garrett’s news letter, send an email to  jgarrett at garrettwatts  dot  com

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JPMorgan Chase Latest Target Over $95 Billion Worth Of Mortgage Backed Securities – Reuters – A law firm that led mortgage bondholders to extract a $8.5 billion settlement from Bank of America Corp is turning its sights on JPMorgan Chase & Co. Houston-based Gibbs & Burns LP said on Friday its clients have instructed trustees overseeing $95 billion of securities issued in the housing boom by JPMorgan’s affiliates to investigate whether ineligible mortgages were included in collateral behind the bonds. Gibbs & Burns said its clients represent holders of more than 25 percent of the voting rights on 243 residential mortgage backed securities. – Huffington Post

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(a new website I am following is http://doddfranksummary.com/ )
Republicans Attempting to Minimize Dodd-Frank Impact Through Purse Strings - Dodd-Frank Summary

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(lots of points – Echo Boomer expert) Attitudes of Young Americans Bode Ill for Housing Recovery – Peter J Reilly – … Our leaders face a major shift in the housing market that few recognize: the Millennial generation (also called Echo Boomers, due to their massive size).  The trouble with Echo Boomers is that few understand them and realize how different they think and act than other American generations.  … more – Forbes

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(housing prices) A Simple Explanation Of How Inequality Has Made The Great Recession So Much Worse – Joe Weisenthal – Money Game at Business Insider
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(new phenomenon?) Buyer’s Remorse; Record Volume of Returns Before Christmas; $217 Billion Returns Expected, Up 14% – Michael Shedlock – MISH’S Global Economic Trend Analysis
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FHFA Inspector General End Runs DoJ, Joins Forces With New York Attorney General Schneiderman – Yves Smith – The development reported by the Financial Times’ Shahien Nasiripour, that the inspector general for the FHFA, the supervisor of Fannie and Freddie, and the Federal Home Loan bank, has decided to share information with New York State attorney general Eric Schneiderman, is far more significant than it appears on the surface. It’s a well deserved slap in the face of the Department of Justice. – Naked Capitalism

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Mortgage Debt in the U.S. Continues to Contract – BY: CARRIE BAY – The ongoing turmoil still gripping housing markets across the country has manifested itself in the Federal Reserve’s macro assessment of household wealth and capital flow. With foreclosure stripping millions of Americans of their largest asset and potential homebuyers still watching for the market bottom, the total sum of home mortgage debt in the U.S. has dropped to its lowest level in nearly five years. Outstanding mortgage debt contracted by 1.8 percent over the third-quarter period to $9.88 trillion, according to the Fed’s ‘Flow of Funds’ report. – DS News
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(LA & OC) Lower conforming limit causes 84% decline in loan volume – by IrvineRenter – In Los Angeles and Orange Counties, the conforming loan limit dropped from $729,750 to $625,000 on October 1, 2011. Many market bulls claimed this would have no effect on sales. In November sales of houses with loans between $625,000 and $729,750 declined 84% as compared to last November. So much for having no impact. – more – Irvine Housing Blog

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(charts too) Residential Remodeling Index at new high in October – The BuildFax Residential Remodeling Index increased for the twenty-fourth straight month in October to 147.6, a new high for the index. This was up from 141.4 in September, and up 39% year-over-year from 105.8 in October 2010. This is based on the number of properties pulling residential construction permits in a given month. – Calculated Risk Blog

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Massive Fed Oversight Plan for Banks Expected To Be Proposed This Week – A 1,000-page-plus proposal is expected to be issued by the Federal Reserve this week, oulining proposed regulations as mandated by the Dodd Frank Act for overseeing banks, as reported by Reuters today, which cited an anonymous source. – Dodd-Frank Summary and News

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Foreclosure counseling doubles the chance of mortgage modification – by JON PRIOR – … Those who went through the program were at least 67% more likely to remain current within nine months of receiving a modification, according to the study. Borrowers who went through the program had their payment reduced by an average of $176 per month. … – Housingwire 
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PNC’s Purchase of RBC Retail Unit Approved by Federal Reserve – By Dakin Campbell – … Central bank officials approved the transaction today, according to a statement on the agency’s website. The Fed didn’t disclose reasons for its decision. PNC, based in Pittsburgh, agreed in June to pay $3.62 billion in cash and stock for Raleigh, North Carolina-based RBC Bank USA to add more than 420 branches … – Bloomberg

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For Rob Chrisman’s latest daily post, click here.

To subscribe to Joe Garrett’s news letter, send an email to  jgarrett at garrettwatts  dot  com

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Here’s A Major Reason Fitch Is Taking An Axe To Bank Ratings - Simone Foxman – In conjunction with downgrading the ratings of eight major trading and global banks this afternoon, Fitch determined that banks are now less able to access financial support from the U.S. government. – In fact, the agency thinks only the eight systemically important U.S. banks will now be able to receive this support if needed – Money Game at Business Insider

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Fannie Mae And Freddie Mac Fight Chicago’s Vacant Building Ordinance With Federal Lawsuit - description of case plus has a link to the lawsuit – Huffington Post
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(chart plus auction thoughts) Foreclosures making their way through the "python" – Sober Look blog – The latest RealtyTrac data is continuing to show a decline in home foreclosures. However in November we saw an uptick in court-ordered auctions – a stage prior to repossession. These homes will ultimately roll into the foreclosure (REO) bucket and most will be owned by the lenders. Lately some reporters have been sounding the alarm on this issue: …

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(good charts too) Reasons For Moving Have Shifted Dramatically – Chris Porter – People buy homes for many different reasons, and the mix of reasons has shifted lately. Family-related reasons, such as marriage or divorce, is an increasing percentage, while the desire for homeownership is a decreasing percentage of home buyers. This supports our forecast for 62% homeownership. – John Burns RE Consulting http://www.realestateconsulting.com/blog/chris-porter/reasons-moving-have-shifted-dramatically
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House panel passes Garrett proposal on future mortgage securitizations – by JON PRIOR – A House subcommittee passed a proposal from Rep. Scott Garrett, R-N.J., late Wednesday night, which would require the Federal Housing Finance Agency to establish rules for a privately funded mortgage finance system. – Housingwire

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(REO summary and charts) Lawler on FHA: Slow Pace of Conveyances, Solid Sales Pushes SF Inventory to Lowest Level since mid-2008 – by CalculatedRisk
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Mortgage-Backed Securities Are Good Bet Now: Gross – By: Margo D. Beller – CNBC.com – The Federal Reserve   will keep interest rates low for "three, four, or five years," which is why Pimco is jumping into mortgage-backed securities   in a big way, the bond giant’s founder and co-chief investment officer, Bill Gross, told CNBC Europe Friday.

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Surprise: Congress Now Contemplating G-Fee Hike for GNMA - By Brian Collins – With Congress moving closer to raising the guarantee fee on Fannie Mae and Freddie Mac loans, a proposal to hike Ginnie Mae fees by an equal amount is being circulated on Capitol Hill, National Mortgage News has learned. Sources say private mortgage insurance companies are pushing the 10 basis point Ginnie fee hike as House and Senate lenders seek to find additional revenues to pay for an extension of the payroll tax holiday. – National Mortgage News

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BofAML: FHA probably won’t require bailout – by JUSTIN T. HILLEY – Housingwire

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(future risk?) Pending CFPB rule could lead to flood of foreclosure challenges – by JON PRIOR – If the Consumer Financial Protection Bureau wishes, it could allow borrowers to challenge future foreclosure actions by questioning whether the loan was a "qualified mortgage" in court. – Housingwire
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(Cameron Findlay interview) New rules would raise mortgage costs - By JEFF COLLINS – THE ORANGE COUNTY REGISTER – … The cost of borrowing may rise as much as 1.25 percent for those who do not qualify for a QRM. Clearly this would be detrimental to existing home prices and reduce the market’s ability to clear existing inventory. … http://www.ocregister.com/articles/firm-331928-charlotte-working.html
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Fannie Blogs About Retained Vs. Released Servicing - BY MORTGAGEORB.COM - For lenders facing the question of whether to retain or release servicing, Fannie Mae wants you to know it has customer account teams waiting for your call. According to a blog authored by Stephen Pawlowski, Fannie’s vice president for business initiative management, advice provided by the account teams can help lenders assess their own strategic objectives, consider the use of a subservicer, model operating results and cashflows under various scenarios, and evaluate pro forma earnings.

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For Rob Chrisman’s latest daily post, click here.

To subscribe to Joe Garrett’s news letter, send an email to  jgarrett at garrettwatts  dot  com

Americans have often had an ambivalent view of whistleblowers. When we feel that the whistleblowing serves some righteous cause, the whistleblower’s actions are worthy of a medal; but when the whistleblower’s cause is considered to mask self-aggrandizement, then we often contend that some jail time might be a more suitable reward, whatever the cause. Still, one person’s justification for such actions may be castigated by another person as an act of perfidy.

In a rather morally twisted way, recent law has combined the act of whistleblowing with the remuneration of bounty hunting, the latter being yet another concerning happenstance of American ambivalence.

Let’s call this new ethical imperative the "Dope for Dough" compact.

In this article:

• A Snitch In Time Saves Crime
• If You See Something, Say Something
• Welcome to the Office of the Whistleblower
• Bounty Hunter
• Tips, Complaints and Referrals
• Anonymity More-or-Less
• Preventing Retaliation More-or-Less
• First Do No Harm

A Snitch In Time Saves Crime

Being a snitch is not exactly the kind of job position somebody must apply for, even in these days of high unemployment. It’s not a career opportunity. A snitch doesn’t want to be a snitch, hates snitching, and would rather not have to snitch at all. Being a snitch does not bestow a badge of honor! There are no annual conferences for snitchers. A snitch is not born a snitch; something has to happen to make a snitch snitch.

Often, the stakes for snitching are very high. Being a snitch means subjecting oneself to potential ostracism, being fired, not being hired, jail time, and even community time (yes, courts have held that "community service" may be a proxy for prison time). Snitchers know that whenever people pass them by, there will be fingers pointed at them and breathless whispers behind their backs about the supposed damage done by, or the great good achieved through, their snitching. Snitching has a wake all its own and the snitcher can never get out of it, whatsoever the tattletale tattled.

The list of snitch martyrdom is long and, depending on the results and society’s comfort zone, contains patriots and traitors, saints and the damned, reformists and reactionaries, the sempiternal loyalists and the double-crossing turncoat. Even if the weaseling betrayer squeals the unvarnished truth, the very act of making manifest the heretofore hidden may bring with it many dangers impinging on the tipster’s physical, let alone social, survival.

LENDERS COMPLIANCE GROUP is the first and only full service, mortgage risk management firm in the country that specializes exclusively in residential mortgage compliance. The firm provides risk management outsourcing to the mortgage industry, offering a full suite of hands-on and automated services in residential mortgage banking.

* Jonathan Foxx is the President and Managing Director of Lenders Compliance Group

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(Q&A) How Does The Dodd-Frank Act Impact The Appraisal Process? – BY BEATRICE ZAGORSKI – … As of Oct. 15, 2010, the HVCC was out, and the appraiser independence requirements (AIRs) were in. … The act went even further by stating that appraisers must be paid a "customary and reasonable rate" for the market area in which the appraisal has been ordered. The goal of the Dodd-Frank Act was to establish legally acceptable behavior for appraisers and lenders. Its wording in some places, however, has created confusion that has fueled rumors and misinformation. The following are some common questions about the legislation as it relates to appraisals. … – has Q&A – MortgageOrb

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(2 charts – G*d help us when rates go up) The Incredible Power Of Ultra-Low Interest Rates – Joe Weisenthal – Money Game at Business Insider
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(the plot thickens – mentions FHFA lawsuit) Cook County passes vacant building ordinance similar to Chicago’s - By Mary Ellen Podmolik – Chicago Tribune – The Cook County Board on Wednesday passed a vacant building ordinance that largely mirrors one adopted by the city of Chicago and now the subject of a federal lawsuit. … A similar ordinance, with some tweaks and a $500 property registration fee, was passed by the Chicago City Council last month. Monday, the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, filed a federal lawsuit against the city, charging that the city’s rules encroach on its role as the sole regulator and supervisor of Fannie and Freddie, which own about 258,000 mortgages within the city of Chicago. … http://www.chicagotribune.com/business/breaking/chi-cook-county-passes-vacant-building-ordinance-similar-to-chicagos-20111214,0,6571328.story
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FBI Estimates 80% of Mortgage Fraud Involved Industry Insiders -   By Washingtons Blog – Fraud By The Big Banks – More Than Anything Done By The Little Guy – Caused The Financial Crisis

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FHFA REO Asset Disposition & Rental Strategy – by SCOTT SAMBUCCI – … In August 2011, the (FHFA) offered its “Request for Information” (RFI) for REO Asset Disposition including a transition to a rental-based solution, soliciting ideas from the private sector, academia, and research groups on the handling of the existing REO inventory.  From the August release: … Two weeks ago, the FHFA posted a summary – FHFA REO Initiative: RFI Response Summary. A couple of the solutions offered by the respondents: (has 3) … The timing could be better for Altos Research – we’ve just launched our Rental Intel products – real-time rental market analytics and listings.  [Author acknowledges shameless plug]  – Altos Research 

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Moody’s Expects Strong 14% Rebound in US Housing Prices by 2015 – by Research Recap – Moody’s Analytics’ US house price outlook calls for a strong rebound once the housing market bottoms next year. A stronger economy, the gradual clearing of foreclosure inventory, and the fact the correction overshot its mark will help spark the turnaround, Moody’s says in its latest ResiLandscape newsletter.
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Michael Olenick: NAR’s Big Miss on Home Sales Underscores Lack of Transparency and Accuracy in Mortgage/Housing Data -  By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha) – Naked Capitalism

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The next 4 posts are from Housingwire.

(lots of items) Congress still dark on housing finance future - by JON PRIOR – Nearly 10 months since the Treasury Department provided three options for a future housing finance system, Congress is still no closer to any reform. A House subcommittee debated a proposal Wednesday from its chair, Rep. Scott Garrett, R-N.J., that directs the Federal Housing Finance Agency to set rules and regulations on a completely private mortgage securitization system. It is unclear when an actual vote on the bill will be taken. – Housingwire
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Congress Questions Impartiality of Independent Foreclosure Reviews - BY: KRISTA FRANKS – … When asked if many of the approved consultants have worked with the servicers previously, Williams admitted that some had. “There are a number of situations where they have done previous work for the servicers in different areas, generally, but they have had previous business engagements with those servicers.” “This raises questions about the true independence of these organizations,” Sen. Jack Reed (D-Rhode Island) stated … – Housingwire
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Freddie Mac Mandates Servicer Participation in State Mortgage Programs – BY: CARRIE BAY     – Freddie Mac has notified servicers that they are required to take part in mortgage assistance programs offered by state Housing Finance Agencies (HFAs) in connection with the federal government’s Hardest Hit Fund initiative. “[E]ffective immediately, you must begin accepting modification assistance program funds from participating HFAs on behalf of eligible borrowers with Freddie Mac-owned or guaranteed mortgages,” the McLean, Virginia-based GSE wrote in a bulletin update sent to its mortgage servicers on Tuesday. – Housingwire
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RealtyTrac reports 14% dip in foreclosures, but new wave expected – by KERRI PANCHUK – Housingwire

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(good read in the wake of MF Global) The ABCs of Re-hypothecation in Gold and Securities Markets: What You Need to Know – Kevin Brekke – Casey Research

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Is 2012 the Year FHA’s Reverse Mortgage Program Grows Up? – by John Yedinak – Reverse Mortgage Daily 
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Valuations and Sales Discounts Eat Away at Foreclosure Proceeds – BY: CARRIE BAY – … according to Moody’s Investors Service.  … They maintain that loss projections based solely on average home prices substantially underestimate a foreclosed property’s actual loss severity. “Our analysis shows that liquidated properties are subject to discounts on their valuation and price that, on average, lead to selling prices that are about 30 percent lower than average home values,” Moody’s said. … – more data – DS News
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For Rob Chrisman’s latest daily post, click here.

To subscribe to Joe Garrett’s news letter, send an email to  jgarrett at garrettwatts  dot  com