Brad Cahoone - Mortgage Loan Expert - Global Home Finance Inc.

The bond and mortgage markets opened a little better this morning ahead of key data points at 10:00 when the June ISM manufacturing report is released and the U. of Michigan consumer sentiment index is revealed. Stock indexes in early trading about unchanged. Manufacturing growth is slowing from China to Europe; China's factory index fell to the lowest level since February 2009, while in the 17-nation euro area, a gauge slipped to an 18-month low. German manufacturing expanded at the weakest pace in 17 months, while Italy, Ireland, Spain and Greece contracted. In the U.K. and India, output growth also slowed.

ECB President Jean-Claude Trichet reiterated yesterday that policy makers are ready to raise the benchmark interest rate further from 1.25 percent to fight inflation threats even as governments struggle to contain Greece's debt crisis. They will hold their next monetary policy meeting on July 7 in Frankfurt.

Crude oil and gold trading lower this morning; crude early was down $1.20, gold at 9:30 off $15.00.

At 9:30 the DJIA opened flat, the 10 yr note +3/32 and mortgage prices +3/32 (.09 bp) frm yesterday's close.

At 9:55 the U. of Michigan consumer sentiment index expected unchanged at 71.8 frm two weeks ago; hit at 71.5, down from 79.6 at the end of May. Current conditions 82.0 frm 79.6, expectations 64.8 frm 66.8 two weeks ago and the 12 month outlook 74.0 frm 78.0. No reaction to the data with the ISM hitting 5 minutes later at 10:00.

At 10:00 the June ISM manufacturing index, expected at 52.0 frm 53.5 in May, increased to 55.3. New orders increased to 51.6 frm 51.0, employment at 59.9 frm 58.2 and prices pd at 68.0 frm 76.5. Like yesterday's Chicago regional report, better than expected and sent stock indexes higher and the bond and mortgage markets lower in prices, higher in yields prior to the release.

May construction spending expected unchanged was down 0.6%.

As noted in the past two days, expect increased market volatility in equities, bonds, energy and precious metals in the next week or two. The rapid increase in interest rates since Tuesday appears to have caught investors off guard, markets will take some time to assess the potential impact on economies, inflation and the potential implications of an interest rate increase in Europe next week. The data this morning is adding to the swift turn in outlooks for the economy; after a series of very weak data points on May data now the data suggests the economy is showing slight signs of improvement. The stock market jumped higher on the 10:00 data, the 10 yr note yield hit 3.20% +4 bp on the initial reaction to the ISM report.

[I am away from the computer on a daily basis, and my access to e-mail is

sporadic

and not timely. In my place are daily commentaries from a series of very

knowledgeable

mortgage industry people with different backgrounds, and they have been

given very

little direction about what to write about - the latest is below. Our views

may

or may not coincide, but I thank them for their time in volunteering and

helping

out.]

Note:

To all those that have served or are serving on active duty: Thank you.

Independence Day:

"On July 2, 1776 the Second Continental Congress voted to approve a

resolution of

independence. After approving the vote for independence, attention was

directed

at writing the Declaration of Independence. The Declaration of Independence

was

to be a statement explaining this decision to seek independence from Great

Britain.

Thomas Jefferson was the principal author". As we should all know, The

Declaration

of Independence was approved and signed on July 4. Enjoy the holiday.

"In a remarkable coincidence, both John Adams and Thomas Jefferson, the only

signers

of the Declaration of Independence later to serve as Presidents of the

United States,

died on the same day: July 4, 1826, which was the 50th anniversary of the

Declaration."

CFPB:

The CFPB has just released its second proposals in a series of five. The

CFPB wants

industries input. Go to http://www.consumerfinance.gov/knowbeforeyouowe/

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312194052&s=8721&e=001M6pGSU

VzFruloCXhQMxAs7Ia_Di5hmIcw8PhZwgji135BP1MQDbdD2ggtojorvc-py6kqGsczaBcFEMYMK

93c6z0M3MEz1hcmvMK29GrTYIHV7kYiKxpXKLQ1fzRWBl1pdDeCV_qaa7XBWtJ8BewHw==]

and VOTE. I would recommend you print out the 2 proposals prior to voting.

They

are in the process of merging the GFE and TIL. I have met with the CFPB

Mortgage

Markets team on a number of occasions and they are very earnest in their

request

for industry responses. They received over 13,000 to the first proposal.

If you want to continue to participate you may register on the CFPB home

page www.cfpb.gov

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312194052&s=8721&e=001M6pGSU

VzFrt83bHPhjlHd-YKbvXTVNlDCYHyza8rCS71h1eN14KRx1qYFWUz9ReKUdpwxAuPbX-E0VLSML

TOXr5qFAtSzpt_ZTaCFf92uDk=]

to receive their emails..

Political Advocacy:

As Steve Emory wrote last week, our industry needs to speak up and get the

truth

out. In the Spring of 2010, I got very frustrated and called the FRB's Mr.

Mondor,

Esq.. We had a very pleasant conversation about the FRB Rule and its

integration.

In his somewhat lengthy legalese, he gave me his version of what would

transpire.

The next day I drove from NJ to DC and started banging on doors, so to

speak. Our

politicians in DC only know what they are told. Most of their information

comes

from media sources or lobbyists. Many ranking officials did not know about

the FRB

Rule on Originator Compensation as late as February 2011. It was simply

amazing

to me how disconnected our elected officials, both parties, are from the

reality

that the 'boots on the street' have to experience.

As we approach our Day of Independence, it's time for you to exercise your

independence.

Go visit your elected official. You don't have to drive to DC, go visit them

in

their local district Talk to them about your issues and concerns. Your

elected officials

are in district most of August. Call their DC office and ask for the

Scheduler and

make an appointment today.

Fannie Mae:

The following are two excerpts come from last week's Fannie Mae's Economics

and

Mortgage Market Analysis

http://www.fanniemae.com/media/pdf/economics/2011/Summary_062011.pdf;jsessio

nid=REGC0CEPB5QEDJ2FQSISFGI

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312194052&s=8721&e=001M6pGSU

VzFrsgDsm6sFfsbB5VJhNetYgvpqTwHcXuLnTagF9a4iaWBGX-XP4DgrSgCUkdJWcGl_v3-U-02b

tsiXnPdvs5_CQwgB6gkpF8tvN-Fs4zletk8G_l25LyitU_nQclc0WQ6dcaqMEtE7eBgy8piXwxNz

OYNfuMLrYXsqA2xZG5ePvL9X21HZ4gely0RADoFS5_z6c8a-evRMH7eLf0-7umRnLwptgScLvKs7

A=]

:

"This month marks the two-year anniversary of the current economic

expansion, which

so far has been quite disappointing. The prospects for accelerating growth

have

grown dimmer recently with downward revisions of first-quarter activity and

most

economic data for the current quarter being downbeat. Markets have reacted

quite

negatively, but the question is whether the repeated onslaught of global

shocks

has generated an overreaction. We believe the doomsayers are wrong;

nevertheless,

growth is slowing appreciably and recession risks have risen."

"For 2011, we now expect economic growth to come in at 2.5 percent, a

downgrade

from 2.9 percent in the previous forecast and more than a full percentage

point

lower than our forecast at the start of this year"

Now I'm only an arm chair economist and mortgage market analyst, but after

25yr

in the mortgage industry as a loan officer, broker and banker and the self

employed

owner of a small business for most of that period, I, as most of you, can

recognize

fluff. And this is fluff. And not the marshmallow fluff we loved as kids.

Let's look at this again. We are in a "two year economic expansion", which

is "disappointing".

I must have missed the economic expansion. I'm perplexed. Are we expanding

or is

it disappointing? After all the bad news of the past few years I would have

thought

an expansion would be easily visible. Fannie openly notes that they are

having downward

revisions. Just the most recent is a revision from 2.9% to 2.5%. This new

target

is after a 1% reduction. So, is the report really saying that Fannie Mae is

now

targeting a 28% lower economic growth rate?

Congress:

This week Rep. Scott Garrett (R-N.J.) and Rep. Carolyn Maloney (D-N.Y.) had

their

United States Covered Bond Act pass out of the Committee.

HVCC

I recently had a conversation with Ian Coate's (NAIHP Vice President) and

appraiser

advocate. Ian noted the following:

The business and profession of appraising is being phased out by external

forces.

The systemic appraisal protections, that high quality appraisals provide to

the

mortgage process, has been severely damaged by recent changes to the

appraisal

guidelines and laws. The Home Valuation Code of Conduct (HVCC), which was

implemented

in May 2009 and then codified into federal law in the Dodd-Frank Act, has

been the

single biggest destructive force to the appraisal profession in recent

years.

With the average age of an appraiser at 57 years old, and the sharp decrease

in

appraiser trainees (caused by the downward pressure on appraisal fees), this

country

is facing the next mortgage related meltdown in 6-10 years due to a shortage

of

highly qualified appraisers. To become licensed as a certified appraiser,

one must

possess an associate's degree or higher (soon to be a 4 year college

degree), take

250 hours of approved appraiser education, and perform 2500 hours of trainee

experience

in no less than 2 years time. With this large investment of time and

resources

paired with the relatively low income expectations in the appraisal field,

there

is little hope of attracting highly qualified candidates to enter the

profession.

And despite financial institutions' desire to obtain property valuations

more quickly

and cheaply, the alternative valuation methods such as AVMs and BPOs are

simply

too unreliable and are dangerously inadequate when compared to traditional

appraisals.

The HVCC issue must be addressed immediately in order to correct a myriad of

negative

consequences which ail our mortgage system.

Brian Benjamin

Two River Mortgage & Investment

Editor's note:

It's an NMLS world, right? The biennial course provider renewal process gets

underway

beginning today and "we're starting to receive quite a few phone calls about

the

process. A list of providers who are due in July and a few tips to prepare

follow:

- As noted previously, NMLS moved from a fixed biennial renewal period to

monthly

rolling renewals based upon the two-year anniversary month of the initial

approval

date. This means the date listed on the Approved Provider List may be

further out

than the one listed on your initial approval letter. Providers should use

the date

listed on the Approved Provider List which can be found here:

http://mortgage.nationwidelicensingsystem.org/courseprovider/Documents/NMLS%

20Approved%20Course%20Providers.pdf

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312194052&s=8721&e=001M6pGSU

VzFrsd4ZZshUPXdk9y0mgIKzBUZdXQC1O-ZMayfYj3i1nBjRXIwTkZ_kRKnfQJrBfB4AyqCqArYt

9cxPJrqcDiZWHjSKgwTZft3xlxZKkJgQOnTnstLN_3iGlOXIPqyi10zFFsRcELQMzPBqieZM6_4U

CqGiN5jMVBjMF92txHPoGq3hqXfqdRwUSOkCy5Y_S8PRMnJcS4Sqf2_XtCtQwZo39Ikxvr5r0cG4

z54hvm2k50Pg==]

- Just like we do when you have a course up for renewal, you will be

notified at

least 30 days prior that your renewal period is approaching. - We will host

a webinar

on July 12th for providers who are due in July and August to go over the

renewal

process, the application forms, and to answer questions. An invitation to

attend

the webinar will be sent to those providers are due in these two months. The

updated

July and August provider renewal list has been reposted. See

http://nmlseducation.wordpress.com/2011/06/21/439

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312194052&s=8721&e=001M6pGSU

VzFrtN0HAe9HLouHikqxfqjrb0XFjqtqPU8LkUp6z5ceCeRTk956pSKTqOlJDAjLB4xyPUSCloQo

b434My6n743SzoLYdhwTyrFrbPU4CX3ZURNfK5pzU-kbVdH-nwsRaePlGNwRZBe7J2HXsR4PsRhy

U2]."

If you're interested, visit my twice-a-month blog at the STRATMOR Group web

site

located at www.stratmorgroup.com

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312194052&s=8721&e=001M6pGSU

VzFrtuqmwQWA0OdZp4ch4_Gq8H0bPgOaGzrkDu19CBggiFAiInVFGcV31ZiMer8NfkbbqXtHfam0

SCXM2DZ2gNe_KRsWy8ZqsNeccd57BBkrZF4Q==]

. The current blog takes a look at near-term news for non-agency securities,

such

as jumbo residential loans. 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.

Rob

(Check out

http://www.mortgagenewsdaily.com/channels/pipelinepress/default.aspx

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312194052&s=8721&e=001M6pGSU

VzFrt5P3dbbpHPhpHbrgOEWgsLXNVX-uJ628yfK1ibDtEPdlTFc7rYu6-pFvWvfOOAnuPnHKD9Rm

65Dlq7UVI6gV21OERvO_jaaBEWDAnHlgcSutoSaxDoHdLV3qvzVyRjM_np4stosPXUb3M4nzCaY4

QjLuBXxRELsTXET6oMRnmLSg==]

or www.TheBasisPoint.com/category/daily-basis

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312194052&s=8721&e=001M6pGSU

VzFrtRP1uGJ6Jji2SCIfCqCtcKdp4JTMeTrnJeTaC5bP3G8Q1x6ITUh2ssimNJJICPRgiEggHlC3

nHSWQ8jErpi22UB5dBYQCJrFw1YOJuRg7DHAmNWBaCjL4JbR1SYa94S-Qn-ZbJaUKEWA==].

For archived commentaries, go to www.robchrisman.com

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312194052&s=8721&e=001M6pGSU

VzFrvMcgg_D0nEdZ8bRgrUflpCq2XbSpGq2gmzXKmnW00fL67O0JID3Y6ZvNwLjsWUWr5TfP8Lmm

BZwEIIwH9hBiJhoKKdVvLW3J0PANM7I-lljg==].

Copyright 2011 Rob Chrisman. All rights reserved. Occasional paid notices

do appear.

This report or any portion hereof may not be reprinted, sold or

redistributed without

the written consent of Rob Chrisman.)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

~~~~

Join My Mailing List

[http://visitor.r20.constantcontact.com/email.jsp?m=1102827910937]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

~~~~

Forward email

http://ui.constantcontact.com/sa/fwtf.jsp?llr=zy6u9cdab&m=1102827910937&ea=b

cahoone@globalhomefinance.com&a=1106312194052

This email was sent to bcahoone@globalhomefinance.com by

rchrisman@robchrisman.com.

Instant removal with SafeUnsubscribe(TM)

http://visitor.constantcontact.com/do?p=un&mse=001gYuebWlSSZMa7X7_YCXY1pkylq

TmggCt&t=001jDVkhX2oka4Y-9RPY7YFQw%3D%3D&llr=zy6u9cdab

Privacy Policy:

http://ui.constantcontact.com/roving/CCPrivacyPolicy.jsp

Online Marketing by

Constant Contact(R)

www.constantcontact.com

Chrisman Inc. | 24-G West Main Street #386 | Clinton | CT | 06413

The bond and mortgage markets opened better this morning after the strong selling the last two sessions taking rates up 20 basis points. The Greek debt issue is off the radar for the moment after its parliament voted to cut spending and qualify for assistance from the IMF and EU keeping Greece from defaulting, at least for now. Safety trades in US treasuries being closed and the very weak treasury auctions this week along with the end of QE 2 today---all combined to drive rates higher in a rapid move. Mix in that the ECB will likely increase its base interest rates next week and the tone has changed. Both the 10 yr note and FNMA 4.0 coupon hit and held their respective 200 day averages but broke all other shorter term averages, the momentum oscillators are now in bearish levels. As we continue to point, the bond and mortgage markets are going to remain volatile over the next week or so as investors work through the end of QE 2, Europe's continuing debt issues and the weakening economic outlook. We are not looking for interest rates to increase in a major way but it is unlikely rates will return to the best levels seen three or four days ago.

Germany's biggest banks and insurers and the government agreed on a draft proposal to roll over Greek debt holdings before a meeting with Finance Minister Wolfgang Schaeuble today, people familiar with the plan said.(Bloomberg)

Weekly jobless claims at 8:30 were down just 1K to 428K, estimates were for a decline of 8K. Continuing claims declined 12K to 3.72 mil. Weekly claims have now been above 400K for 12 consecutive weeks, no improvement but equally no increases in claims.

At 9:30 the DJIA opened +47, the 10 yr note +7/32 at 3.10% -2 bp and mortgage prices +5/32 (.15 bp).

At 9:45 the June Chicago purchasing mgrs index, expected at 53.8 frm 56.6 in May, jumped to 61.1; new orders increased to 61.2 frm 53.5, employment did decline to 58.7 frm 60.8 and prices pd at 70.5 frm 78.6 on a decline in oil prices recently. The report much stronger than thought flipped the bond and mortgage markets from minor price gains to lower prices; mortgage prices at 9:3 up 5/32 (.15 bp) at 9:50 -5/32 (.15 bp), a .30 bp swing lower and breaking the 200 day averages on the 10 yr yield and prices on the FNMA coupon. VOLATILITY!

Will the Fed launch QE 3 at some point? That is the question being debated in minds of traders now with the economic outlook declining somewhat. Many believe the Fed is out of bullets to help the economy, historically low US interest rates haven't helped much, at least based on where the economy stands now; however what would have been the situation if the Fed hadn't executed QE 2, buying $600B of US treasuries? Bernanke has said it is now a fiscal matter, meaning Congress and the Administration have the ball now; that of course isn't a confidence builder in the minds of investors since Washington continues to play its political games while the country stumbles.

Today is the end of the month and the end of the quarter, to some extent today trading in equities and bonds may be impacted on moves large investors need to make to adjust their portfolios for the end of the 2nd quarter.

[I am away from the computer on a daily basis, and my access to e-mail is

sporadic and not timely. In my place are daily commentaries from a series of

very knowledgeable mortgage industry people with different backgrounds, and

they have been given very little direction about what to write about - the

latest is below. Our views may or may not coincide, but I thank them for

their time in volunteering and helping out.]

This IS the economy, stupid...

Over the past three and a half years as I've watched my career get

annihilated, my savings accounts dwindle, waiting for the Great Punkin' as

it were, it finally dawned on me a little over a year ago, this is the

economy, stupid! It has been mildly amusing to fairly sickening to watch the

City of San Jose not unlike other municipalities whine and fuss over a 10%

pay cut while many of us have easily taken a 75% haircut and counting. It

hasn't escaped me either that we are about forty six months into this

financial crisis and we are just now hearing and reading the call for

emergency pay cuts not to mention the budget cuts that have been littering

the headlines of late. Not without notable mention the most recent headline

on June 22, 2011 where the California State Controller Chiang threatened to

withhold California lawmaker's paychecks for not producing a balanced

budget, and without much fanfare unlike times in the past a short time

later, June 28, 2011 (ahem!) the Mercury News reported Governor Brown had a

budget in hand he was sure to approve! Amazing that our "public servants"

can get along so well and settle their differences now that is it their

money that is being withheld.

Without going through all of the blame and rhetoric that we're all nauseated

hearing one more time, I do believe that if we cannot stimulate the economy,

first through some sort of renewed confidence that isn't spelled QE3, with

said confidence in fact it may lead to new jobs and then the American public

into at least considering buying a home our lifestyles might JUST change as

in a downgrade and maybe change for the foreseeable future and possibly

beyond. My personal opinion, I look for home values to continue to

deteriorate another 10% at the minimum and up to 30% or worse should we

continue in this downward holding pattern we cannot seem to shake.

With Americans continuing to lose equity in their homes, some losing half,

or most of their savings riding out their unemployment situation how can our

lifestyles that we've become so accustomed to stay at status quo when our

resources are tapped leaking like a sieve at unprecedented levels?

Especially since we've been in an uptrend with regard to the American

lifestyles upgrading over the past few decades?

Some things or a lot of things for that matter have got to give.

It is one thing to complain, so what is the solution? Run to the mirror and

deem yourself accountable, we the American public are responsible for the

politicians we vote into office and allow, yes I said allow to make laws

that are not in our best interests but their own. We as the voting public

need to consider that MAYBE WE AS A NATION CANNOT AFFORD THE PRIVILEGE OF

THESE "PUBIC SERVANTS" SERVICES AND starting immediately elect officials:

#1. Have to ask the American people IF they can have a raise and not vote

their own raise in, automatic pay increases no less.

#2. Have the EXACT same retirement program we have, no more lifelong

pensions, are you KIDDING me???

#3. Have the EXACT same Health Care Program that they prescribe for all

Americans

#4. Consider increasing our expectations of said politicians and kick out

the candidates with DUI's, Domestic Violence history, accepting any favor

whatsoever, ANY perverted behavior, there is never just one cockroach, ANY

cheating spouse, if you don't have any more self- control than that OR the

nuts to tell your spouse you want out, don't try to run our country or your

municipality clean up your home front First!

#5. Any and all laws said elected officials enact have the exact same

consequence for themselves as they vote to give to Americans

I received a call from a former client that had a home paid for in another

state, took money out of that house and paid cash for another, upgraded home

they purchased and now are letting the first house which they took cash

proceeds from go back to the bank. I'm not a huge fan of the banks but that

is just not right, we as Americans HAVE to find it in ourselves to do the

right thing even in the face of watching our corporation owned and operated

government do exactly to us and others the same thing I am describing here

in varying degrees, this HAS to stop somewhere and it starts with us as

individual Americans. My father's generation, he's 74 with all its foibles

did a lot of things right and to this day if you shake my dad's hand,

whatever he shook on he'd rather die than not keep his word. For us to get

back the former reputation, respect and dignity of our once pristine nation

we need to act accordingly and make sure our corporations and government are

in line with OUR values as a nation. Your vote does count, what you say and

do does too, everyone is watching, your kids, family, neighbors, friends

and colleagues!

Finally, some unintended benefits came from this gut wrenching time and I

can say I'm better for it

- I appreciate my family more than ever, all of them, even Uncle Art...

- I appreciate my four year old car and don't understand my previous

obsession

with driving a newer one than my new one

- I may not ever be able to buy Diesel brand jeans again, so I love the

one's

I have

- I'm still in this business and I thank God for every client, like my

jeans

I love the one's I have!

My boyfriend and I were sitting at a table at his high school reunion, and

he kept staring at a drunken woman slugging down her drink as she sat alone

at a nearby table.

I asked him, "Do you know her?"

"Yes", he said,

"She's my old girlfriend. I understand she took to drinking right after we

split up those many years ago, and I hear she hasn't been sober since."

"My God!" I said, "Who would think a person could go on celebrating that

long?"

Hee! Haw!

Lisa Melby

Firestone Financial Group

www.lisamelby.com

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312193954&s=8721&e=001ZNWqIz

_nv7ROppXtEEYNKV5y3kglD91vAMiOMstGq3smBf-Qh-3hZnGwjyco8THZe-NYg-NzfYJcLj1mGv

H5xCsk8Va-DyI-3SV2da1wYr0e1kIc4hDloQ==]

Editor's note:

Yesterday the press was filled with accounts of the massive, partial, Bank

of America settlement. But companies involved in other potential liabilities

are closely following progress/resolution between other companies.

For example, Ally Financial Inc. said it expects to incur a $100 million

second quarter charge to cover mortgage losses posted by securitization

trusts, and that it received subpoenas from regulators related to "certain

mortgage activities" according to a filing with the SEC. In an updated

prospectus filed with the Securities and Exchange Commission, Ally said it

made payments to such trusts of $152 million in the second quarter.

And returning to Bank of America briefly, it has set aside $14 billion to

meet investors'

claims that loans packaged in mortgage-backed securities before the

financial crisis failed to meet promised underwriting standards. As you

might expect, this should eliminate any profits during the 2nd quarter. The

$14 B is the $8.5 billion non-agency settlement plus another $5.5 billion in

charges to cover additional claims from government-owned mortgage companies

as well as other private investors. In addition, BofA said it could

eventually face as much as $5 billion in additional claims over its

underwriting standards from other banks. So far, Countrywide has accounted

for more than $25 billion in losses at BofA - the gift that keeps on giving.

Freddie Mac has entered into a proposed settlement with whatever is left of

Taylor, Bean & Whitaker Mortgage and the creditors' committee appointed in

the lender's bankruptcy proceeding. Freddie Mac told the SEC that it will be

granted an unsecured claim in the TBW bankruptcy estate in the amount of

about $1 billion, which represents its exposure to past and future loan

repurchases, but the mortgage financier estimates that it will only see

between $40 million and $45 million from that claim - about

4 cents on the dollar! Freddie will also be entitled to approximately $203

million on deposit in certain TBW bank accounts relating to the company's

mortgage loans.

The FDIC as receiver of Colonial Bank, which went under in 2009 as a direct

result of the fraudulent activity going on at TBW, has already handed over

$150 million of this amount to Freddie. In addition, the GSE will receive

other mortgage loan receipts estimated to be $6 million, but Freddie must

pay a total of $61 million to TBW and the trade creditors represented by

the creditor's committee to settle their potential claims against the GSE.

If you're interested, visit my twice-a-month blog at the STRATMOR Group web

site located at www.stratmorgroup.com

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106312193954&s=8721&e=001ZNWqIz

_nv7SqsZNCsbm_cOKVKYLZB2pFjmxLG6WWPivbQ85jDrIWqYgzPbNr41fCj4sLOtFmClQK2Bh4Um

2HfDicTje7Clp51dCs8A09JxwUcB3aIx8Zzw==]

. The current blog takes a look at near-term news for non-agency securities,

such as jumbo residential loans. 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.

Rob

[I am away from the computer on a daily basis, and my access to e-mail is

sporadic and not timely. In my place are daily commentaries from a series of

very knowledgeable mortgage industry people with different backgrounds, and

they have been given very little direction about what to write about - the

latest is below. Our views may or may not coincide, but I thank them for

their time in volunteering and helping out.]

How You Can Make a Difference

(and make a lot of money in the process)

I think it's fairly safe to say that most of the people who jumped into the

industry to promote the toxic loan products left a long time ago. For the

most part, those who remain in the industry to clean up this mess were not

the ones who were promoting the products to start out with. I am sure there

are a lot of Loan Officers who feel like I do. We have always put the needs

of our clients first and did not give in to the temptation of the fat

commissions that were being offered to promote those products. We can't help

but feel that we are being punished for someone else's crimes.

The real irony is that many of the changes that have come about actually

make it harder those of us who have acted as professionals to serve and

protect the borrowers now.

Although most of us remaining in the industry did not cause the problems, we

are in a unique position to solve them. I do feel that the biggest

opportunities remain fairly unidentified by most Realtors and Loan Officers

though.

No matter who is responsible for the housing meltdown, there is no debate

that it has been devastating to the economy and resulted in a lot of

suffering. You can't work in this industry without seeing the hardship every

day. Clearly there is a need to stabilize the housing market and create

employment. We have the ability to do both with products that offer multiple

benefits right now. It is truly a case where 1 plus 1 equals much more than

2.

Just about anywhere you go in this country there is a significant inventory

of distressed properties. There are also a significant number of skilled

people in the construction field that are currently unemployed. These two

dynamics have a clear symbiotic connection.

Currently, these houses are bringing down the values in these neighborhoods

as they sit empty and neglected. They're also putting a strain on law

enforcement and other municipal services at a time when they are already

struggling due to the lack of revenue. When they do sell it is typically to

an investor who pays cash for the property. Obviously, they're buying it at

a deep discount, which further reduces housing values and municipal

revenues. Typically, these investors either repair them and rent them out,

or repair and sell them. In either case they will not generally do more than

a token level of work to them. Since the extent of the repairs translates

directly into employment and revenue for the community, this is certainly

not an optimal situation. They are also not concerned about including the

measures to increase the energy efficiency of a home because they will not

be paying the utility bills.

There are even direct correlations between the percentage of rental houses

in a neighborhood and things like teen pregnancy, drug abuse, dropout rates

and crime.

We have the ability to change this dynamic by increasing ownership.

Now, let's look at what we can create here. We have the products that allow

owner occupants to purchase these properties, repair them, and turn them

into very nice homes. They can make them very energy efficient as well. This

results in much higher levels of repair and upgrade to these properties

creating more jobs, higher sales prices, higher tax revenues, and better

neighborhoods. As if this is not enough, cash buyers are not good for my

business or yours. I make my living originating loans.

So how do we accomplish this? Let's talk about the energy efficiency

component of this for a moment. Increasing the energy efficiency of these

homes involves additional upgrades and job creation. It also makes the home

more comfortable, affordable, and dependable for the new owner. In many

cases the savings on their monthly utility bill can be substantially greater

than the cost that it adds to the mortgage payment.

This means the homeowner is holding onto money they would have been sending

to a utility company every month. This money is remaining in the community,

creating additional jobs and municipal revenue.

I am a huge advocate for the Energy Efficient Mortgage Program (EEM). In

fact, it is very likely that I have personally done more EEMs since the

program was introduced in 1993 than any other loan officer in the nation.

When this program was first introduced I was very excited about it. In all

honesty, my excitement was not based in any extremist desire to save the

world; it was based on the fact that this was clearly a way to remove a

major barrier for many buyers.

Let me explain; when I was talking to qualified buyers whether they were

first-time or move-up buyers, they had one thing in common, fear and

anxiety. The biggest factor among those who ultimately chose not to buy was

fear and anxiety. They were looking at increasing their monthly housing

expense. They had to deplete their savings to get into the home and would

now be responsible for any major unexpected repairs.

Their concerns were legitimate.

I recognized the EEM as a great way to protect these buyers and alleviate a

lot of their fears. The program required an independent evaluation to

determine that the savings on their energy bill would be greater than the

increase to their mortgage payment. This made the house more affordable.

Most importantly it addressed the single most common unexpected expense that

affects homeowners in my area, the failure of their air-conditioning unit.

There is typically no warning of this, and it is very expensive to replace.

Here was a program that allowed them to finance 100% of the cost to replace

that old inefficient air-conditioning unit with a brand-new,

state-of-the-art one that was under warranty. Many of these distressed

properties have issues that can be addressed using nothing but the EEM. And

when properties need upgrades and repairs that go beyond the EEM there are

several solutions we can offer. The FHA 203K, Streamline 203K, and FNMA

Homestyle Renovation loans all provide opportunities for owner occupant

buyers to purchase these distressed houses and turn them into very nice

homes.

It has taken me almost 20 years of specializing in these programs to learn

how to use them effectively. If we are going to have the impact that we need

to on this process we need to greatly reduce that learning curve. I created

a platform to assist policymakers, contractors, and those in the real estate

community with practical information on how these programs really work. If

you are interested in creating a lot of opportunities for yourself while

making a significant contribution to solving the issues your community are

currently facing, you are welcome to utilize this resource at

ExperiencedEnergyFinancing.com

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106299939917&s=8721&e=001HSPfPI

0rxwIfKpJmH-zTDEYf5n4hTgq9YFyL9P9a1qHu_xDa_mBF-fNYr30aFkbBT2ZOMcg_wc-8AUXeZY

2IHKegW_DP4ECex4UsUSgm0d_gc0asZfuWJUa2fxTz6DO4D_g7O6Tvjzo=].

I have also been speaking at state and national events to promote the

understanding of these opportunities. Some of these presentations may be

found on my site as well as a list of upcoming venues. I am currently

developing a video series that will be offered through a blog format that I

will be introducing in the next couple of days. Through this I will be

offering ongoing tips and training related to these opportunities. If you

would like to receive these presentations please email

Scott.Short@Comcast.net [mailto:Scott.Short@Comcast.net] and we will ensure

that you are added to this distribution list. Although most of the

information provided there is relevant nationally, some of it relates to

local and state programs as I currently limit my loan origination to

California.

Kevin Nunn

Residential Loan Officer specializing in homebuyer programs, energy

financing opportunities, and acquisition/rehabilitation financing throughout

the state of California since 1993.

Editor's note: Word has hit the tape that Bank of America is near an $8.5

billion settlement with a group of non-agency investors on

rep-and-warranty-related issues:

226 deals, of which 15 are re-REMICs. The remaining 211 deals have a current

balance outstanding of $79 billion and original balance of $178 billion. As

such, the $8.5bn of settlement translates into 10.8% of the current balance

and 4.8% of the original balance, but exact details are changing as more

comes to light and many questions remain. For example, for non-agency

investors, is the issue of whether the settlement payment is made to the

investor group directly or to the trusts involved in the complaint - both

have pros and cons although most believe that the money will likely flow

into the trusts, otherwise BofA would expose itself to a large contingent

liability from other investors in these deals. When will the money be dished

out to investors?

It is expected that the cash flow will come over several months.

What does this mean for BAC liability and other non-agency deals? Remember

that total Countrywide non-agency issuance during 2004-07 (the period during

which the deals in the settlement were issued) was $523 billion, so the

settlement covers about 35% of this. There is some fear that the remaining

65% of production, although probably cleaner, could be subject to more

liability, therefore between $24-30 billion!

Regardless, any positive news, which includes less uncertainty such as some

kind of settlement, may help prices of existing securities.

But will this, or any settlement, be passed down somehow to the originators

which sold loans to Countrywide between 2004 and 2007? First, remember that

this settlement is for non-agency product. Second, and I am not privy to any

inside information, just because a settlement includes a portion of

BofA/Countrywide's production, that doesn't mean that BofA, or any large

investor, will "call off the hounds" in pursuing full retribution against

originators. The settlement does not resolve issues for smaller lenders,

especially when fraud is involved, nor does it mean that BofA (or any

investor) would ever say, "Well, we settled for X pennies on the dollar, so

we will let you do the same."

If you're interested, visit my twice-a-month blog at the STRATMOR Group web

site located at www.stratmorgroup.com

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106299939917&s=8721&e=001HSPfPI

0rxwKacKFkPi4Gl7lZh8_WLKXUXKe55GryYxAWy3tyBzZEEHcXDJ7bMRnx-B-JUON6e4Mv-enf_F

T1YYTrX5egwv648jtZdZRhYBSab9hatTM6ww==]

. The current blog takes a look at near-term news for non-agency securities,

such as jumbo residential loans. 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.

Rob