I really do know my son is boning up for the SAT when I heard him yell at his sister, “You defalcated my allowance!” “What does that mean?” “Look it up, bright one” he replied. Defalcate: to steal or misuse money or property entrusted to one's care. A timely word, given what is happening out there in some segments of the financial world.

What do Aflac, Nugget Markets, Devon Energy, Scottrade, Quik Trip, The Container Store, NuStar Energy, Stew Leonard, and Publix Super Markets have in common? None of them have ever had a lay-off! Strategies and comments include not replacing employees who leave voluntarily, locations within 15 miles of each other sharing staff, cross-training employees, using past employees for temp work, keeping costs low, no raises in slow times but mid-year raises in boom times, telecommuting and flex schedules helping streamline operations, and cushioning p&l swings by giving the employees a share of profits rather then giving them to stockholders/owners.

Let’s hope that owners of mortgage companies out there aren’t thinking about lay-offs already, unless funding volumes pick up. STRATMOR, a consulting and investment banking company that specializes in mortgage banking recently released the results of a survey they performed. They state that “lenders strongly believe that a large proportion of mortgage banking origination tasks or functions have the potential to be outsourced. In general, however, those functions that typically involve direct contact with borrowers are not viewed as candidates for outsourcing. Independent of company size, a majority of lenders approach origination outsourcing on an ‘a la carte basis’ and most lenders want to be able to pick and choose those functions that they will outsource. Lenders perceive that outsourcing all or most of their back office origination functions puts them at great strategic risk to the pricing, performance and continued business operation of their outsource service provider, so would like to be able to adopt outsourcing on a gradual basis and, as only where it makes economic and strategic sense. Lenders told us that controlling costs, managing operational risks and improving efficiency and productivity are the primary reasons for outsourcing.”

Colonial National Mortgage, out of Forth Worth and a division of Colonial Savings, F.A., announced that it would exit the wholesale lending business to concentrate on its consumer direct channels.   "After conducting an extensive review of our wholesale operations and taking into consideration the extraordinary risk in the current environment, we have made the very difficult decision to close our wholesale lending division for the foreseeable future," said J. David Motley, president of  Colonial National Mortgage.  Colonial Savings, started in 1952, has a servicing portfolio of $12.5 billion and originates more than $2 billion in FHA, VA, conventional and innovative single close construction loans annually.  
 
According to Yahoo Finance, “Officials said 20-year-old Mississippi-based Realty Mortgage Corp., one of the largest privately owned mortgage companies in Mississippi, laid off about 300 employees in several states last week after Countrywide Financial Corp. froze its line of credit. Representatives at Countrywide, which was acquired by BofA, notified Realty Mortgage on Tuesday its line of credit used for payroll and day-to-day operations — amounting to over $200 million — would be frozen

For anyone needing FHA training, don’t forget that the California Mortgage Bankers Association (CMBA) and CampusMBA, the education department of the Mortgage Bankers Association (MBA), is offering two workshops. “March 23, 2009: FHA Fundamentals Workshop in Santa Ana and March 24, 2009: FHA Underwriting & Operations Workshop in Santa Ana. The courses are separate but offered back-to-back and the details for both are on one flyer: http://www.cmba.com/new/brochures/California_FHACentralFlyer.pdf

UBS posted the biggest annual loss in Swiss history and said it would cut a further 2,000 investment banking jobs. UBS lost $7 billion in the 4^th quarter, but also said that net new money turned positive in both wealth and asset management in January, after three consecutive negative quarters.

“Early this week” is what legislators are saying about the Senate vote on the stimulus bill. Remember, however, that even if it passes, the differences between their bill and the House bill need to be worked out. Last Friday Senate Republicans and Democrats cut back the package, and Senate Democrats (who control the chamber with a 58-41 majority) were able to close off debate yesterday. If approved as expected, the package would go to a vote today.  A $35.5 billion measure would create a new tax credit equal to 10% of a primary-home purchase, up to $15,000. The House bill has much smaller $2.5 billion housing provision, which would waive the repayment requirement for a $7,500 tax credit that already exists for first-time home buyers. The difference needs to be ironed out.

Fortunately we are seeing some buying in the fixed-income markets, and rates have crept back down. Yesterday, in a speech, FHFA Director Lockhart said Fannie/Freddie may need more than the $200 billion already pledged by the US Government if the housing market continues to deteriorate. Once again there is no scheduled economic news, but rates have dropped: the 10-yr is back to 2.94% and mortgage prices are better by .250 or more. Apparently, there is some sense that today’s $32 billion 3-yr Treasury auction will generate investor demand. Will the US Government turn around and buy the Treasury instruments? I can’t quite figure that one out, but perhaps Fed Chairman Ben Bernanke will help explain things when he testifies today before the House Financial Services Committee on the Fed’s lending programs at 1PM EST. We also have Treasury Secretary Timothy Geithner testifying before the Senate at 10AM EST on the oversight of the financial rescue plan before outlining the details an hour later.

Wanda's dishwasher quit working so she called in a repairman. Since she had to go to work the next day, she told the repairman, “I'll leave the key under the mat. Fix the dishwasher, leave the bill on the counter, and I'll mail you a check. Oh, by the way don't worry about my dog Spike. He won't bother you. But, whatever you do, do NOT, under ANY circumstances, talk to my parrot!”

“I MUST STRESS TO YOU:  DO NOT TALK TO MY PARROT!!!”
When the repairman arrived at Wanda's apartment the following day, he discovered the biggest, meanest looking dog he has ever seen. But, just as she had said, the dog just lay there on the carpet watching the repairman go about his work. The parrot, however, drove him nuts the whole time with his incessant yelling, cursing and name calling.
Finally the repairman couldn't contain himself any longer and yelled, “Shut up, you stupid, ugly bird!”
To which the parrot calmly replied, “Get him Spike!”

Rob