Phil Grossfield's Blog


Monthly Archives: December 2013

Time To Fess Up

miley2I like Miley Cyrus. Whew! That was hard to type. You may recall I slammed Miley in my post entitled Wannabe Shock Artist…No Miley! after her VMA performance in August. I was upset because as Hannah Montana  she was someone my daughter looked up to…then she turned the corner, and it made me angry. But I read some articles about her and her interview in Rolling Stone…I’ve had time to reflect.  I’ve come to accept she is just a kid finding her way like we all did and still do. miley3As a father it bothers me with some of the crap she does, but as a father it bothers me with some of the crap I did. So, I’m trying to be more understanding…she’s young and an artist who is expressing herself…and she has a platform to do so. In that way I respect her…even if I hate it when she sticks her tongue out. I hereby admit it’s not fair to expect her to be a role model for my kids. Whew! Now that I got that out of the way, I can actually say I like her music…click the picture above to hear a cool rendition of her hit We Can’t Stop with Jimmy Fallen.

anchormanI like Anchorman. Sorry Colleen. My wife hates this movie and when it came up in an “argument” with our 18-year old nephew over Thanksgiving I took my wife’s side. Sorry Trevor. But I hereby admit it…I like Anchorman…it’s funny! Click the picture to see some funny scenes…my favorite is at 3:08.

More Serious Transgressions. Sorry Readers, but this is not exactly the most appropriate venue for a full out confession. I’m sure there’s a lot more I could fess up to…but you’ll never know!  That said, I’m sure there are many things I need to make resolutions for…and I will…but not today. Today I’m hanging out with my family and tonight I’m having friends and neighbors over for a NYE party. My goal is to not wake up on the bathroom floor…an improvement on years past. Anyway, maybe on Thursday I’ll share some personal resolutions…maybe….  🙂



QM 3% Comp Rule – What’s Included? When is it Effective?

$799 Lender Fee – Effective for Jan 1 Uploaded Submissions
With all the compliance issues we as a lender face, the cost per loan has gone up extensively. Interbank is long overdue to increase its lender fee. This is effective for all loans uploaded on or after Jan 1.
Comp Plan QM Changes – Effective for Jan 1 Uploaded Submissions
Comp plans are being automatically modified (unless you manually do so) effective for all loans uploaded on or after Jan 1:
      (1)  Max Compensation 2.500%, and
      (2)  Flat Fees and Floors Eliminated.

      The portal is now open to allow manual changes to your Broker Comp Plan.
      Simply log into the portal using your Admin User ID and select
      “Broker Compensation Settings” under the “Tools” menu.

Simply put, your GFE MUST be correct when you upload the submission package. When you took the application and when you locked is irrelevant.

FOR EXAMPLE, let’s say you took a loan application on December 27th, registered the loan in the Interbank portal on December 28th, and locked the loan online on December 29th. Your processor then uploaded the submission package on January 2nd.  Because the submission package was uploaded in January, you are subject to your NEW JANUARY COMP PLAN AND OUR NEW $799 LENDER FEE. The fact your borrower signed an application in December and you locked in December is irrelevant…you are now subject to the new Jan comp plan and lender fee because you uploaded in January. If your GFE is incorrectly based on our old Lender Fee or on your 4th quarter comp then the GFE is a compliance violation and therefore your loan and your lock must be cancelled.
If this is not 100% clear then please let me know….

  QM Points and Fees Included

  QM Points and Fees Not Included

I Made My Wife Cry – Gifts Abound – Stomachs Afull


Gifts Abound!  I got some good stuff including this shirt from my sister-in-law-to-be-some-day-hopefully. Like me she is also an attorney so this shirt is fitting, pun intended. Another notable gift was a set of heat-resistant spatulas that I cleverly hinted I wanted by posting my wishes on Facebook for all to see…my in-laws got the message.

I Made My Wife Cry. I got her a bunch of stuff but the winner was a photobook of her Instagram pictures. Score! I would’ve posted a picture evidencing this event but I got in trouble for posting something else on Facebook before she had a chance to shower and apply make-up. What can I say…I think she’s beautiful first thing in the morning.

Stomachs Afull.  I ate…a lot. I wish I could say it was limited to yesterday but holy crappers I’ve been eating nonstop for what seems like 2 weeks. I’m definitely going on a diet and exercise regimen…soon…next week…

Well, Thanksgiving, Hanukkah and Christmas were fantastic this year. Just New Years Eve and Day stand in our way of the long wait until Valentine’s Day. I hope your holiday was as wonderful as mine. 🙂

Since so many of you have expressed your love of this ad from Apple, I’m leaving it in here. It’s entitled “Misunderstood” which I found to be smart, and it connects whether you celebrate Christmas or Hanukkah or whatever…


My Market Watch:  Bonds Flat but trading near a Floor of Support.  The Fannie Mae bond is trading flat this morning. That said it’s very near a floor of support (Floor 1 in my graphic) and we need that floor to hold. If the bond falls below the floor we could see another tick for the worse. Hopefully trading will remain slow or improve…I think it will. Let me know if this doesn’t make sense to you…it would be my pleasure to explain….


Jew With Christmas…& Hanukkah

xmas2013_dreidelJew With Christmas, & Hanukkah.  I married a non-Jewish woman and as such we celebrate both Hanukkah and Christmas. That makes me a lucky man! And it makes for lucky kids too!  Since we celebrate both holidays I’m often asked about my thoughts…here are a few…

xmas2013_menorahTwo Sets of Gifts.
Yes, even though my wife is a shiksa, she is the one that buys all the Hanukkah presents…you gotta love that!  In fact, she even bought my Dad a Hanukkah present this year. And, she buys all the presents for Christmas too…you gotta love that even more! The only one I shop for is her, which believe me is difficult enough for me.  Now, even though my kids get two sets of presents, we try to keep it somewhat under control. But make no mistake, my kids get a ton more presents than I ever got as a kid. In fact, as a kid I don’t recall a focus on the gift aspect of the holiday. And now that I think about it, there isn’t much focus or attention given to Hanukkah regarding gift-buying by advertisers. Think about it, how many commercials do you see that focus on Hanukkah? None come to mind. Maybe it’s because advertisers don’t feel there is enough Jewish shoppers to make an advertising campaign part of their holiday budget? Hmmm, when I think about some of my Jewish friends and their families, it seems to me they’re missing out on a huge market opportunity….

xmas2013_carmelThe Menorah & The Christmas Tree. I love the menorah. Each night we light a candle to represent the 8 days of Hanukkah. It’s a nice tradition that even our neighbors, whom are not Jewish, like to share with us. Then we get out the dreidels and chocolate gold coins. This year we were fortunate to be in Minneapolis and had a Hanukkah party with my whole family.  I love the Christmas tree too.

xmas2013_karissaEvery year we dedicate one day to going out and buying a tree, setting it up, and then decorating it. As a Jew this is something I never had as a kid, but man it’s fun! The thing I love the most is the memories it triggers since all those ornaments were collected over the years of our marriage. We even have Jewish ornaments such as dreidels and Stars of David on the tree. Each year I find myself studying the tree…remembering when we bought a particular ornament…I love it. And let’s face it, the tree is just nice.xmas2013_starofdavid

Two Celebrations. The best part of being a Jew with Christmas is we get to celebrate two sets of holidays, and the more reasons to celebrate life is fine with me. In fact, one of the reasons I fell in love with my wife is her desire to celebrate as many holidays as possible. Celebrate life!  Hey, that’s catchy (wink wink to my brother).  In case you didn’t see my post last week, I love this ad from Apple entitled “Misunderstood.” The ad is smart, and it connects whether you celebrate Christmas or Hanukkah or whatever…




Misunderstood. I love this ad from Apple, and so do 4,400,000…every day another 300,000-400,000 people watch it.  Have a wonderful weekend!


Bonds Improving This Morning After Dropping Early.
2 Price Improvements Issued!
Trends in Bond Trading Shed Some Light.

The 30-year Fannie Mae Bond was down early but has since bounced back and is now trading positive +25bps on the day. We already issued a two reprice improvements.

As you know, a lender’s rates/pricing is directly affected by the 30-year Fannie Mae bond. If the bond is selling then rates improve and if bonds are sold off rates get worse. It’s that simple. Capital Markets looks at other indicators as well, like the 10-year note, but the 30-year Fannie Mae bond is a direct indicator and the most reliable, by far.

How the bond trades over time is watched carefully by traders. They look for trends in bond prices to best-guess on which direction it’s headed so they can strategize to buy low and sell high. Traders look for floors of support to make a best-guess on when to start buying. That is, they look for the bottom, and when they think the bond is done selling off and the price is as low as it’s going to get they’ll start buying bonds hoping the price will go up so they can sell at a profit. I hope that makes sense.

So why am I telling you all of this?  Don’t get so impatient…I’m getting there….  Okay, so look at the chart below…this shows how the 30-year Fannie Mae bond has been trading from September 18 until today…about 3 months. Green candles show positive movement…the price of the bond increased. Red candles show negative movement…the price of the bond went down. Over the course of the 3 months you can see how the bond improved and then headed back down again. But when it hit the same floor as the September 18th price it stopped…and then moved positive…this happened yesterday…you see that?!  That line is now a major Floor Of Support. It has held strong and traders are using it to guess when to buy. This bodes well for the bonds which looks like it’s on its way to improving. If so, we could see some improvements to rates/pricing over the coming weeks….

Now, before you get too excited, you must keep in mind there are a ton of things that can happen which influence pricing. Geopolitical issues, economic reports, even weather and unforeseen acts of G-d can disrupt the markets. But this trend has merit and I’d like to take some positivity into the new year with me, can you dig it?


Fed Announces QE Taper! Are You Good?

Family MovemberAre You Good?  My family is fine, thanks. Many of you asked about the stomach flu that ripped through our family, and, how my wife dealt with it on her own since I was out of town. Answer: my wife kicks ass.

I was in Chicago and all three of them got sick…and we have no family in San Diego to come help out. Now, it’s one thing to take care of a sick kid…it’s another thing to take care of two sick kids…BUT IT’S AN ENTIRELY DIFFERENT THING ALTOGETHER TO TAKE CARE OF BOTH OF THEM WHEN YOU’RE SICK YOURSELF. I almost flew home early but my wife said she watched an episode of Oprah that made her feel lucky to be able to take care of her kids. You got to love Oprah! AND YOU GOTTA LOVE MY WIFE!

Fed Announces Taper – Bonds and Stocks Are All Over The Place In a Wild Roller Coaster!  The 30-year Fannie Mae Bond was up, then down, then up again, and now down -31bps. It’s one of the craziest things I’ve seen in a long time.

The Fed via Ben Bernanke announced it will begin tapering Quantitative Easing to the tune of $10 billion split between the treasury and mortgage-backed securities. But then they came back 2-minutes later and said that they would not likely begin tapering unless unemployment was well below 6.5%. Ben2For that reason the bond and stock market is on a serious wild roller coaster…down 30bps and then par and then back down again…CRAZY!

As a quick refresher, Quantitative Easing or “QE” is Fed monetary policy of buying bonds to create an artificial market of low rates. Put another way, the Fed buys millions of bonds each day and in doing so, traders continue to invest which keeps rates low.  The Fed wants to taper (decrease the amount they buy bonds) because they want to eliminate the artificial market. That is, they want the market to be able to support itself without government intervention…they want a more natural market to exist.

Where this will all end up is unknown. Right now we’re down again at -31bps on the day. Until things settle I have no idea how to advise other than a more conservative approach sure seems warranted. Best wishes!

Don’t Tell Me What My Xmas Present Is! Fed Statement Tomorrow – QE Tapering?

secretsantaDon’t Tell Me What My Xmas Present Is!  My daughter might end up being a CIA agent, or FBI agent, or private investigator…she’s got skills. But the boy’s got chops too…check it out….

Everyone in my house is sick…and now I am too. However, whereas they all had stomach flu while I was in Chicago all weekend (yikes!), I have what appears to be a minor cold. Nevertheless, I sought refuge on the couch this morning in an attempt to give the nasty headache a chance to dissipate…I was hidden from the kids…and I kept silent when they came down looking for food.

My 8-year old daughter began her interrogation with a smooth attempt to extract any knowledge about her Xmas presents. “Hey, is Daddy down here? No? Good. If you tell me what I’m getting for Xmas, then I can tell you some of the things you’re getting,” she said. The 5-year old boy was confused, “what do you mean? You know what I’m getting?” She responded, “Uh huh, but you have to tell me first.”  But then the light-bulb went on…he figured it out, “DON’T TELL ME! I’M NOT SUPPOSED TO KNOW!”  Ahhhh, how long will the boy’s Xmas integrity last?

Bonds Up This Morning. The Fed Statement Is Tomorrow…Will They Announce QE Tapering? 

The 30-year Fannie Mae Bond is trading higher this morning. As you know, when the bond is being bought, like this morning, generally rates/pricing improve. But let’s focus on the big news…tomorrow’s Fed statement.


Ben Bernanke

According to Barry Habib, 50% of economists believe the Fed will announce QE tapering. As a quick refresher, Quantitative Easing or “QE” is Fed monetary policy of buying bonds to create an artificial market of low rates. Put another way, the Fed buys millions of bonds each day and in doing so, traders continue to invest which keeps rates low.  But there has been a steady increase in pressure to begin tapering this buying of bonds…tapering means to decrease.


Janet Yellen

The Fed wants to taper at some point because they want to eliminate the artificial market. That is, they want the market to be able to support itself without government intervention…they want a more natural market to exist. The big question is when should they taper, and to what extent. Has the economy healed enough to withstand tapering? Can the market sustain growth if the Fed decreases its daily purchases?

This debate has been going on for a year. There were several instances when we thought the Fed would announce tapering. But then a poor economic report would get revealed, or the government shut down, etc. But tomorrow is Ben Bernanke‘s last press conference as the Fed Chair. And if Janet Yellen intends to taper in Q1-2014, this would be a decent way to transition the news. I don’t know what’s going to happen, but I think it’s a distinct possibility. If had to place a bet, I’d bet there is no mention of QE tapering. Also, I’m not sure how the markets will react to the news if they do announce it. My guess is that both stocks and bonds will sell off. But again, I just don’t know. I would love some feedback….

Face To Face – Comp Plan Changes For QM

terry mike suzanne 2013_2Face To Face.  I have returned from our Awards Dinner and holiday party in Chicago. I’m alive…barely…but alive. It was big fun to see all the top producers, managers and reunite with the Ops staff. Pictured are my friends and colleagues Suzanne from OC, Terry from Texas, and my boss’s boss Mike from Oregon.

You know, despite working closely with these people, there’s nothing like seeing them face-to-face. This is even more true when it comes to the Ops staff. Emails are sometimes misunderstood and more often than not can be misinterpreted without explanation. But when you meet someone in person and get to understand them, the emails take on a different meaning. I’m so glad our company recognizes the importance of this interaction and I’m extremely grateful to have been a part of the festivities. Now, let’s get to work!

Bonds Fell This Morning But Now Holding.  The 30-year Fannie Mae Bond is trading lower this morning but the bleeding seems to have stopped. All eyes and ears are focused on Wednesday’s Fed Statement…I will write more about this tomorrow morning….

Comp Changes For QM – 1/10/2014

QM goes into affect on January 10…max LO compensation will be 3.000% including closing costs. Interbank has begun making some changes…first and foremost the permitted comp plans are being modified:

  1. Max Compensation 2.500%. If you currently have a comp plan that exceeds 2.500%, it will automatically be reduced. If your comp plan is already equal to or less than 2.500%, then you need do nothing.
  2. Flat Fees and Floors Eliminated. Because the maximum compensation including closing costs will be 3.000% per QM, we have to ensure we do not exceed this and having a Flat Fee and/or a Floor makes it too difficult to manage. We checked around and most if not all competitive lenders are doing the same thing…eliminating the options altogether.

The portal is now open to allow changes to Broker Comp Plans for Q1-2014.  To change your broker comp plan, simply log into the portal using the Admin User ID and select “Broker Compensation Settings” under the Tools menu. Let me know if you have questions…

Bait And Switch

philshockBait And Switch.  Have you ever loved a song but never really knew the words? I suppose there are a lot of songs like that…the beat and tune are catchy and fun. But then when you learn the lyrics it’s a shock, you know what I’m typing about?

  1. Example 1 – Blow My Whistle Baby by Flo Rida. I loved this song at first but the minute my daughter started singing it my wife and I wanted to vomit all over the place. Yeah, it was banned from our world. Aiiiyaayaiiayyaiayaa!  I’m not even going to put any of the lyrics here for this one…I think you already know what the song is about. Click here to see the lyrics and here the song.
  1. Example 2 – Pump up Kicks by Foster The People. This is a catchy song my daughter was singing…I liked it too until I discovered the lyrics were about a kid finding his Dad’s gun…here is one lyric:  All the other kids with your pumped up kicks, You’d better run, better run, faster than my bullet…  Uh, no thanks!  Click here to see the rest of the lyrics and hear the song.

Example 3 – E.I. by Nelly.  I’ve had this song on my workout playlist…it’s been on there for years. I still have no idea what the song is about and I even looked up the lyrics. There’s certainly some foul language and maybe some sexual references but as long as I don’t know anything more I’m keeping it on my workout playlist…ignorance is bliss, no? Click here to hear the song.

Got any other good examples you could share?

Bonds Down -20bps – Auction TodayThe 30-year Fannie Mae Bond is trading lower -20bps and has been falling all morning. If it continues to fall we’ll see a mid-day reprice for the worse by most lenders. There was a 10-year note auction and it didn’t go well. There’s nothing else going on today.

Appraisal Process Changed – 12/11/2013.  You order your appraisal through our portal and it will come from one of our approved AMCs, not necessarily Streetlinks. You will automatically receive notifications regarding the status of the appraisal. It is now extremely important you provide your email address with every order to receive notifications (by clicking on the “Attach Notifications” button and selecting the notifications you wish to receive). Without doing so, you will NOT be notified (we are working on automating this process.)  TILA holds: the appraisal order will remain on hold until the borrower opens and acknowledges receipt of the emailed disclosures. The borrower has 2 days to acknowledge receipt of the email. If not then the disclosures will be snail-mailed to the borrower via USPS and an additional 3 days is added to the hold. Therefore, unless the email to the borrower is acknowledged within 2 days, the total hold on the appraisal with be 5 days excluding Sunday. Email me for more informationTapering

Image of Freedom – Nelson Mandela In His Own Words

nelsonmandelaImage Of Freedom He changed the world for better on a global scale…how many individuals throughout time have done that? More than being the first black South African to hold office, and more than being the first elected in a fully democratic process, Nelson Mandela’s image now stands for freedom.

nelsonmandela3If you want to read about him there are plenty of stories on the Internet…about his accomplishments before and after his 27 year sentence, during which he slept on a cell floor. Simply put, his political and philanthropic achievements are worthy of sainthood. I like this 4-minute interview – in his own words.

Pricing Improved – Fed Speakers TodayThe 30-year Fannie Mae Bond is trading higher this morning and fixed pricing is improved by +0.125 on Conforming, High Balance (Agency Jumbo) and Non-Conforming Jumbo products…ARMS are unchanged.

I hate it when the Fed speaks because usually they say something that turns the market against mortgage brokers, that is, their words seem to influence traders to sell off bonds. When bonds are sold off our rates get worse. This morning the St. Louis President said he thinks the Fed should taper now, in December. What?! I hope the traders don’t see this as an opportunity to dump bonds…so far it doesn’t look like it so that’s a good thing. The Fed meets next week to discuss monetary policy. The focus of the discussion will no doubt be when and to what extent they will begin QE tapering. For your information, here is my explanation of QE and QE Tapering:

Quantitative Easing (“QE”) is Fed monetary policy to influence trading in the marketplace. Essentially the Fed buys bonds in mass quantities in order to artificially keep rates low…this has been going on for years now much to our delight in the mortgage business. But the Fed will eventually taper QE, that is, decrease the buying of bonds. Why would they pull back you ask? They will pull back to remove the artificial market and begin to return it to a more natural state, with the intention that eventually they will not have to buy bonds at all and the market will be able to support itself.longblacktrain The Fed will only taper QE if they feel the economy is improved, will continue to improve, and therefore can handle it. The big question isn’t if the Fed will taper, the question is when and to what extent.  For a good portion of 2013 we expected tapering, but one thing after another kept pushing the inevitable back…weak economic reports, the government shut-down, a change in the Fed Chair, etc. But it is going to happen…it’s a long train a coming, and when it gets here your mortgage rates are going to go up, plain and simple.….

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