Both agencies still have plenty of “foreclosure cannon fodder” although delinquencies continued to decline in October according to information released by Lender Processing Services.  But foreclosure inventories reached a record high during the month, now representing 4.3% of all active mortgages – how does anyone expect house prices to move higher with that overhang out there? The total delinquency rate in the country is now about 8%, down from over 9% in October 2010. Per LPS the average delinquent loan in foreclosure has been delinquent for 631days versus a few years ago when an average foreclosure took 251 days from the first missed payment.  The length of the process has increased by three months just since the beginning of this year for various reasons (backlog, type of foreclosure in the state, lawsuits, and so on).

When in doubt, do some training. “The CFPB in Focus: Where Are We Now and What Lies Ahead?” is being presented by BuckleySandler. “In this webinar, we will review the current status of the CFPB and its progress to date, including an overview of the scope of its powers, stated priorities, key staff, and the issuance of the CFPB's new Supervision and Examination Manual. We also will discuss the CFPB's enforcement powers: how it intends to enforce consumer protection laws, its plans to collaborate with other federal and state regulators, and concerns regarding how the CFPB will protect confidential data provided by industry in examination, enforcement, and other contexts.” It is next Thursday, 2-3:15PM EST, and you can register at https://www1.gotomeeting.com/register/335580144.

And if you have commercial loans, the FDIC will host a free telephone seminar to discuss prudent commercial real estate (CRE) loan workouts and related accounting issues, including the treatment for troubled debt restructurings (TDRs). The seminar will be held from 1-2:30PM EST on December 15. “Employees of all FDIC-supervised institutions are invited to participate.” For more info go to: http://www.fdic.gov/news/news/financial/2011/fil11071.html.

Wednesday the commentary mentioned some frustration that secondary execs were having, watching investors disappear, scale back, or not expand their business lines. I received this note: “Tell folks to keep the pressure on the smaller lenders to develop true mandatory delivery platforms, and encourage newer participants like Pennymac, Impac companies, American Home, and Bank of Manhattan to do the same.  As the banks exit the correspondent space, non-depository lenders will fill the void and we will have a more competitive market for Agency product. I am also seeing a trend to offer bank overlay product (which I believe is the infancy of private label).”

Adam Quinones with Thomson Reuters wrote, “Mortgage-backed security dealers are reporting slowdown in TBA hedging recently but the Fannie desk has been busy. Wednesday they reported a $2.5 billion session while the Street was about $1 billion. That is a big discrepancy! More lock desks must be going direct to the cash window. With fewer AOT options and more folks choosing to retain servicing, the lack of TBA hedging more recently makes sense.”

And Eric W. wrote, “Provident Funding has entered the correspondent space this year and offers a treat execution in the conventional space. As Freddie's #1 ranked servicer with over $50 billion is servicing assets they are leading the market in price daily and offer both best efforts flow and mandatory pricing. There is no AOT but there is a competitive bulk price.” For more information write to ewilson@provident.com.

Yesterday I spoke at a real estate finance forum in Sacramento where the HARP was Topic #1, and the frustrating consensus is that a) most lenders have not followed Fannie and Freddie yet, b) look for a retail-based branch rollout initially, and c) the investors/aggregators don't know where to price this stuff (no one is going to pay the same price for a 4% 150% LTV loan as a 4% 75% loan, right?). Once again, just because the government says something is ok doesn't mean the aggregators have to go along with it.

By the way, for those interested in further details about Bank of Oklahoma's rollout of HARP 2.0 that was noted in the commentary early yesterday can visit: http://www.marketwatch.com/story/bok-financial-mortgage-group-accepts-harp-ii-mortgage-program-applications-2011-12-01.

MGIC rolled out a new HARP Refi-to-Mod (RTM) program “designed to complement the changes recently announced by the FHFA, Fannie Mae and Freddie Mac…Loans currently insured by MGIC that are refinanced under either Fannie Mae’s Refi Plus or DU Refi Plus programs or Freddie Mac’s Relief Refinance Mortgage program are eligible for MGIC’s HARP RTM Program. Reps and warrants associated with the original loan file are extinguished once the HARP refinanced loan is delivered to Fannie Mae or Freddie Mac. The refinance lender reps and warrants that the loan is eligible for a HARP refinance and all HARP requirements of the applicable GSE are met. The 50-basis-point modification premium charged to New Insured/Servicers will not apply to HARP RTM’s - more details can be found at http://www.mgic.com/origination/refi_to_mod.html.

Radian Guaranty has requested that a dozen states waive capital ratio requirements. The company is exploring a variety of alternatives to continue writing new business in all states where it currently operates - waivers are being sought in 12 states. Radian has already received approvals for waivers in Illinois, Kentucky and Wisconsin. Radian's risk-to-capital ratio was 21.4-to-one as of Sept. 30 and without any capital infusion, the ratio is expected to increase as mortgage insurance losses develop. As we know, MI company ratios have been impacted industry-wide. In the states that don't allow a waiver, Radian is seeking the approval of Fannie and Freddie to operate a new entity: Radian Mortgage Insurance.

Yesterday the commentary noted a link to changes that Fifth Third Mortgage is making. It said “brokers” but attached a link to the correspondent rate sheet page. Fifth Third correspondent doesn’t work with brokers; wholesale does, obviously. I apologize for any confusion.

Plaza Home Mortgage spread the word that “effective with loan applications December 1st and after, any Relief Refi loan with an LTV of 80% or less will now have a maximum CLTV/HCLTV of 105%. NOTE:  LP will not be updated with this restriction until March 2012.  This guideline must be applied manually. Other underwriting enhancements outlined in Bulletin 2011-22 must be evaluated and will not be available until LP has been updated. Pricing enhancements for both DU Refi Plus and Relief Refi are being evaluated now and we will provide further communication as soon as possible.”

Citi rolled out its monthly pricing bumps for 24 states in December. It is fairly broad-based, including fixed rate & ARM, conventional, FHA & VA, best efforts, single loan mandatory, and mandatory trade desk sales. “Pricing incentive is in addition to all other applicable loan level price adjusters, including existing state adjusters. Loans must be in all respects eligible for sale to Citi in accordance with the provisions of your Correspondent Loan Purchase Agreement with Citi.”

Uh-oh: HUD Secretary Shaun Donovan told a Congressional hearing that the FHA may need to raise its premiums for some borrowers if economic conditions worsen. The Secretary said that any negative changes in 2012 that eroded the value of the FHA's portfolio by anything more than $7 billion would require further steps to shore up FHA's cash reserve.  An audit of the agency released on November 15 showed that FHA's reserves had fallen 45% over the last year to $2.6 billion.  FHA is mandated by Congress to maintain a minimum balance (the ratio of economic value to insurance-in-force) in the Fund of 2% and the audit found the current reserves are now at 0.24 percent. For the nitty-gritty read it at: http://portal.hud.gov/hudportal/documents/huddoc?idSOHUDtestimony1212011.pdf.

Yesterday the 10-yr T-noted closed at 2.08%, mostly buffeted by strong debt auctions in France and Spain and the U.S Initial Jobless Claims number coming in slightly higher than expected. But this morning’s U.S. employment data is impacting the markets: Non-farm Payroll was +120k, with the previous two month’s revised higher by 82k, and the headline Unemployment Rate dropped to 8.6%. This is the lowest rate since early 2009. As you’d expect, rates are higher with the 10-yr up to 2.14% and MBS prices worse by roughly .250.

A man and a friend are playing golf one day at their local golf course.

One of the guys is about to chip onto the green when he sees a long funeral procession on the road next to the course. He stops in mid-swing, takes off his golf cap, closes his eyes, and bows down in prayer.

His friend says, “Wow, that is the most thoughtful and touching thing I have ever seen. You truly are a kind man.”