Another expanding company is U.S. Bancorp. In its earnings announcement the bank showed an increase in 1^st quarter net income by 28% (to $1.34B) as a result of lower ALLL and 9% revenue growth from loans and fees. Loans were up 6% driven by C&I and CRE production. USB reported a 127% year-over-year increase in mortgage banking revenue and another solid quarter for commercial loan growth – who says banks aren’t lending? First-quarter mortgage banking revenue was very strong, at $452 million, increasing from $303 million the previous quarter, and $199 million a year earlier. U.S. Bancorp (#5 in residential originations in the 4^th quarter) expects to become a top five player in U.S. mortgage originations and servicing, CEO Richard Davis said in a conference call with analysts. Given BofA dropping wholesale and correspondent lines, USB may pass it soon.

A few weeks ago the commentary mentioned the Dodd-Frank rule addressing minority ownership of service providers to financial companies, and now we have Goldman Sachs and MetLife being requested to publicly disclose information about racial and gender breakdowns of their staffs. This is at the behest of New York City’s public pension funds, whose assets exceed $118 billion and have large stakes in Goldman and MetLife. Of course big employers are required to report data to the federal government on their efforts to provide equal employment opportunities, but many do not make those numbers available to the public. (But one of the largest American advertising companies, Omnicom Group, did not agree to the pension funds’ demands, so the matter is expected to be on the ballot when Omnicom’s shareholders meet in San Francisco on May 22.) Per the U.S. Government Accountability Office, in “Wall Street firms” white men held 64% of the management-level jobs in the financial-services industry, while minorities held less than 10% of them.

The American Mortgage Law Group released some helpful hints for lenders dealing with repurchased demands. “Challenge every unexplained and seemingly unwarranted category of claimed losses in a repurchase or make whole statement, requesting all documents that support those losses. When confronted with allegations of misrepresentative appraisal, take a twofold approach: 1) send the investor's review appraisal report to the original appraisal for review, comment and rebuttal; 2) also obtain an independent retrospective appraisal from an appraisal management company unaffiliated with the original borrower.  Supply it with the original appraisal report and nothing more, and request a retrospective report on that.  This will eliminate any taint of self-interest should the retrospective appraisal agree with the original.” (If you would like to receive more information or legal advice on repurchases, contact Evans Prieston at info@americanmlg.com.)

Firm K&L Gates noted that the FTC outlined some best practices in its “Final Privacy Report” which is directed at tenants’ rights under the Global Foreclosure Settlement Agreement. Authors Weissgold and Yost point out that contained in the 40-plus pages of “Servicing Standards” that are part of the recently announced global foreclosure settlement agreement (the “Agreement”) are two bullets on a topic that could impact thousands: tenants’ rights. “Specifically, the Agreement requires subject servicers to: (1) comply with all applicable state and federal laws governing the rights of tenants living in foreclosed residential properties; and (2) develop and implement written policies and procedures to ensure compliance with such laws.” But just what does compliance with the applicable state and federal laws entail? “First and foremost, notice. Under the federal Protecting Tenants at Foreclosure Act, a tenant of foreclosed residential property is entitled to receive notice at least 90 days before being required to vacate the property. Similar state laws generally require the same notice period, prescribe the exact form that the notice must take and the method of its delivery, and also provide penalties for failure to give the required notice. Both the Protecting Tenants at Foreclosure Act and similar state laws condition the rights of a successor in interest to foreclosed property, requiring such a party to let a bona fide tenant finish out the term of his or her lease, unless the party intends to occupy the property as his or her principal residence. Separate notice requirements may apply to property for which a foreclosure action has been filed and for property which has been sold at a foreclosure sale.”

K&L continues: “Thus, at a minimum, for servicers to develop policies and procedures to ensure compliance with federal and state tenant protection laws will require identifying the specific requirements of each law (which, in the case of notice laws, include timing, scope, method of delivery, and format). Keeping in mind that each state law varies with regard to the penalties for noncompliance with notice requirements, a one-size-fits-all approach will not suffice.

“Second, servicers need to be mindful that compliance with state and federal laws is not limited to the notice requirements described above...Many states and municipalities also have enacted laws and ordinances requiring lenders to maintain vacant or tenant-occupied properties. To fulfill their obligations under such laws, lenders and servicers may be required to maintain the exterior and grounds of such properties (removing debris, maintaining landscaping and pools), ensure that vacant properties do not become nuisances (because of criminal activity or the accumulation of trash), and otherwise comply with local property maintenance standards.

“Third, for REO properties, servicers will need to understand landlord-tenant laws both at the state and local level. Rental limitations arising under local zoning laws or homeowner and condominium association rules could either prohibit a lease or limit the number of occupants. If the servicer is implementing a rent-to-own program (as leaseback offers in connection with deeds in lieu of foreclosure are gaining popularity), a host of additional issues would come into play. According to recent guidance from the Federal Reserve Board, the rental of REO properties could also implicate landlord licensing and registration requirements, protections under the Servicemembers Civil Relief Act and anti-discrimination laws (such as the Fair Housing Act and the Americans with Disabilities Act), and the property oversight of third-party vendors used to manage properties. Although this guidance is addressed to banking organizations subject to the Federal Reserve’s oversight (such as state member banks, bank holding companies, non-bank subsidiaries of bank holding companies, savings and loan holding companies, non-thrift subsidiaries of savings and loan holding companies, and U.S. branches and agencies of foreign banking organizations), the enumerated laws are not so limited in their application.

“Although the Agreement’s standards apply only to five servicers (and their affiliates), the application of these provisions will be much broader if the expectation is true that the standards are the baseline for consideration of national standards. Furthermore, given their inclusion in the Agreement, tenants’ rights may be an area to which state regulators pay increased attention, making compliance by all parties subject to these provisions more important. The issues raised above are only examples, and by no means an exhaustive list, which indicates the amount of effort that may be required to ensure compliance with applicable laws.”

Turning to something more fun like upcoming conferences, Secondary Marketing folks will be flocking to Manhattan for the annual MBA’s event from May 6-9. More information can be found at http://events.mortgagebankers.org/Secondary2012/default.html. (I’ll be wandering around – say hello!)

During this event, ThomsonReuters will be hosting a Casino Night Networking night on Monday, May 7, 5:30-8:30pm. For Secondary folks that aren’t tired of gambling during their day jobs, the room will be filled with tables for Blackjack, Craps and Roulette, prizes for the top winners, an open bar, appetizers and an amazing view of the NYC skyline!  The event will be held 3 blocks from the Marriott Marquis on the top floor of the ThomsonReuters corporate headquarters, Times Square. There are only so many free chips, so register at http://online.thomsonreuters.com/forms/casino/.

The week after, in Ohio, it is time for the Ohio Mortgage Bankers Convention. It will be held from May 14-16 near Columbus. For more information, contact Bob Niemi at bniemi@OhioMBA.org or visit the organization’s website at http://www.ohiomba.org/.

Out in California, the California Association of Mortgage Professionals is hosting its Spring Lender Fair next week – and it’s free! Sessions include information on government affairs, mortgage recovery options, the CFPB, and recent changes with FHA. The event is in South San Francisco, and for registration e-mail cambinfo@gmail.com.

In the southern part of that state, the membership of The National Reverse Mortgage Lenders Association (NRMLA) will gather for its Western Regional Meeting at the Hyatt Regency in Irvine. Entitled “New Products, New Markets,” the gathering of  NRMLA members and other industry participants will focus on consumer responses to emerging products such as the HECM Saver and the HECM for Purchase.  The Western Regional Meeting will be held on May 16 & 17 and registration is available at http://www.nrmlaonline.org/.

Tomorrow is the early registration deadline for the May 20-23 Texas Mortgage Bankers next soiree at the JW Marriott San Antonio Hill Country Resort & Spa in San Antonio. More information can be found at http://www.texasmba.org/convention/.

If you want to hear more about what the CFPB is up to, “join CFPB leadership and the Supervision team” as they host an industry discussion in Midtown Manhattan on Friday, May 4, from 11:30am - 1:30pm. More information can be found at http://cfpbindustrytalknyc.eventbrite.com/.

(Speaking of the CFPB, as a reminder, it has hinted that it may relax the Dodd-Frank rules on compensation that, amongst other things, have reduced loan originators’ flexibility at closing to zero.  Legislation that would allow originators to lower their costs up to 30% at closing is currently in the works, and if the introduced legislation (HR 2509) does come to pass, it is predicted to be in place by January 2013.)

Through all of this, no one is complaining about mortgage rates. Originators seem to be producing steady volumes of new agency mortgages, and the Fed, money managers, and the usual investors seem to be buying them. The morning the Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose nearly 7% in the week ended April 13. Refi’s jumped over 13% - obviously due to rates falling, but purchases dropped by over 11% (2^nd week in a row), and with it refi’s shot back up to 75% of applications.

The market seems content with “Up a little, down a little” in terms of rates, and yesterday we had “up a little” as MBS prices ended down/worse by about .250 and the 10-yr T-note closed at 2.01%. With no real news today, the 10-yr has slunk down to 1.99% and MBS prices are about .125 better.

For anyone who has seen a foreign movie, hates cats, likes cats, or know someone that does, this is a classic: http://www.coolestone.com/media/3748/Cat-Expresses-His-Dissatisfaction/. (You’ll need sound.)