This news will prompt many lenders to throw a ticker-tape parade that will rival the NY Giants football event today. HUD and the FHA have long promoted the FHA Streamline Refinance as a useful tool to allow responsible homeowners to save thousands of dollars by refinancing at today’s low interest rates. FHA-insured borrowers must be current, and in theory they can refinance into today’s lower rates without requiring additional underwriting. “However, it has become apparent that some of our lending partners are reluctant to offer this product widely because of concerns about taking on the risk of a loan which they may not have underwritten and the potential adverse impact such a loan may have on their FHA Compare Ratio. In order to expand the availability of this product for eligible borrowers, FHA will make changes to the way in which FHA Streamline Refinance loans are displayed in the Neighborhood Watch Early Warning System (Neighborhood Watch). Streamline Refinances will be removed from the public compare ratio in Neighborhood Watch, but lenders will still be able to view their own traditional compare ratio (with streamlines included).” The announcement can be seen at http://portal.hud.gov/hudportal/documents/huddoc?idfhacomcgstlinfn2312.pdf.

All eyes are on California as the deadline approaches for state officials to sign onto the multibillion-dollar foreclosure abuse settlement.  As the largest remaining holdout, California appears to leaning towards signing, which could potentially increase the settlement from $19 billion to upward of $25 billion. New York seems to be acting on the same lines. (Do you think the AG’s are texting with each other?) Part of the deal for these two states would be the preservation of the right to investigate banks’ past misdeeds and adding regulation to ensure that financial institutions adhere to the deal and that the money actually reaches struggling homeowners.  As it stands now, the deal would allocate $17 billion specifically for principal reductions and other relief for up to one million borrowers whose homes are underwater. The 750,000 families whose homes have been foreclosed would receive checks for about $2,000. A deal has been in the making for the past 13 months, as the settlement has been delayed on multiple occasions, so a lot is riding on the decisions of the California and New York Attorneys General - if they do sign on, a finalized deal will come much sooner than later.

As the foreclosure abuses settlement deal finalizes people are getting a better idea of the numbers involved.  The amount that home mortgage securities investors will have to pay is now projected to be up to $40 billion, which, according to the government, would act as a “down payment” for future principal reduction initiatives from future settlements. The White House plans to litigation as a key tool for procuring additional sums from large financial institutions that will be used to further aid for struggling borrowers.  This is part of a trend that has seen the Obama administration escalate efforts to help US borrowers—in addition to the finalization of the foreclosure and loan abuses settlements, a new state and federal unit has been created to investigate mortgage-related fraud.

I will never be an internet mortgage marketing whiz kid. And I guess Google thinks something similar - on the heels of several office closures, Google has discontinued its mortgage rate advertising platform Google Mortgage Advisor after two years of operation.  Apparently the decision was based on the product’s poor performance and a company initiative to de-clutter by shutting down programs that aren’t as successful as projected. Mortgage Advisor was discontinued in most US states in November with the exception of Alabama, Alaska, California, Pennsylvania and DC, though lenders who advertised on the platform and mortgage technology vendors believed that the part closure was only temporary.  Google at the time framed the decision as a strategy that would allow the company to better focus on a smaller market, tweak the program as necessary, and then implement the improved version on a national scale once more.  Lenders were apparently not notified of the discontinuation and received a rather rude surprise upon trying to log into their accounts… Some users believe that, poor performance aside, the program was scrapped because (in the words of a former customer who wanted to be kept anonymous) “mortgage is kind of a dirty word across the industry.”   The fact that other Google Advisor product searches like credit cards, certificates of deposit, and checking and savings accounts still remain would suggest as much.

“Recent changes to the Home Affordable Refinance Program (HARP) present both opportunities and challenges to lenders and services. DataQuick, a provider of advanced real estate information solutions powered by data, analytics and decisioning, has already responded with timely new offerings that quickly identify eligible loan modification candidates. Through the application of proprietary analytics on its nationwide property database, DataQuick has identified 6.7 million borrowers who meet the new eligibility requirements and will most likely benefit from the revised program. Lenders and servicers can easily match their current portfolio to the database to identify the best candidates for loan modification. HARP eligibility requires that candidates have no late mortgage payments in the past six months and no more than one late payment in the past 12 months.” Sounds pretty nifty - for more information contact your DataQuick sales representative or Wendy Barnett at wbarnett@dataquick.com. (And nope, this wasn’t a paid ad.)

I am not an expert in compliance, but this caught my eye: in the January 24th Federal Register, HUD has proposed a rule  (ECOA/Reg B) that prohibits banks from discriminating against borrowers based on ethnicity, religion, national origin, gender, marital status, age (provided the applicant has the capacity to contract), income from public assistance, or the exercise of any Consumer Credit Protection Act.  The Fair Housing Act prohibits discrimination on account of familial status or handicaps. These are very, very recent developments—both rules go into effect on March 5.  It boggles the mind a bit, but better late than never, one supposes. The January 24th Federal Register entry can be read by clicking http://edocket.access.gpo.gov/2011/pdf/2011-1346.pdf.

The markets certainly don’t care about marital status or gender, and yesterday we saw a nice little half-point rally (improvement) in the U.S.10-yr with it closing at 1.90%. With no scheduled news in this country, Treasuries gained today as “risk aversion” was back on worries about Greece. MBS prices improved from nearly .5 on 30-year 3.0% coupons to just roughly unchanged on 4.5’s through 6.5’s, as one would expect. And then overnight Greece's main political parties reportedly missed a deadline for responding to demands for more austerity measures. Negotiations between Greece and its private creditors are on hold while officials work on a rescue program with the EU, the International Monetary Fund and the European Central Bank. Greece faces a 14.5 billion euro bond repayment in less than six weeks. It won't be able to make the payment without international help.

Here in the states, once again there is no news of substance although we do have a $32 billion 3-yr note auction at 1PM EST. Chairman Bernanke is scheduled to repeat his recent testimony before the House Budget Committee to the Senate Budget Committee beginning at 10AM EST, but don’t look for anything new. In the very early going things appear pretty quiet in the markets.

HIGH SCHOOL -- 1957 vs. 2010 (Part 2 of 2)
Scenario 5:
Mark gets a headache and takes some aspirin to school.
1957 - Mark shares his aspirin with the Principal out on the smoking dock.
2010 - The police are called and Mark is expelled from school for drug violations. His car is then searched for drugs and weapons.
Scenario 6:
Pedro fails high school English.
1957 - Pedro goes to summer school, passes English and goes to college.
2010 - Pedro's cause is taken up by state. Newspaper articles appear nationally explaining that teaching English as a requirement for graduation is racist. ACLU files class action lawsuit against the state school system and Pedro's English teacher. English is then banned from core curriculum. Pedro is given his diploma anyway but ends up mowing lawns for a living because he cannot speak English.
Scenario 7:
Johnny takes apart leftover firecrackers from the Fourth of July, puts them in a model airplane paint bottle and blows up a red ant bed.
1957 - Ants die.
2010 - ATF, Homeland Security and the FBI are all called. Johnny is charged with domestic terrorism. The FBI investigates his parents - and all siblings are removed from their home and all computers are confiscated. Johnny's dad is placed on a terror watch list and is never allowed to fly again.
Scenario 8:
Johnny falls while running during recess and scrapes his knee. He is found crying by his teacher, Mary. Mary hugs him to comfort him.
1957 - In a short time, Johnny feels better and goes on playing.
2010 - Mary is accused of being a sexual predator and loses her job. She faces 3 years in State Prison. Johnny undergoes 5 years of therapy.