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January 2010 NEWSLETTER

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ICC NEWS Chief Executive Officer, JPMorgan Chase &
News of Note Company
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Companies wishing to take advantage of Compli- gan Stanley
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Technology
The pointy-headed academics and other
DISASTER PLANNING
Publications of Interest “partisan” groups were also represented:
Once again, it is time to consider the implications
Connections of disaster planning, including business continuity  Mark Zandi, Chief Economist and Co-
contingency planning. ICC will be pleased to re- founder, Moody's Economy.com
Interesting Links
view your business contingency plans at no  Kenneth T. Rosen, Chair, Fisher Center for
charge. Please contact customer service to make Real Estate and Urban Economics, Univer-
your review arrangements. sity of California, Berkeley
Thank you for your continuing business. We  Julia Gordon, Senior Policy Counsel, Center
Money rates for end of month count on your referrals -- please don't keep us for Responsible Lending
January 2010 as reported in the a secret from friends and associates who
Wall Street Journal could benefit from our services!  C.R. "Rusty" Cloutier, President and Chief
Prime 3.25000% Executive Officer, MidSouth Bank, N.A.; Past
Chairman, Independent Community Bankers
6 month Libor 0.38438% NEWS OF NOTE Association
Federal Reserve Statistical
release H.15 for January 15, BERNANKE CONFIRMED AMONG TURMOIL And we could hardly leave out the politicians;
2009 (For Section 32 purpose)
In spite of the media-driven grandstanding by  Eric H. Holder, Jr., Attorney General, U.S.
Treasury Securities many Senators seeking media face-time and the Department of Justice
chance to openly criticize Fed Chairman Bernanke
1 Yr.` 0.330% for the current economic disaster, Bernanke was  Lanny A. Breuer, Assistant Attorney General,
2 Yr. 0.890% confirmed for another four-year term by a vote of Criminal Division, U.S. Department of Justice
3 Yr. 1.440% 70 – 30. There were major criticisms of the Fed’s
lack of transparency and its continued push for
 Sheila C. Bair, Chairman, U.S. Federal De-
5 Yr. 2.440%
posit Insurance Corporation
7 Yr. 3.170% independence from Congressional and Admini-
10 Yr. 3.700%
stration oversight. The role of the Fed versus the  Mary L. Schapiro, Chairman, U.S. Securities
traditional regulatory agencies was also a sticking and Exchange Commission
20 Yr 4.480%
point as was their artificially low Federal Funds
30 Yr 4.580% Target Rate. Faced with a choice of confirming  Lisa Madigan, Attorney General, State of
Bernanke or listening to the likes of ultra-left winger Illinois
George Soros, the Senate took the only course
*Note: all rates are for reference possible and confirmed Bernanke. Whether or not  John W. Suthers, Attorney General, State of
only; you may check the actual Bernanke can stave-off an audit of the Federal Colorado
rates at: Reserve, maintain independence from those who
www.federalreserve.gov/ want to influence the Fed’s actions, secure a posi-  Denise Voigt Crawford, Commissioner, Texas
releases/h15/ tion as the chief regulator – and control unemploy- Securities Board and President, North Ameri-
ment and potential inflation is yet to be seen. can Securities Administrators Association, Inc.

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THE DOG AND PONY SHOW
The Financial Crisis Inquiry Commission held their
first public hearings to examine the root causes of
the financial crisis. The ringmaster of this circus
was Phil Angelides, a liberal democrat party hack
from California. The list of actors was long and
distinguished; including such luminaries as:
 Lloyd C. Blankfein, Chairman of the Board
and Chief Executive Office, Goldman Sachs
Group, Inc.
 Glenn Theobald, Chief Counsel, Miami-Dade
County Police Department; Chairman, Mayor
Carlos Alvarez Mortgage Fraud Task Force
And, of course, all of the testimony was pre-scripted
and non-revealing lest the testimony be used in a
criminal or civil court proceeding against the person
and their firm. Or, heaven forbid, used to make a
political statement in an election-cycle year.
(Continued on page 2)

(Continued from page 1)
Noticeably absent were those who really were
responsible for much of the legislation which re-
sulted in the economic turmoil. Specifically, Barney
Frank (D-MA), Chairman of the House Financial
Services Committee and Christopher Dodd (D-CT,
Chairman of the Senate Banking Committee.
Also absent were representatives of the GSEs
who hold the majority of the nation’s mortgages
within their grasp: Fannie Mae and Freddie Mac.
Both of which stand accused of cooking the books
to enrich their executives and of pandering to Con-
gress by relaxing the underwriting standards for
loans that they purchased.
All-in-all, this was not a bi-partisan examination of
the facts as represented to the American public,
but a partisan look at avoiding blaming those who
were really responsible: the politicians who en-
abled this fiasco with their demands for unsound
underwriting activities, the government bureau-
crats who shirked their regulatory oversight re-
sponsibilities and those who operated on the basis
of self-interest and greed.
For those wishing to see this Kabuki Theatre/
Charade, you might want to visit the FCIC’s web-
site at http://www.fcic.gov. There are links to the
self-serving testimony of the participants.
IN PLAY: WHAT IS GOING ON?
 Senator Dodd becomes more dangerous
… With the news that embattled Senator
Christopher Dodd (D-CT) has decided not to
stand for re-election; one wonders how dan-
gerous the Chairman of the Senate Banking
Committee might become now that he no
longer needs to pander to his constituents or
the special interests that provide campaign
funds and voter support. Dodd has a some-
what checkered background as a “Friend of
Angelo” and as one-half of the famous Ken-
nedy-Dodd Waitress Sandwich. Should the
democrats prevail in replacing Dodd, the prime
candidate is likely to be the well-respected
Richard Blumenthal whose prominent role in
the ABSCAM congressional corruption probe
signals that he is a tireless “law and order”
crusader. Blumenthal’s junior status precludes
chairing any prominent committee.
 Dangerous beyond belief … The precise
reason liberal Barney Frank, Chairman of the
House Financial Services Committee is so
dangerous to the mortgage industry is be-
cause he believes that “Fannie Mae and
Freddie Mac are ‘public policy’ instruments of
the government.” Frank and his fellow col-
leagues believe that the GSEs are their per-
sonal piggy bank and can be manipulated for
political purposes.
 Global economic warfare: Fannie Mae and
Freddie Mac targeted … Former Treasury
Secretary Henry Paulson’s new book “On the
Brink” claims that Russia and China were said
to be using their investments in Fannie Mae
Page 2
and Freddie Mac to influence U.S. economic
policy. “The Russians made a ‘top-level ap-
proach’ to the Chinese ‘that together they
might sell big chunks of their GSE holdings to
force the U.S. to use its emergency authori-
ties to prop up these companies.” Just an-
other consequence of poor underwriting
making the United States economy – and
foreign policy – vulnerable to manipulation.
 HUD’s big mouth … HUD’s OIG (Office of
Inspector General) issued a press released
noting that they had served document pro-
duction subpoenas on 15 mortgage compa-
nies that had higher than average rates of
mortgage default and insurance claims.
There is no allegation of abusive lending
practices and the OIG wanted to discover if
any abuses were present. The press release
was made apparently without thinking of the
reputational risk to the mortgage companies
that might ensue when the mainstream me-
dia highlighted, what appeared to them, a
regulatory action. The press release can be
found at http://portal.hud.gov/portal/page/
p o r t a l / H U D / p r e s s /
press_releases_media_advisories/2010/
HUDNo.10-005.
 Obama Administration continues to play
politics with housing … As if the govern-
ment has not created enough havoc with its
affordable lending initiatives and threats
against those financial institutions that fail to
make loans to minorities and the disadvan-
tages, the Department of Justice has an-
nounced the creation of the “Fair Lending
Unit.” One only wonders: fair to whom? Of
course the announcement was made at
Jesse Jacksons’ Rainbow Push Coalition’s
Wall Street Conference. While we are all
against predatory lending practices, not ac-
counting for the true credit risks when under-
writing mortgage loans is what initiated and
exacerbated the mortgage meltdown. For a
copy of the Assistant United States Attorney
General Thomas Perez’s remarks, they can
be found at www.justice.gov/crt/speeches/
tp_rainbow_push.pdf.
 FDIC’s political idiocy … Once again, we
see Administration-style politics rear its ugly
head in regulatory agencies. In this case, the
FDIC is proposing to link employee compen-
sation programs to FDIC insurance assess-
ments. “The Board of Directors of the Federal
Deposit Insurance Corporation (FDIC) today
approved an Advance Notice of Proposed
Rulemaking (ANPR) seeking input on
whether certain employee compensation
structures pose risks that should be captured
in the deposit insurance assessment pro-
gram. The press release on “Incorporating
Employee Compensation Criteria into the
Risk Assessment System” can be found at
http://www.fdic.gov/news/news/press/2010/
(Continued on page 3)

(Continued from page 2)
pr10005.html. Comments on the program
from the Comptroller of Currency, John
Dugan, may be found at http://occ.treas.gov/
ftp/release/2010-3a.pdf.
 Only the shadow knows … Everybody is
waiting for the other shoe to drop – the
shadow inventory being held by financial
institutions and investors, knowing that they
are foreclosure candidates, but preferring to
accept little or nothing from homeowners
and renters who are living almost rent free
and maintaining the property in a somewhat
salable condition. Media estimates put the
shadow inventory somewhere near 2.4 mil-
lion homes and condos, potentially leading
to another drop of 10% -15% in market
prices, depending how fast they are fed into
the foreclosure process. Until the govern-
ment and regulatory agencies permit hous-
ing sales to seek their own level – without
artificial stimulus efforts such as tax incen-
tives and funny-money accounting methods
– the housing market will not stabilize to the
point of providing consistent valuations for
loan collateral. The key to market thinking
should be that valuations should regress to
their historic mean so that affordable hous-
ing can be offered to willing buyers and fi-
nanced through traditional loans.
 Adding insult to injury … With all of the
complex paperwork bogging down the fore-
closure process, it appears that lenders are
now beginning to concentrate their attention
on pursuing individuals for deficiency judg-
ments arising from foreclosure activities.
Anyone who did not clear their debt in a
bankruptcy filing or is protected by state laws
is at risk – sometimes years after the original
event – and when they may be earning more
income. The prime targets are said to be
those who made a rational “walk-away” deci-
sion to quit paying the mortgage on a loan
that was significantly more that the value of
the property. These people did not neces-
sarily encounter hardships or experience
cash flow problems, but decided it made
economic sense to send the keys back.
Considering these people are likely to be
employed, they become vulnerable to those
lenders and others who are turning their
deficiencies into cash by selling the “hunting
rights” to others on a discounted basis.
 Roofies becoming more popular …No, not
the date rape drug – but the Retaining Occu-
pancy on Foreclosure (ROOF) agreements
to allow people to rent back their foreclosed
homes, thus providing a lender with some
income and a tenant who will keep the prop-
erty in good repair until the lender decides to
sell the property into a better market.
 Another new trade association … With all
of the economic difficulty facing the mort-
gage industry, it appears that a new trade
Page 3
association is about to launch. Little is known
about this new group other than it will be
headed by Marc Savitt who served as the
President of NAMB. (National Association of
Mortgage Brokers).
THE FEDERAL RESERVE
The FOMC (Federal Open Market Committee)
Announcement for the January 26th/27th
meeting …
Nothing new and exciting was announced at the
January FOMC meeting. Perhaps this is due to
the uncertainty surrounding Chairman Bernanke’s
pending confirmation or that the FOMC statement
was scheduled to be issued on the same day that
President Barack Obama addressed the nation
with his “State of the Union” speech.
 The action and forward outlook … “The
Committee will maintain the target range for
the federal funds rate at 0 to 1/4 percent and
continues to anticipate that economic condi-
tions, including low rates of resource utiliza-
tion, subdued inflation trends, and stable
inflation expectations, are likely to warrant
exceptionally low levels of the federal funds
rate for an extended period.”
“Information received since the Federal Open
Market Committee met in December sug-
gests that economic activity has continued to
strengthen and that the deterioration in the
labor market is abating.”
“Household spending is expanding at a mod-
erate rate but remains constrained by a weak
labor market, modest income growth, lower
housing wealth, and tight credit. While bank
lending continues to contract, financial mar-
ket conditions remain supportive of economic
growth. Although the pace of economic re-
covery is likely to be moderate for a time, the
Committee anticipates a gradual return to
higher levels of resource utilization in a con-
text of price stability.”
 Housing … There was no specific mention
of the housing market in the FOMC an-
nouncement, perhaps more information re-
garding this key component of the economy
with be available when the FOMC meeting
notes are released.
 Inflation … “With substantial resource slack
continuing to restrain cost pressures and with
longer-term inflation expectations stable, infla-
tion is likely to be subdued for some time.”
It should be noted that the vote to accept the
FOMC position was not unanimous. “Voting
against the policy action was Thomas M.
Hoenig, who believed that economic and
financial conditions had changed sufficiently
that the expectation of exceptionally low lev-
els of the federal funds rate for an extended
period was no longer warranted.”
(Continued on page 4)

(Continued from page 3)
 Weasel words … “The Committee will con-
tinue to evaluate its purchases of securities
in light of the evolving economic outlook and
conditions in financial markets.”
“The Federal Reserve is prepared to modify
these plans if necessary to support financial
stability and economic growth.”
 Future plans include … “To provide sup-
port to mortgage lending and housing mar-
kets and to improve overall conditions in
private credit markets, the Federal Reserve
is in the process of purchasing $1.25 trillion
of agency mortgage-backed securities and
about $175 billion of agency debt. In order to
promote a smooth transition in markets, the
Committee is gradually slowing the pace of
these purchases, and it anticipates that
these transactions will be executed by the
end of the first quarter.
“In light of improved functioning of financial
markets, the Federal Reserve will be closing
the Asset-Backed Commercial Paper Money
Market Mutual Fund Liquidity Facility, the
Commercial Paper Funding Facility, the
Primary Dealer Credit Facility, and the Term
Securities Lending Facility on February 1, as
previously announced.”
“In addition, the temporary liquidity swap
arrangements between the Federal Reserve
and other central banks will expire on Febru-
ary 1.”
“The Federal Reserve is in the process of
winding down its Term Auction Facility: $50
billion in 28-day credit will be offered on Feb-
ruary 8 and $25 billion in 28-day credit will
be offered at the final auction on March 8.
The anticipated expiration dates for the
Term Asset-Backed Securities Loan Facility
remain set at June 30 for loans backed by
new-issue commercial mortgage-backed
securities and March 31 for loans backed by
all other types of collateral.”
Once again, we caution readers that careful ob-
servation of the financial markets in and around
cut-off dates is important as Fed operations can
greatly affect both liquidity and rates.
For those wishing to read the FOMC meeting
announcement in context, they can be found at
http://www.federalreserve.gov/newsevents/press/
monetary/20100127a.htm.
The FOMC (Federal Open Market Committee)
Minutes for the December 15th/16th meeting
Nothing new and exciting was announced at the
December FOMC meeting. According to the
FOMC, “The information reviewed at the Decem-
ber 15-16 meeting suggested that the recovery in
economic activity was gaining momentum. The
pace of job losses slowed noticeably in recent
months, and total hours worked increased in
November; however, the unemployment rate
Page 4
remained quite elevated.”
 The action and forward outlook … “The
Committee maintained the federal funds
target range at 0 to 1/4 percent and, based
on the outlook for a slow economic recovery,
decided to reiterate its anticipation that eco-
nomic conditions, including low levels of re-
source utilization, subdued inflation trends,
and stable inflation expectations, were likely
to warrant exceptionally low rates for an ex-
tended period.”
Translation: The Federal Reserve, following
its long-standing policy of not telegraphing its
interest rate moves is saying nothing officially
– even though various Fed members are
going about claiming that a hike seems indi-
cated somewhere in the near future. As they
say, go figure!
“In the forecast prepared for the December
FOMC meeting, the staff raised its projection
for average real GDP growth in the second
half of 2009 somewhat, and it also modestly
increased its forecast for economic growth in
2010 and 2011.”
“The staff again anticipated that the recovery
would strengthen in 2010 and 2011, sup-
ported by further improvement in financial
conditions and household balance sheets,
continued recovery in the housing sector,
growing household and business confidence,
and accommodative monetary policy, even
as the impetus to real activity from fiscal pol-
icy diminished. However, the projected pace
of real output growth in 2010 and 2011 was
expected to exceed that of potential output
by only enough to produce a very gradual
reduction in economic slack.”
 Housing … “The housing sector showed
continuing signs of improvement, though
housing starts had leveled out after increas-
ing earlier in the year and activity remained
quite low.”
“Sales of new homes increased significantly
in recent months, a development that, given
the slow pace of construction, reduced the
inventory of unsold new homes; sales of
existing homes rose strongly.
Note: Let us not forget that the housing mar-
ket is being flooded with attractively priced
foreclosures, stimulated by one-time govern-
ment purchase incentives, and the FHA is
still insuring loans with little or no equity. The
growth in homes sales does not appear to be
sustainable. It should also be noted that a
great deal of the housing inventory is being
withheld from the marketplace due to the
reluctance of lenders and investors to add
additional losses to their balance sheets as
would be required if a foreclosed property
were sold. Many financial institutions appear
to be purposely leaving homeowners in-
(Continued on page 5)

(Continued from page 4)
place as they hope for better housing condi-
tions in the near future. Unfortunately, what
we can expect is for housing prices to re-
gress to some mean which tends to indicate
the home prices have further to fall, a mini-
mum of 25-45% according to trending fore-
casts. Without the artificial stimulus to banks
which allow them to continue to hold property
on the books, we might see an increasing
number of problematical institutions which
are technically insolvent or unsound.
“In the residential real estate sector, home
sales and construction had risen relative to
the very low levels reported in the spring;
moreover, house prices appeared to be sta-
bilizing and in some areas had reportedly
moved higher. Generally, the outlook was for
gains in housing activity to continue. How-
ever, some participants still viewed the im-
proved outlook as quite tentative and again
pointed to potential sources of softness, in-
cluding the termination next year of the tem-
porary tax credits for homebuyers and the
downward pressure that further increases in
foreclosures could put on house prices.
Moreover, mortgage markets could come
under pressure as the Federal Reserve's
agency MBS purchases wind down.”
“Housing construction held fairly steady in
recent months, while demand for housing
continued to firm. Single-family housing
starts remained roughly flat from June to
November at levels only modestly above
those reported earlier in the year. In the
much smaller multifamily sector, where tight
credit conditions persisted and vacancies
stayed elevated, the average pace of starts
in October and November decreased some-
what from the already very low rate in the
third quarter. In contrast, sales of existing
single-family homes increased significantly
again in October. Sales of new homes also
rose in October after two months of little
change. With sales continuing to outpace
construction, the inventory of unsold new
homes declined to its lowest level in three
years. The recent increases in sales likely
reflected improved fundamentals: The aver-
age interest rate on 30-year conforming fixed
-rate mortgages declined to less than 5 per-
cent, and surveys suggested that house-
holds now expected home prices to be fairly
stable over the next year. Although some
house price indexes declined a little in Sep-
tember and October, they remained above
the troughs reached last spring.
“Some participants remained concerned
about the economy's ability to generate a self
-sustaining recovery without government
support. In particular, they noted the risk that
improvements in the housing sector might be
undercut next year as the Federal Reserve's
purchases of MBS wind down, the home-
buyer tax credits expire, and foreclosures and
Page 5
distress sales continue. Though the near-term
outlook remains uncertain, participants gener-
ally thought the most likely outcome was that
economic growth would gradually strengthen
over the next two years as financial conditions
improved further, leading to more-substantial
increases in resource utilization.”
To politicians, more government and more
legislation is always the answer. Unfortu-
nately we are facing the massive restructur-
ing of our financial regulatory agencies and
continuing interference of the government in
what should be free-market transactions.
Why the government continues to artificially
bolster sagging financial institutions instead
of letting them fail continues to be the un-
asked question.
 Non-residential real estate … “CRE activity
continued to fall markedly in most parts of the
country as a result of deteriorating fundamen-
tals, including declining occupancy and rental
rates, and very tight credit conditions. Pros-
pects for nonresidential construction re-
mained weak.”
“In contrast, conditions in the nonresidential
construction sector generally remained quite
poor. For instance, real outlays on structures
outside of the drilling and mining sector
plunged in the third quarter. Also in the third
quarter, vacancy rates on nonresidential prop-
erties rose further, and property prices contin-
ued to fall amid difficult financing conditions.”
Commercial lending is projected to be the
next major blow to the financial marketplace
as securitized leases experience defaults in
the underlying collateral.
 Lending … “Banks were raising new capital
and in some cases paying back funds re-
ceived from the Troubled Asset Relief Pro-
gram. Bank loans, however, continued to
contract sharply in all categories, reflect-
ing lack of demand, deterioration in poten-
tial borrowers' credit quality, uncertainty
about the economic outlook, and banks'
concerns about their own capital posi-
tions. With rising levels of nonperforming
loans expected to be a continuing source of
stress, and with many regional and small
banks vulnerable to the deteriorating perform-
ance of CRE loans, bank lending terms and
standards were seen as likely to remain tight.”
This is exactly the same scenario we saw
with the TARP (Troubled Assets Relief Pro-
gram) funds were used by financial institu-
tions to acquire other financial institutions and
shore up their own balance sheets and core-
capital requirements rather than easing li-
quidity in consumer and commercial lending.
 Inflation … “The staff forecast for inflation was
nearly unchanged. The staff interpreted the
increases in prices of energy and nonmarket
(Continued on page 6)

(Continued from page 5)
services that recently boosted consumer price
inflation as largely transitory. Although the
projected degree of slack in resource utiliza-
tion over the next two years was a little lower
than shown in the previous staff forecast, it
was still quite substantial. Thus, the staff con-
tinued to project that core inflation would slow
somewhat from its current pace over the next
two years. Moreover, the staff expected that
headline consumer price inflation would de-
cline to about the same rate as core inflation
in 2010 and 2011.”
“Participants agreed that underlying inflation
currently was subdued and was likely to
remain so for some time. Some noted the
risk that, over the next couple of years,
inflation could edge further below the
rates they judged most consistent with
the Federal Reserve's dual mandate for
maximum employment and price stabil-
ity; others saw inflation risks as tilted toward
the upside in the medium term.”
The portent of deflation is almost as
strong as the prospect of increased infla-
tion. Where we lapse into troubling defla-
tion depends on how the Fed reduces the
amount of money in circulation and the
continuing fall in home values.
“Most participants anticipated that substan-
tial slack in labor and product markets, along
with well-anchored inflation expectations,
would keep inflation subdued in the near
term, although they had differing views as to
the relative importance of those two factors.
Overall, many participants viewed the risks
to their inflation outlooks as being roughly
balanced. Some saw inflation risks as tilted
to the downside, reflecting the quite elevated
level of economic slack and the possibility
that inflation expectations could begin to
decline in response to the low level of actual
inflation. But others felt that inflation risks
were tilted to the upside, particularly in the
medium term, because of the possibility that
inflation expectations could rise as a result of
the public's concerns about extraordinary
monetary policy stimulus and large federal
budget deficits.”
Economists are notorious for presenting “on
one hand … and on the other hand” scenar-
ios so they appear to actually know what is
happening -- which is often far from the fact.
 Weasel words … “To keep inflation expec-
tations anchored, all participants agreed that
monetary policy would need to be respon-
sive to any significant improvement or wors-
ening in the economic outlook and that the
Federal Reserve would need to continue to
clearly communicate its ability and intent to
begin withdrawing monetary policy accom-
modation at the appropriate time and pace.”
“Although members generally saw little risk
Page 6
that maintaining very low short-term interest
rates could raise inflation expectations or
create instability in asset markets, they noted
that it was important to remain alert to these
risks. All agreed that the path of short-term
rates going forward would depend on the
evolution of the economic outlook.”
“The Committee emphasized that it would
continue to evaluate the timing and overall
amounts of its purchases of securities in light
of the evolving economic outlook and condi-
tions in financial markets.”
 Future plans include … “In the Committee's
discussion of monetary policy for the period
ahead, all members agreed that no changes
to the Committee's large-scale asset pur-
chase programs, or to its target range for the
federal funds rate, were warranted at this
meeting, inasmuch as the economic outlook
had changed little since the November meet-
ing. Accordingly, the Committee affirmed its
intention to purchase $1.25 trillion of agency
MBS and about $175 billion of agency debt
by the end of the first quarter of 2010 and to
gradually slow the pace of these purchases
to promote a smooth transition in markets.”
What is not mentioned by the Federal Re-
serve and certainly not by the Treasury De-
partment, the federal government has pro-
vided almost unlimited support to the GSEs
Fannie Mae and Freddie Mac who control an
estimated $5.4 TRILLION or more in mort-
gages and other assets. Something which
could drastically affect both the real estate
marketplace and the financial industry.
Unfortunately, we are seeing the Federal Re-
serve, in coordination with the Treasury Depart-
ment, selectively release information that may not
be complete or totally accurate. While we can see
that the Fed, Treasury and Wall Street Wizards do
not have a crystal ball, they do seem to have con-
nections with each other – possibly leading to
subtle understandings that can influence the mar-
kets and financial fundamentals.
For those wishing to read the FOMC meeting
announcement in context, they can be found at
http://www.federalreserve.gov/newsevents/press/
monetary/fomcminutes20091216.pdf.
ICC’s Fed Watcher … Rising Inflation –
Indication of a Fed Funds Rate Hike in the
immediate future?
Basis Points To Achieve
A Neutral Inflationary Stance
Month Ending 5-Year 10-year
Outlook Outlook
November 2009 188 308
December 2009 264 380
January 2010 222 351
(Continued on page 7)

(Continued from page 6)
Last month we found that ICC’s Fed Watch indi-
cated that it would take 264-basis points to
achieve a neutral inflationary stance within the
five-year outlook and 380-basis points to achieve
a neutral inflationary stance within the ten-year
outlook. This month we find that it would take 222
-basis points to achieve a neutral inflationary
stance within the five-year outlook and 351-basis
points to achieve a neutral inflationary stance
within the ten-year outlook. This is clearly an
indication of inflation and the need for the Federal
Reserve to raise rates in the near term. Of
course, the Fed’s official stance, according to
their FOMC announcement, is to stay the course.
But various members of the Fed continue to
claim that a rate hike is necessary and probably
imminent. As noted in the FOMC minutes, Fed
Governor Thomas M. Hoenig believes that
“economic and financial conditions had changed
sufficiently that the expectation of exceptionally
low levels of the federal funds rate for an ex-
tended period was no longer warranted.” This is
the first appearance of a statement of negative
support for an existing policy in the current low-
interest regime.
It is believed that between the Federal Reserve
and the Treasury, they may hold up to 80% of 30
-year notes yielding somewhere between 4% and
4.5%. When the Fed stops their purchases in
March, it is anticipated that the spread between
the 10-year and 30-year notes will widen be-
tween 20 and 30 basis points. However, should
the market turn chaotic and turbulent, look to the
Fed to hold down rates by resuming some addi-
tional purchases.
Warning: In past times, we have seen higher
rates as a harbinger of a recovery or inflation.
However, in these economically unstable times it
can also presage deflation as higher rates re-
duces demand and the housing slump increases.
It should be noted that, due to the reduced liquid-
ity in TIPS, an investor premium of up to 50-basis
points or more might be reflective of the current
market conditions.
Selected Federal Reserve and Regulatory
Agency Operations…
On January 6th, the Federal Reserve and the
other regulatory agencies issued an “Advisory
on Interest Rate Risk Management” which
seemed to be an indicator of future action by the
Federal Reserve in planning to raise the Federal
Funds Target Rate. “The financial regulators are
issuing this advisory to remind institutions of su-
pervisory expectations regarding sound practices
for managing interest rate risk (IRR). In the cur-
rent environment of historically low short-term
interest rates, it is important for institutions to
have robust processes for measuring and, where
necessary, mitigating their exposure to potential
increases in interest rates.” The advisory bulletin
can be found at http://www.federalreserve.gov/
newsevents/press/bcreg/bcreg20100107.pdf.
You may also wish to review FDIC’s Financial
Page 7
Institution Letter FIL-2-2010 which can be found
at http://www.fdic.gov/news/news/financial/2010/
fil10002.html.
 On January 11th, the Fed made another $75
BILLION of TAF 28-day loans at a stop-out
rate of 0.25% available to 121 bidders who
submitted applications for $38.531 billion in
loans. As with previous loan operations, not
all loan funds were disbursed.
 On January 14th, the Department of the
Treasury announced President Obama’s
proposal to tax the banks, calling the tax a
“Financial Crisis Responsibility Fee.” This
fee (really a tax on all depositors, investors
and counterparties) would require the largest
and most highly levered Wall Street firms to
pay back taxpayers for the extraordinary
assistance provided so that the TARP pro-
gram does not add to the deficit. The Treas-
ury Department’s “Fact Sheet: Financial
Crisis Responsibility Fee” (TG-506) can
be found at http://www.treas.gov/press/
releases/tg506.htm.
 On January 15, the OTS (Office of Thrift
Supervision) issued Regulatory Bulletin
Regulatory Bulletin RB 37-51 which an-
nounced the revision of Examination Hand-
book Sections 530, Liquidity Risk Manage-
ment, and 540, Investment Securities. The
bulletin also rescinds RB 32-32, Liquidity
Management, dated December 9, 2003; and
TB 77, Sound Practices for Liquidity Man-
agement, dated June 19, 2001. .
 On January 21st, the regulatory agencies
issued their “funny money” accounting bulle-
tin “Final Rule for Regulatory Capital
Standards Related to Statements of Fi-
nancial Accounting Standards Nos. 166
and 167.” The bulletin provides guidance for
new accounting standards that make sub-
stantive changes to how banking organiza-
tions account for many items, including se-
curitized assets, especially those which have
been previously excluded from these organi-
zations' balance sheets and appeared in “off
balance sheet” accounts. This rule is effec-
tive March 29, 2010. Banking organizations
may elect to comply with this final rule as of
the beginning of their first annual reporting
period that begins after November 15, 2010.
For those wishing to read the hyper-
technical rule, it may be found at http://
frwebgate4.access.gpo.gov/cgi-bin/
PDFgate.cgi?WAISdocID=154519385936
+1+2+0&WAISaction=retrieve.
What the Fed, Treasury and Regulatory
Agency members are saying…
 Vice Chairman Donald Kohn: “Monetary
Policy in the Crisis: Past, Present, and
Future” at the Brimmer Policy Forum,
American Economic Association Annual
Meeting, Atlanta, Georgia (January 3, 2010)
(Continued on page 8)

(Continued from page 7)
http://www.federalreserve.gov/newsevents/
speech/kohn20100103a.htm.
 Chairman Ben S. Bernanke: “Monetary Pol-
icy and the Housing Bubble” at the Annual
Meeting of the American Economic Associa-
tion, Atlanta, Georgia (January 3, 2010)
 http://www.federalreserve.gov/newsevents/
speech/bernanke20100103a.htm.
 Governor Elizabeth A. Duke: “The Economic
Outlook” the Economic Forecast Forum,
Raleigh, North Carolina (January 4, 2010)
 http://www.federalreserve.gov/newsevents/
speech/duke20100104a.htm.
 KC Fed President Thomas Hoenig: “The 2010
Outlook and the Path Back to Stability” at The
Central Exchange Kansas City, Kansas
(January 7, 2009) http://www.kc.frb.org/
SpeechBio/HoenigPDF/Hoenig.01.07.10.pdf.
 FDIC Chairman Sheila C. Bair: “Causes and
Current State of the Financial Crisis” before
the Financial Crisis Inquiry Commission,
Washington, D.C. (January 14, 2010) http://
www.fdic.gov/news/news/speeches/chairman/
spjan1410.html.
 Vice Chairman Donald Kohn: “Focusing on
Bank Interest Rate Risk Exposure” at the
Federal Deposit Insurance Corporation's
Symposium on Interest Rate Risk Manage-
ment, Arlington, Virginia (January 29, 2010)
http://www.federalreserve.gov/newsevents/
speech/kohn20100129a.htm.
COMPLIANCE NOTES
Please note: Bill descriptions and links were
accurate at the time of listing, but may have
been changed for administrative or legislative
reasons. Please refer to the latest version of
the bill and seek guidance from qualified com-
pliance counsel. ICC does not, under any cir-
cumstances, provide legal or implementation
advice regarding legislation or regulatory mat-
ters. Also keep in mind that future legislation
and regulatory responsibilities may be dramati-
cally altered in future actions and that regula-
tors and legislation may be rendered null and
void at any time.
Effective Date: Immediately
HUD: RESPA RULE FAQ UPDATE
Once again, HUD has updated its FAQ
(Frequently Asked Questions) on January 28,
2010. The updated sections are “bolded” for easy
reference. The RESPA FAQ can be found at http://
www.hud.gov/offices/hsg/ramh/res/
resparulefaqs.pdf.
Effective Date: Immediately
HUD: IMMINENT DEFAULT GUIDANCE
HUD has issued Mortgagee Letter 2010-04 to
define “imminent default” and provide guidance to
FHA-Approved servicers on how to assist those
Page 8
FHA borrowers. At this time FHA is limiting the
loss mitigation options that may be used to assist
borrowers facing imminent default to forbearance
and FHA-HAMP. Mortgagee Letter 10-04ML can
be found at http://www.hud.gov/offices/adm/
hudclips/letters/mortgagee/files/10-04ml.pdf.
Effective Date: Immediately
HUD: MORTGAGEE TERMINATIONS --
STRICTER STANDARDS FOR MORTGAGEES
WITH PROBLEM LOANS
HUD has issued Mortgagee Letter 2010-03 to
advise that HUD will be using its regulatory author-
ity to terminate a mortgagee’s authorization to
underwrite single family loans in geographic areas
where the lender has a high rate of early defaults
and claims. “Every three months, HUD will review
the rate of defaults and claims on all FHA-insured
single family loans. The review will analyze the
performance of every participating mortgagee in
each geographic area served by a HUD field of-
fice. The review will be limited to loans with an
amortization commencement date within the pre-
ceding 24 months.” “Regulations permit HUD to
terminate the Authority of any mortgagee having a
default and claim rate for loans underwritten with
an amortization date within the preceding 24
months that exceeds 200% of the default and
claim rate within the geographic area served by a
HUD field office, and also exceeds the national
default and claim rate.” The Mortgagee Letter con-
taining program details, along with mitigation fac-
tors and appeal procedures, may be found at
http://www.hud.gov/offices/adm/hudclips/letters/
mortgagee/files/10-03ml.pdf.
Effective Date: Immediately
HUD/TREASURY: SERVICERS -- UPDATED
HAMP GUIDANCE
HUD and the Treasury Department have re-
leased updated guidance for servicers participat-
ing in the Administration’s mortgage modification
program. This guidance refines the documenta-
tion requirements in order to expedite conver-
sions of current trial modifications to permanent
ones. More information can be found at https://
www.hmpadmin.com/portal/docs/hamp_servicer/
sd1001.pdf and the press release can be found at
http://portal.hud.gov/portal/page/portal/HUD/
press/press_releases_media_advisories/2010/
HUDNo.10-021.
Effective Date: Immediately
VA: ALLOWABLE FEES AND ADDITIONAL
REQUIREMENTS
In response to the new 2010 RESPA rules, the
VA is providing additional guidance via Circular 26
-10-01 which covers the fees and charges a vet-
eran may pay when obtaining a VA-guaranteed
home loan. The circular also announces new
documentation requirements for lenders and the
elimination of a previously required disclosure
statement. More information may be found at
http://www.homeloans.va.gov/
circulars/26_10_1.pdf.

Last Day for Comments: February 1, 2010
FED – PROPOSAL FOR TERM DEPOSIT
FACILITY
The Federal Reserve is requesting public com-
ments on proposed rulemaking which amends
Regulation D (Reserve Requirements of Deposi-
tory Institutions) to authorize the establishment of
a “Term Deposit Facility” intended to provide the
Fed with another tool for managing monetary
policy. More information may be found at http://
edocket.access.gpo.gov/2009/pdf/E9-31040.pdf.
Effective Date: Immediately
HUD – TEMPORARY WAIVER OF
ANTI-FLIPPING RULE
HUD has implemented a temporary policy to
waive anti-flipping regulations in an effort to stabi-
lize home values and improve conditions in com-
munities where foreclosure activity is high. The
policy was designed to expand access to FHA
mortgage insurance and allow for the quick resale
of foreclosed properties. The regulations impose
strict conditions and guidelines to assure that
predatory practices are not allowed. The press
release can be found at http://portal.hud.gov/
portal/page/portal/HUD/press/
press_releases_media_advisories/2010/
HUDNo.10-011 and details of the waiver program
can be found at http://www.hud.gov/offices/hsg/
sfh/waivpropflip2010.pdf.
Effective Date: February 15, 2010
(Delayed from January 1, 2010)
HUD – APPRAISAL STANDARDS
Mortgagee Letter 2009-28 “provides clarification
and reaffirms Federal Housing Administration
(FHA) appraisal requirements related to appraiser
independence and announces new requirements
pertaining to entities that are eligible to order ap-
praisals for FHA insured mortgages. The new
requirements set forth in this mortgagee letter will
be effective for all case numbers assigned on or
after February 15, 2010. The existing require-
ments will remain in effect. ” Mortgagee Letter 09-
28 can be found at http://www.hud.gov/offices/
adm/hudclips/letters/mortgagee/files/09-28ml.doc.
Effective Date: February 15, 2010
(Delayed from January 1, 2010)
FHA – DUAL PURPOSE APPRAISAL FORM
Mortgagee Letter 2009-51 announces that the
FHA is adopting the Appraisal Update and/or
Completion Report (Fannie Mae Form 1004D/
Freddie Mac Form 442/March 2005). This is a
dual purpose form. Part A, Summary Appraisal
Update Report, provides for updates of existing
appraisals when the appraiser concurs with the
original appraisal report and updates the ap-
praisal by incorporating the original appraisal
report. Part B, Certification of Completion, pro-
vides for compliance repair and completion in-
spections for existing and new construction dwell-
ings. This mortgagee letter is effective for all case
Page 9
number assignments on or after February 15,
2010. More information can be found at http://
www.hud.gov/offices/adm/hudclips/letters/
mortgagee/files/09-51ml.pdf.
Effective Date: February 15, 2010
NEW YORK – FORECLOSURE: FILING
INFORMATION
New York Senate Bill S.B. 66007 relating to home
mortgage loans, the crime of mortgage fraud, and
appropriations to the New York State Housing
Trust Fund Corporation provides for filing certain
information with the Banking Department More
information can be found at http://
assembly.state.ny.us/leg/?bn=S66007&sh=t.
Last Day for Comments: February 16, 2010
FFIEC – GUIDANCE ON REVERSE
MORTGAGES
“The FFIEC (Federal Financial Institutions Exami-
nation Council) is requesting comments on Re-
verse Mortgage Products: Guidance for Managing
Compliance and Reputation Risks. Comments will
be used in the proposed rulemaking process.
“The proposed guidance discusses the general
features of, certain legal provisions applicable to,
and consumer protection concerns raised by re-
verse mortgage products. In addition, it focuses
on the need to provide adequate information to
consumers about reverse mortgage products; to
provide qualified independent counseling to con-
sumers considering these products; and to avoid
potential conflicts of interest. The proposed guid-
ance also addresses related policies, procedures,
and internal controls and third party risk manage-
ment. More information may be found at http://
www.gpo.gov/fdsys/pkg/FR-2009-12-16/html/E9-
29882.htm.
Last Day for Comments: February 16, 2010
HUD – PROPOSAL RULE ON S.A.F.E.
COMPLIANCE
HUD is requesting comments on the standards
relating to the S.A.F.E. (Secure and Fair En-
forcement Act of 2008) which affects mortgage
originator licensing. This is a hyper-technical
rule which mostly impacts state regulatory
agencies. More information can be found at
http://frwebgate5.access.gpo.gov/cgi-bin/
PDFgate.cgi?WAISdocID=937029210163+14+
2+0&WAISaction=retrieve.
Notice: February 16, 2010
FOMC – FOMC MEETING MINUTES AVAILABLE
The minutes of the January 26-27 meeting will be
available on the Federal Reserve’s website after
2:00 p.m. (Eastern Standard Time). http://
www.federalreserve.gov/monetarypolicy/
fomccalendars.htm.

Last Day for License Renewal: February 28, 2010
WASHINGTON – EXPIRED MORTGAGE
BROKERS LICENSES
According to the Washington State Department of
Financial Institutions, the formal renewal period for
Mortgage Broker licenses ended December 31,
2009. Licensees who did not successfully renew
prior to December 31, 2009 have until February
28, 2010 to reinstate their expired license. Until the
license is reinstated, the company cannot operate
as a Mortgage Broker in Washington. More infor-
mation can be obtained at http://www.dfi.wa.gov/
cs/mortgage-loan-originator-renewal.htm.
Effective Date: March 1, 2010
MASSACHUSETTS – PERSONAL
INFORMATION SAFEGUARDS
Massachusetts Office of Consumer Affairs and
Business Regulation (OCABR) has revised the
security standards affecting those who own, li-
cense or use consumer’s personal information as
defined in the legislation. The regulations make
clear that their approach to data security is a risk-
based approach that is especially important to
small businesses that may not handle a lot of per-
sonal information about customers. Under a risk-
based approach, a business, in developing a writ-
ten security program, should take into account its
size, nature of its business, the kinds of records it
maintains, and the risk of identity theft posed by its
operations. The press release can be found at
http://www.mass.gov/?pageID=ocapressreleas
e&L=1&L0=Home&sid=Eoca&b=pressrelease&f
=20090817_idtheftregs&csid=Eoca and the re-
vised regulations may be found at http://
w w w . m a s s . g o v / E o c a / d o c s /
idtheft/201CMR1700reg.pdf. Press release on
“Final Data Security Regulations” can be found at
h t t p : / / w w w . m a s s . g o v / ?
pageID=ocapressrelease&L=1&L0=Home&sid=Eo
ca&b=pressrelease&f=20091104_idtheft&csid=Eo
ca. “If an entity uses a third party to handle data,
the contract must include safeguard provisions by
March 1, 2012. Existing contracts are not required
to be updated before March 1, 2012, but new or
renewal contracts executed after March 1, 2010,
must include the provision.” The updated FAQ
(Frequently Asked Questions) can be found at
http://www.mass.gov/Eoca/docs/
idtheft/201CMR17faqs.pdf. Please Note: For those
concerned about Safeguard provisions at ICC, you
may wish to review our contractual modification
statement at http://www.iccdocs.com/Business/
GLB_FTC1.htm.
Effective Date: March 6, 2010
RHODE ISLAND – FORECLOSURE NOTICE
Rhode Island Senate Bill S.B. 1002A provides for
a 45-day pre-foreclosure notice and sets forth the
disclosure requirements and the penalties for non-
disclosure. It is anticipated that the RI Department
of Business Regulation will publish a model fore-
closure form prior to the effective date. More infor-
mation can be found at http://www.rilin.state.ri.us/
BillText09/SenateText09/S1002A.pdf.
Page 10
Last Day for Comments: March 12, 2010
FHFA – MINORITY AND WOMEN INCLUSION
IN PLANS
The Federal Housing Finance Agency is propos-
ing a regulation with the specific purpose of in-
cluding minority and women in all activities pro-
moted by the GSEs; including Fannie Mae,
Freddie Mac and the Federal Home Loan Banks.
More information can be found at http://
frwebgate6.access.gpo.gov/cgi-bin/
PDFgate.cgi?WAISdocID=248705118772+0+2
+0&WAISaction=retrieve.
Effective Date/Last Day for Comments:
March 15, 2010
HUD – HOPE FOR HOMEOWNERS
AMENDMENTS – FINAL RULE
“HOPE for Homeowners Program; Statutory
Transfer of Program Authority to HUD and Con-
forming Amendments to Adopt Recently En-
acted Statutory Changes; Final Rule imple-
ments the changes made to the HOPE for
Homeowners (H4H) program by the recently
enacted Helping Families Save Their Homes
Act of 2009.” More information can be found at
http://frwebgate4.access.gpo.gov/cgi-bin/
PDFgate.cgi?WAISdocID=246335162748+0+2
+0&WAISaction=retrieve.
FED Meeting Date: March 16, 2010
FOMC ONE DAY MEETING
Federal Reserve’s Federal Open Market Com-
mittee two day meeting. The announcement of
the meeting results will become available on the
Federal Reserve website after 2:00 p.m. (EST) at
http://www.federalreserve.gov/monetarypolicy/
fomccalendars.htm.
Effective Date: March 31, 2010
RHODE ISLAND – LICENSING
Rhode Island House Bill H.B. 5704 enacts provi-
sions of the federal Secure and Fair Enforcement
for Mortgage Licensing Act of 2009. Provisions
include “Each mortgage loan originator licensee
shall, on or before March 31, 2010 and every
March 31st thereafter, file with the director or the
director's designee evidence acceptable to the
director or the director's designee that said loan
originator licensee has filed with the nationwide
mortgage licensing system and registry a report
of condition, which shall be in such form and shall
contain such information as the nationwide mort-
gage licensing system and registry may require
along with evidence of meeting all of the pre-
scribed requirements. More information can be
found at http://www.rilin.state.ri.us/BillText09/
HouseText09/H5704A.pdf.

Effective Date: April 1, 2010
FEDERAL RESERVE – REGULATION-Z
PROVISIONS
The provisions of Regulation-Z which require a
subprime lender to implement escrow accounts
for the first twelve months of a loan for site-built
homes are in effect. Review this legislation care-
fully as the consequences of violating these rules
can be prohibitively expensive. The highlights of
the final rule can be found at http://
www.federalreserve.gov/newsevents/press/bcreg/
E1515A7162514E5EAD0C295B038E101F.htm
and the 419-page Draft Federal Register Notice
can be found at http://www.federalreserve.gov/
boarddocs/meetings/2008/20080714/
draftfedreg.pdf.
Effective Date: April 1, 2010
CONNECTICUT– NMLS LICENSURE
REQUIRED
Connecticut Senate Bill S.B. 948 IS “an act con-
cerning implementation of the S.A.F.E. mortgage
licensing act, the emergency mortgage assis-
tance program, foreclosure procedures and tech-
nical revisions to the banking statutes. Note:
there are multiple dates contained in this legisla-
tion. “No person shall engage in the business of
making residential mortgage loans or act as a
mortgage broker in this state unless such person
has first obtained the required license for its main
office and each branch office where such busi-
ness is conducted … Effective April 1, 2010, any
such person who is an individual shall also obtain
a mortgage loan originator license prior to con-
ducting such business unless such individual
does not engage directly in the activities of a
mortgage loan originator.” More information can
be found at http://www.cga.ct.gov/2009/ACT/Pa/
pdf/2009PA-00209-R00SB-00948-PA.pdf.
Effective Date: April 1, 2010
TEXAS– LICENSING
Texas House Bill H.B. 2779 is a bill related to
House Bill 10 and House Bill 2774 which imple-
ment the Safe and Fair Enforcement Mortgage
Licensing Act. This bill establishes the regulatory
framework for the licensing and regulation of
mortgage banker employees who originate resi-
dential mortgage loans. More information can be
obtained at http://www.legis.state.tx.us/
B i l l L o o k u p / H i s t o r y . a s p x ?
LegSess=81R&Bill=HB2779. The other bills may
be found at http://www.legis.state.tx.us/
B i l l L o o k u p / H i s t o r y . a s p x ?
LegSess=81R&Bill=HB10 and at http://
www.legis.state.tx.us/BillLookup/History.aspx?
LegSess=81R&Bill=HB2774.
Page 11
Effective Date: April 5, 2010
FHA– PREMIUM INCREASE
HUD Mortgagee Letter 2010-02 notes that the
FHA will collect an upfront mortgage insurance
premium of 2.25% (up from 1.75%) for FHA
loans where the case number is assigned on or
after April 5, 2010. The policy change will apply to
premiums for purchase money and refinance
transactions, including FHA-to-FHA credit-
qualifying and non-credit qualifying streamlined
refinance transactions. More information may be
found at http://www.hud.gov/offices/adm/
hudclips/letters/mortgagee/files/10-02ml.pdf.
FED Meeting Date: April 27/28, 2010
FOMC TWO DAY MEETING
Federal Reserve’s Federal Open Market Com-
mittee two day meeting. The announcement of
the meeting results will become available on the
Federal Reserve website after 2:00 p.m. (EST) at
http://www.federalreserve.gov/monetarypolicy/
fomccalendars.htm.
Effective Date: May 1, 2010
VA: GUIDANCE ON DISCLOSURE OF FEES
AND CHARGES
The VA, in response to HUD’s new RESPA rules
that took effect January 1, 2010, has issued cir-
cular 26-10-01 providing guidance on fees and
charges a veteran may pay when obtaining a VA-
guaranteed home loan. The circular also an-
nounces new documentation requirements for
lenders and the elimination of a previously re-
quired disclosure statement. The Guidance may
be found at http://www.homeloans.va.gov/
circulars/26_10_1.pdf.
Effective Date: June 1, 2010
FTC – REF FLAG RULE TO BE ENFORCED
The Federal Trade Commission’s Red Flags
Rule was promulgated under the Fair and Accu-
rate Credit Transactions Act. The Act required
covered agencies to develop regulations requir-
ing ‘creditors’ and ‘financial institutions’ to ad-
dress the risk of identity theft. The resulting Red
Flags Rule requires all such entities that have
‘covered accounts’ to develop and implement
written identity theft prevention programs to help
identify, detect, and respond to patterns, prac-
tices, or specific activities – known as ‘red flags’ –
that could indicate identity theft.” More informa-
tion about the Red Flags Rule can be found at
h t t p : / / w w w. f t c . g o v / b c p / e d u / m i c r o s i t e s /
redflagsrule. Those interested in the exclusions
from the program based on a revised definition of
“creditor” may want to review H. R. 3763 which
“amends the Fair Credit Reporting Act to provide
for an exclusion from Red Flag Guidelines for
certain businesses” which is currently under con-
sideration by the Senate Banking Committee.
The bill can be found at http://
frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?
dbname=111_cong_bills&docid=f:h3763eh.txt.pdf

Effective Date: June 1, 2010
ALABAMA – MORTGAGE LICENSING
Alabama Senate Bill S.B. 249 “establishes the
Alabama Secure and Fair Enforcement for Mort-
gage Licensing Act that requires the State Bank-
ing Department to license and regulate mortgage
loan originators and independent loan processors
and underwriters beginning on June 1, 2010 and
loss mitigation specialists beginning on July 1,
2011. In doing so, this bill imposes a $75 annual
and renewal license fee on loan originators and
independent loan processors and underwriters.
The licensure requirements would increase the
administrative and financial obligations as well as
fee receipts to the Department by an undeter-
mined amount that would be dependent upon the
number of licensees that come under the provi-
sions of this bill. In addition this bill requires all
mortgage loan originators licensed by the Depart-
ment to register with the Nationwide Mortgage
Licensing System and Registry which will require
the Department to participate in the registry at no
cost to the Department. This bill authorizes the
Department to impose civil penalties not to ex-
ceed $25,000 per violation. Mortgage loan origi-
nators, examination, licensing, and regulation,
exemptions, fees, background checks, surety
bonds, civil penalties, Secure and Fair Enforce-
ment for Mortgage Licensing Act or Alabama
S.A.F.E. Mortgage Licensing Act (2009-20312)”
More information can be found at http://
alisondb.legislature.state.al.us/acas/
A C T I O N V i e w F r a m e . a s p ?
TYPE=Instrument&INST=SB249&DOCPATH=se
archableinstruments/2009RS/Printfiles/
&PHYDOCPATH=//alisondb/acas/
searchableinstruments/2009RS/PrintFiles/
&DOCNAMES=SB249-int.pdf,SB249-
eng.pdf,SB249-enr.pdf.
FED Meeting Date: June 22/23, 2010
FOMC TWO DAY MEETING
Federal Reserve’s Federal Open Market Com-
mittee two day meeting. The announcement of
the meeting results will become available on the
Federal Reserve website after 2:00 p.m. (EST) at
http://www.federalreserve.gov/monetarypolicy/
fomccalendars.htm.
Effective Date: July 1, 2010
ARIZONA – LICENSURE, EXEMPTIONS AND
OTHER MATTERS
Arizona House Bill H.B. 2143 is an act to amend
the Arizona codes to conform to federal law re-
quiring the licensing of mortgage originators and
to establish the Mortgage Recovery Fund for
liabilities resulting loan originator wrongdoing.
While the law became effective July 13, 2009;
the new mortgage loan originator licensing provi-
sions will become effective July 1, 2010. More
information can be found at http://www.azleg.gov/
legtext/49leg/1r/bills/hb2143s.pdf.
Page 12
Effective Date: July 1, 2010
CALIFORNIA – MORTGAGE ORIGINATOR
LICENSING
California Senate Bill S.B. 36 requires mortgage
loan originators to be licensed. This omnibus
licensing bill brings California law into compliance
with the S.A.F.E. rules and regulations and pro-
vides for the participation in the Nationwide Mort-
gage Licensing System and Registry. This bill
provides that persons doing business in the State
of California are required to have a mortgage
loan originator license under the California Fi-
nance Lenders Law or the California Residential
Mortgage Lending Act after July 1, 2010. This is
an omnibus act containing many provisions.
More information can be found at http://
www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0001-
0050/sb_36_bill_20091011_chaptered.pdf
Effective Date: July 1, 2010
CALIFORNIA – FOREIGN LANGUAGE DOCU-
MENT REQUIREMENTS
California Assembly Bill S.B. 1160 would require
a supervised financial organization, as defined,
which negotiates a contract or agreement for a
loan or extension of credit secured by residential
real property, to deliver, prior to the execution of
the contract or agreement, and no later than 3
business days after receiving the written applica-
tion, a specified form in that language (primarily
in the languages of Spanish,
Chinese, Tagalog, Vietnamese, or Korean) sum-
marizing the terms of the contract or agreement,
as specified. If you do business in a foreign lan-
guage, you are cautioned to consult competent
legal and compliance counsel. More information
can be found at http://www.leginfo.ca.gov/pub/09
-10/bill/asm/ab_1151-1200/
ab_1160_bill_20091011_chaptered.pdf.
Effective Date: July 1, 2010
HAWAII – LICENSURE, EXEMPTIONS AND
OTHER MATTERS
Hawaii Senate Bill S.B. 1218 “allows the commis-
sioner of financial institutions to regulate, license,
examine, and enforce laws regulating mortgage
loan originators. Exempts mortgage loan origina-
tors from chapter 454, HRS, relating to mortgage
brokers and solicitors. While the law became
effective July 16, 2009 with the legislature vetoing
the Governor; the new mortgage loan originator
licensing provisions will become effective July 1,
2010. More information can be found at http://
legis.delaware.gov/LIS/lis145.nsf/vwLegislation/
SB+73/$file/legis.html?open.
Effective Date: July 1, 2010
HAWAII – MORTGAGE SERVICERS ACT
Hawaii House Bill H.B. 1071 “provides for the
licensing and regulation of mortgage servicers
that service residential mortgage loans secured
by real property located in the State of Hawaii.
(Continued on page 13)

(Continued from page 12)
Specifies prohibited practices for mortgage ser-
vicers. More information can be obtained at http://
www.capitol.hawaii.gov/session2009/bills/
HB1071_CD1_.pdf.
Effective Date: July 1, 2010
MAINE – UNIFORM POWERS OF ATTORNEY
ACT
Maine Senate Paper S.P. 507 enacts the
Maine Uniform Power of Attorney Act to con-
form to the Uniform Power of Attorney Act
drafted and approved by the National Confer-
ence of Commissioners on Uniform State
Laws. More information may be obtained at
http://www.mainelegislature.org/legis/bills/
bills_124th/chappdfs/PUBLIC292.pdf.
Deadline Licensing Date: July 1, 2010
VERMONT – LICENSING LENDERS/LOAN
OFFICERS
Vermont House Bill H.171, an act relating to
home mortgage protection for Vermonters, imple-
ments the requirements of the federal Secure
and Fair Enforcement (S.A.F.E.) Act.
“All individuals who, on or before December 31,
2009, are employed by a mortgage broker hold-
ing a valid Vermont license and who are author-
ized to act as a mortgage broker under such
license, or are employed by a lender holding a
valid Vermont license and are acting as a lender
or loan officer under such license, shall complete
the pre-licensing education and testing require-
ments and shall obtain a mortgage loan origina-
tor license required by this act no later than July
1, 2010. All other individuals must obtain a mort-
gage loan originator license as required by this
act prior to acting as a mortgage loan originator in
this state. More information can be found at http://
www.leg.state.vt.us/docs/2010/bills/Passed/H-
171.pdf.
Deadline Licensing Date: July 1, 2010
VIRGINIA – IMPLEMENTS SAFE LICENSING
ACT
Virginia House Bill H.B. 2031/Senate Bill S.B.
1171 “prohibits an individual from acting as, or
holding himself out to the public as being, a mort-
gage loan originator on or after July 1, 2010,
unless he has obtained a license from the State
Corporation Commission (SCC). The measure
implements requirements of the federal Secure
and Fair Enforcement for Mortgage Licensing Act
of 2008, which allows states to retain regulatory
authority over mortgage loan originators if they
enact legislation that provides for the licensing
and registration of such persons through the Na-
tionwide Mortgage Licensing System and Regis-
try. The measure establishes licensing proce-
dures and criteria, including requirements for
bonding, background checks, education, testing,
continuing education, investigations, examina-
tions, reporting, payment of annual fees, license
suspension and revocation, and fines. The
Page 13
measure also provides for the SCC, to the extent
practicable, to include in any written memoran-
dum of understanding or other written agreement
with the Registry provisions that address informa-
tion security, disclosure of pending or incom-
pletely adjudicated regulatory matters, licensing
tests limited to specific products and services,
reports on examination results, privilege or confi-
dentiality of information, and review of the Regis-
try's proposed budget, fees, and audited financial
statements.” More information can be found at
http://leg1.state.va.us/cgi-bin/legp504.exe?
091+ful+CHAP0453.
Effective Date: July 1, 2010
(Previously Exempt)
WASHINGTON – MORTGAGE BROKER
LICENSING
Washington House Bill H.B. 1749 regulates busi-
ness practices of mortgage brokers for compli-
ance with the secure and fair enforcement
(SAFE) for mortgage licensing act of 2008. The
bill modifies licensing, education, and back-
ground check standards for mortgage brokers
and loan originators. Under the SAFE Act, all
states must have a system of licensing in place
for residential mortgage loan originators by Au-
gust 1, 2009 that meets national definitions and
minimum standards, including:
 criminal history and credit background
checks;
 pre-licensure education;
 pre-licensure testing;
 continuing education;
 net worth, surety bond or recovery fund; and
 licensing mortgage loan originators through
a Nationwide Mortgage Licensing System
In order to facilitate an orderly transition to licens-
ing and minimize disruption in the mortgage mar-
ketplace, sections 4, 6 through 9, 11, 12, 14, and
17 are effective January 1, 2010; mortgage loan
originators who were previously exempt as exclu-
sive agents under RCW 6 19.146.020(1) (a) (ii)
must obtain a mortgage loan originator license
under this chapter before July 1, 2010. More
information can be found at http://
apps.leg.wa.gov/documents/billdocs/2009-10/
Pdf/Bills/House%20Passed%20Legislature/1749
-S.PL.pdf.
Deadline Licensing Date: July 1, 2010
WYOMING – MORTGAGE ORIGINATOR
LICENSING
Wyoming House Bill H.B. 169 is “AN ACT relat-
ing to mortgage loan originators; modifying the
Wyoming Residential Mortgage Practices Act;
modifying the Uniform Consumer Credit Code;
amending and providing new definitions; provid-
ing exceptions for licenses; providing for surety
bonds; providing for confidentiality; providing
coordination with and disclaimer to a national
registry system; providing for enforcement; re-
(Continued on page 14)

(Continued from page 13)
quiring reports; providing for loan origination li-
censing and registration; authorizing rulemaking;
providing for processing applications; providing
for pre-licensing education; providing for continu-
ing education; requiring testing; providing for
license renewal; requiring fees; making conform-
ing amendments; repealing a license exemption;
and providing for an effective date.” “These
changes to the Wyoming Residential Mortgage
Practices Act and the Uniform Consumer Credit
Code are necessary to comply with new federal
requirements enacted in 2008.” More information
can be found at http://legisweb.state.wy.us/2009/
Engross/HB0169.pdf.
Effective Date: July 31, 2010
HUD – MANDATORY COMPLIANCE WITH
SAFE MORTGAGE LICENSING ACT
(Note Exemption)
HUD has set July 31st as the deadline for all loan
originators to be licensed in their respective
states under a system that is SAFE-Act compli-
ant. The only exemption involves originators who
possess a valid license that was granted under
another system that was in-place prior to a SAFE
Act-compliant system; these people must be
licensed under a SAFE Act-compliant system by
December 31st, 2010. Guidance on HUD require-
ments involving the SAFE Act Licensing program
can be found at http://www.hud.gov/offices/hsg/
sfh/mps/smlicact.cfm.
Deadline Licensing Date: July 31, 2010
COLORADO – MANDATORY ORIGINATION
LICENSING
Colorado House Bill H.B., 1085 concerns “the
regulation of mortgage loan originators, and, in
connection therewith, modifying the ‘Mortgage
Broker Licensing Act’ to conform to the federal
"Secure and Fair Enforcement (S.A.F.E.) for
mortgage licensing act of 2008,” exempting cer-
tain financial institutions from the list of prohibited
practices under the act, and making an appro-
priation.”
“On or after July 31, 2010, unless licensed by the
director and registered with the nationwide mort-
gage licensing system and registry as a state-
licensed loan originator, an individual shall not
originate or offer to originate a mortgage or act or
offer to act as a mortgage loan originator.” More
information can be found at http://
www.leg.state.co.us/clics/clics2009a/csl.nsf/
fsbillcont2/8538d858778cab9f87257537001d21d9?
OpenDocument&Click=87257426007F3773.89755
51e51fa01d087256dd30080e1d5/$Body/0.2F64.
Effective Date: July 31, 2010
CONNECTICUT– NMLS LICENSURE
REQUIRED: INDEPENDENT CONTRACTORS
Connecticut Senate Bill S.B. 948 IS “an act con-
cerning implementation of the S.A.F.E. mortgage
licensing act, the emergency mortgage assis-
tance program, foreclosure procedures and tech-
Page 14
nical revisions to the banking statutes. Note:
there are multiple dates contained in this legisla-
tion. “Effective July 31, 2010, a loan processor or
underwriter who is an independent contractor
may not engage in the activities of a loan proces-
sor or underwriter unless such independent con-
tractor loan processor or underwriter obtains and
maintains a license as a mortgage loan originator
under section 36a-489, as amended by this act.
Each independent contractor loan processor or
underwriter licensed as a mortgage loan origina-
tor shall have and maintain a valid unique identi-
fier issued by the system. More information can
be found at http://www.cga.ct.gov/2009/ACT/Pa/
pdf/2009PA-00209-R00SB-00948-PA.pdf.
Effective Date: July 31, 2010
DELAWARE – LICENSURE, EXEMPTIONS
AND OTHER MATTERS
Delaware House Bill S.B. 73 is an act to amend
title 5 of the Delaware code to implement the
United Sates Secure and Fair Enforcement for
mortgage licensing act of 2008 (U.S. Public Law
110-289). While the law became effective July 6,
2009; the new mortgage loan originator licensing
provisions will become effective July 31, 2010.
More information can be found at
http://legis.delaware.gov/LIS/lis145.nsf/
vwLegislation/SB+73/$file/legis.html?open.
Effective Date: July 31, 2010
ILLINOIS – MORTGAGE ORIGINATOR
LICENSING
Illinois House Bill H.B. 4011 amends the Resi-
dential Mortgage License Act of 1987 to comply
with the Nationwide Mortgage Licensing System
and Registry; provides for requirements, educa-
tion, penalties and other matters pertaining to
licensing as a mortgage originator. Some licens-
ing provisions take effect on January 1, 2011.
More information can be found at http://
www.ilga.gov/legislation/publicacts/96/PDF/096-
0112.pdf.
Effective Date: July 31, 2010
LOUISIANA – LICENSURE AND OTHER
MATTERS
Louisiana House Bill H.B. 810 enacts the licens-
ing provisions to conform to federal guidelines
and to prohibit certain acts relating to mortgage
loans. No person shall engage in any residential
mortgage lending activity in this state unless such
person has first obtained a license which shall be
maintained annually and be accompanied by a
unique identifier that shall be used in accordance
with the prevailing rules. The provisions of the
law shall not apply to a person whose residential
mortgage lending activities were not subject to
the licensing requirements on July 30, 2009, or a
person engaged in residential mortgage lending
activities that was exempt from licensure on July
30, 2009. While the law became effective July
31, 2009; the new mortgage loan originator li-
(Continued on page 15)

(Continued from page 14)
censing provisions will become effective July 31,
2010. More information can be found at http://
www.legis.state.la.us/billdata/
streamdocument.asp?did=668805.
Effective Date: July 31, 2010
MAINE – NMLS IMPLEMENTATION
Maine Senate Bill S.P. 523 (LD 1439) is “an Act
to Conform State Mortgage Laws with Federal
Laws.” The act was passed as an emergency
measure to insure compliance with federal dead-
lines. More information can be found at http://
www.mainelegislature.org/legis/bills/bills_124th/
billpdfs/SP052301.pdf.
Effective Date: July 31, 2010
MASSACHUSETTS – MORTGAGE
ORIGINATOR LICENSING
Massachusetts Senate Bill S.B. 452 is an act
adopting the federal Secure and Fair Enforce-
ment for Mortgage Licensing Act of 2008. For all
individuals other than individuals described in
subsection (b) shall be July 31, 2010, or such
later date approved by the Secretary of the U.S.
Department of Housing and Urban Development.
For all individuals licensed as mortgage loan
originators as of the enactment of this chapter
shall be January 1, 2011. More information can
be found at http://www.mass.gov/legis/bills/
senate/186/st00pdf/st00452.pdf.
Effective Date: July 31, 2010
MICHIGAN – MORTGAGE ORIGINATOR
LICENSING
Michigan Senate Bill S.B. 462 is an act to provide
for the licensing of mortgage loan originators; to
regulate the business practices of mortgage loan
originators; to establish certain obligations of
employees and principals of mortgage loan origi-
nators; to prescribe the powers and duties of
certain state agencies and officials; and to pro-
vide remedies and prescribe penalties. An indi-
vidual shall not engage in the business of a mort-
gage loan originator with respect to any dwelling
located in this state without first obtaining and
maintaining annually a license under this act.
Each licensed mortgage loan originator must
register with and maintain a valid unique identifier
issued by the nationwide mortgage licensing
system and registry. An individual engaged in the
business of a mortgage loan originator is not
required to obtain and maintain a license under
this act until July 31, 2011 if that individual is em-
ployed exclusively by a mortgage servicer; if that
individual is authorized to perform loan modifica-
tion activities concerning existing residential mort-
gage loans, and not to originate new residential
mortgage loans or perform any other activities of
a mortgage loan originator, on behalf of that
mortgage servicer; and if this extension of time is
not inconsistent with any guideline, rule, regula-
tion, or interpretative letter of the United States
department of housing and urban development
Page 15
concerning the interpretation of the SAFE act and
its applicability to loan modification activities.
More information can be found at http://
www.legislature.mi.gov/documents/2009-2010/
publicact/pdf/2009-PA-0075.pdf.
Effective Date: July 31, 2010
MICHIGAN – LICENSING
Michigan Senate Bill S.B. 463 would amend the
Mortgage Brokers, Lenders, and Servicers Li-
censing Act (MBLSLA) to require a loan officer to
be registered under the proposed Mortgage Loan
Originator Licensing Act, rather than under the
MBLSLA as currently required. More information
can be found at http://www.legislature.mi.gov/
documents/2009-2010/publicact/pdf/2009-PA-
0076.pdf.
Effective Date: July 31, 2010
MICHIGAN – LICENSING
Michigan Senate Bill S.B. 464 would amend the
Secondary Mortgage Loan Act to require a sec-
ondary mortgage loan officer to be registered
under the proposed Act, rather than under the
Secondary Mortgage Loan Act as currently re-
quired. More information can be found at http://
www.legislature.mi.gov/documents/2009-2010/
publicact/pdf/2009-PA-0077.pdf.
Effective Date: July 31, 2010
MICHIGAN – LICENSING
Michigan Senate Bill S.B. 465 would amend the
Consumer Financial Services Act to prohibit a
licensee acting as a mortgage broker or mort-
gage lender from employing or engaging an indi-
vidual as a loan officer to originate mortgage
loans unless he or she were a licensed loan offi-
cer under the proposed Act. More information
can be found at http://www.legislature.mi.gov/
documents/2009-2010/publicact/pdf/2009-PA-
0078.pdf.
Effective Date: July 31, 2010
MISSOURI – LOAN ORIGINATOR LICENSING
Missouri House Bill H.B. 382 “repeals the Resi-
dential Mortgage Brokers License Act and estab-
lishes in its place the Missouri Secure and Fair
Enforcement for Mortgage Licensing and Resi-
dential Mortgage Brokers Licensing Act.
“Requires, beginning July 31, 2010, or the later
date approved by the Secretary of the United
States Department of Housing and Urban Devel-
opment, an individual engaging in the business of
a mortgage loan originator to be licensed, em-
ployed, and acting under the supervision of a
single, Missouri-licensed residential mortgage
broker, with the exception of certain specified
individuals. Each licensed mortgage loan origi-
nator must register with and maintain a valid
unique identifier issued by the Nationwide Mort-
gage Licensing System and Registry (NMLSR).
The unique identifier must be clearly shown on all
(Continued on page 16)

(Continued from page 15)
residential mortgage loan application forms, so-
licitations, or advertisements, including business
cards, web sites, and any other documents as
required by the Director of the Division of
Finance within the Department of Insurance,
Financial Institutions and Professional Registra-
tion. Other details relating to licensing are in-
cluded; including surety bonds and penalties for
civil violations of the Act. More information can be
found at http://www.house.mo.gov/billtracking/
bills091/biltxt/truly/HB0382T.HTM with an easier-
to-read summary located at http://house.mo.gov/
content.aspx?info=/bills091/bilsum/truly/
sHB382T.htm.
Effective Date: July 31, 2010
NEW HAMPSHIRE – MORTGAGE
ORIGINATOR LICENSING
New Hampshire House Bill H.B. 610 provides
consumer protection from certain practices of
mortgage bankers, mortgage brokers, and mort-
gage loan originators and implements the
S.A.F.E. mortgage licensing act. Mortgage Origi-
nators must be licensed by July 31, 2010. More
information can be found at http://
www.gencourt.state.nh.us/legislation/2009/
HB0610.html.
Effective Date: July 31, 2010
NEW YORK – LICENSURE, EXEMPTIONS
AND OTHER MATTERS
New York Assembly Bill A.B. 6924 is an act to
amend the banking law, in relation to conforming
the regulation of mortgage loan originators in
New York Law to the federal law; and to repeal
article 12-E of such law relating thereto. While the
law became effective July 11, 2009; the new
mortgage loan originator licensing provisions will
become effective July 31, 2010. More information
can be found at http://assembly.state.ny.us/leg/?
bn=A06924&sh=t.
Effective Date: July 31, 2010
NORTH CAROLINA – MORTGAGE
ORIGINATOR LICENSING
North Carolina House Bill H.B. 1523 an act to
rewrite the North Carolina Mortgage Lending Act
in order to conform to the requirements of federal
law. The licensing requirements are effective July
31, 2010 for “exclusive mortgage brokers” and by
December 31, 2009 for “limited loan officers.”
According to the definitions, "Exclusive mortgage
broker" means an individual who acts as a mort-
gage broker exclusively for a single mortgage
lender or mortgage broker licensee or a single
exempt mortgage lender and who is licensed
pursuant to G.S. 53-244.050(b)(3). More informa-
tion can be found at http://www.ncleg.net/
Sessions/2009/Bills/House/PDF/H1523v6.pdf.
Page 16
Deadline Licensing Date: July 31, 2010
OKLAHOMA – MORTGAGE LICENSING
Oklahoma Senate Bill S.B. 1062 creates the
Oklahoma Secure and Fair Enforcement (SAFE)
for Mortgage Licensing Act to insure confor-
mance with federal law. “The effective date for
licensing all entities and individuals, including
those currently licensed as mortgage brokers or
mortgage loan originators, shall be July 31, 2010
More information can be found at http://
webserver1.lsb.state.ok.us/2009-10bills/SB/
SB1062_ENGR.RTF.
Effective Date: July 31, 2010
OREGON – MORTGAGE ORIGINATOR
LICENSING
Oregon House Bill H.B. 2189 prohibits individ-
ual from engaging in business as mortgage
loan originator without obtaining license from
Director of Department of Consumer and Busi-
ness Services and obtaining unique identifier
from Nationwide Mortgage Licensing System
and Registry. More information can be found at
http://www.leg.state.or.us/09reg/measpdf/
hb2100.dir/hb2189.en.pdf.
FED Meeting Date: August 10, 2010
FOMC ONE DAY MEETING
Federal Reserve’s Federal Open Market Com-
mittee two day meeting. The announcement of
the meeting results will become available on the
Federal Reserve website after 2:00 p.m. (EST) at
http://www.federalreserve.gov/monetarypolicy/
fomccalendars.htm.
FED Meeting Date: September 21, 2010
FOMC ONE DAY MEETING
Federal Reserve’s Federal Open Market Com-
mittee two day meeting. The announcement of
the meeting results will become available on the
Federal Reserve website after 2:00 p.m. (EST) at
http://www.federalreserve.gov/monetarypolicy/
fomccalendars.htm.
Effective Date: October 1, 2010
FEDERAL RESERVE – REGULATION-Z
PROVISIONS
The provisions of Regulation-Z which require a
subprime lender to implement escrow accounts
for the first twelve months of a loan for manufac-
tured housing are now in effect. Review this
legislation carefully as the consequences of vio-
lating these rules can be prohibitively expensive.
The highlights of the final rule can be found at
http://www.federalreserve.gov/newsevents/
press/bcreg/E1515A7162514E5EAD0C295B0
38E101F.htm and the 419-page Draft Federal
Register Notice can be found at http://
www.federalreserve.gov/boarddocs/
meetings/2008/20080714/draftfedreg.pdf.

Effective Date: October 1, 2010
FLORIDA – NMLS IMPLEMENTATION
(OMNIBUS BILL)
Florida Senate Bill S.B. 2226 “Authorizes the
Financial Services Commission to adopt rules
relating to compliance with the S.A.F.E. Mortgage
Licensing Act of 2008. Provides exemptions from
part I, II, and III of ch. 494, F.S., relating to the
licensing and regulation of loan originators, mort-
gage brokers, and mortgage lenders. Exempts
certain attorneys from the definition of
‘foreclosure-rescue consultant,’ etc. This is an
omnibus bill which contains multiple provisions
and multiple effective dates. More information
can be found at http://www.myfloridahouse.gov/
Sections/Documents/loaddoc.aspx?
FileName=_s2226er.DOCX&DocumentType=
Bill&BillNumber=2226&Session=2009.
FED Meeting Date: November 2/3, 2010
FOMC TWO DAY MEETING
Federal Reserve’s Federal Open Market Com-
mittee two day meeting. The announcement of
the meeting results will become available on the
Federal Reserve website after 2:00 p.m. (EST) at
http://www.federalreserve.gov/monetarypolicy/
fomccalendars.htm.
Effective Date: December 1, 2010
CALIFORNIA – MORTGAGE ORIGINATOR
LICENSING
California Senate Bill S.B. 36 requires mortgage
loan originators to be licensed. This omnibus
licensing bill brings California law into compliance
with the S.A.F.E. rules and regulations and pro-
vides for the participation in the Nationwide Mort-
gage Licensing System and Registry. This bill
provides that certain persons doing business in
the State of California are required to have a
mortgage loan originator license endorsement
under the Real Estate Law, as set forth in the
bill, after December 1, 2010.This is an omnibus
act containing many provisions. More information
can be found at http://www.leginfo.ca.gov/
pub/09-10/bill/sen/sb_0001-0050/
sb_36_bill_20091011_chaptered.pdf
FED Meeting Date: December 14, 2010
FOMC ONE DAY MEETING
Federal Reserve’s Federal Open Market Com-
mittee two day meeting. The announcement of
the meeting results will become available on the
Federal Reserve website after 2:00 p.m. (EST) at
http://www.federalreserve.gov/monetarypolicy/
fomccalendars.htm.
Effective Date: December 31, 2010
HUD – MANDATORY COMPLIANCE WITH
SAFE MORTGAGE LICENSING ACT
(For those Previously Exempt)
HUD has set December July 31, 2010 as the
deadline for all loan originators who may have
been exempt from obtaining a mortgage origina-
Page 17
tor’s license under a SAFE Act-compliant system
due to an existing mortgage originator’s license
issued under a non-SAFE Act-compliant system
to be licensed in their respective states under a
system that is SAFE-ACT compliant. Guidance
on HUD requirements involving the SAFE Act
Licensing program can be found at http://
www.hud.gov/offices/hsg/sfh/mps/smlicact.cfm.
Effective Date: January 1, 2011
FED/FTC – RISK-BASED PRICING NOTICE
AND FREE CREDIT REPORT
“The Federal Reserve Board and the Federal
Trade Commission final rules generally require a
creditor to provide a consumer with a notice
when, based on the consumer's credit report, the
creditor provides credit to the consumer on less
favorable terms than it provides to other consum-
ers. Consumers who receive this ‘risk-based
pricing’ notice will be able to obtain a free credit
report to check the accuracy of the report.
Risk-based pricing refers to the practice of setting
or adjusting the price and other terms of credit
provided to a particular consumer based on the
consumer's creditworthiness. The final rules pro-
vide creditors with several methods for determin-
ing which consumers must receive risk-based
pricing notices.
As an alternative to providing risk-based pricing
notices, the final rules permit creditors to provide
consumers who apply for credit with a free credit
score and information about their score. The final
rules implement section 311 of the Fair and Ac-
curate Credit Transactions Act of 2003, which
amends the Fair Credit Reporting Act. More infor-
mation can be found at http://
www.federalreserve.gov/newsevents/press/
bcreg/bcreg20091222b1.pdf.
Effective Date: January 1, 2011
REGULATORS – GLBA MODEL PRIVACY
FORMS
The Regulatory Agencies (Fed, CFTC, FDIC,
FTC, NCUA, OCC, OTS, and SEC) have
adopted a final model privacy notice to comply
with the provisions of the GLBA (Gramm-Leach-
Bliley Act). Agencies are adopting a model pri-
vacy form that financial institutions may rely on as
a safe harbor to provide disclosures under the
privacy rules. In addition, the Agencies other than
the SEC are eliminating the safe harbor permit-
ted for notices based on the Sample Clauses
currently contained in the privacy rules if the no-
tice is provided after December 31, 2010. Simi-
larly, the SEC is eliminating the guidance associ-
ated with the use of notices based on the Sample
Clauses in its privacy rule if the notice is provided
after December 31, 2010. The proposed rule can
be found at http://www.ftc.gov/privacy/
privacyinitiatives/PrivacyModelForm_Rule.pdf.
The model form can be found at http://ftc.gov/
privacy/privacyinitiatives/PrivacyModelForm.pdf
and the “No Opt-Out” version can be found at
h t t p : / / f t c . g o v / pr i v a c y/ pr i v a c yi n i t i a t iv e s /
(Continued on page 18)

(Continued from page 17)
PrivacyModelForm.pdf. Note: Additional provi-
sions become effective on January 1, 2012.
Effective Date: January 1, 2011
ILLINOIS – MORTGAGE ORIGINATOR
LICENSING
Illinois House Bill H.B. 4011 amends the Resi-
dential Mortgage License Act of 1987 to comply
with the Nationwide Mortgage Licensing System
and Registry; provides for requirements, educa-
tion, penalties and other matters pertaining to
licensing as a mortgage originator. Some licens-
ing provisions take effect on January 1, 2011.
More information can be found at http://
www.ilga.gov/legislation/publicacts/96/PDF/096-
0112.pdf.
Effective Date: January 1, 2011
MASSACHUSETTS – MORTGAGE
ORIGINATOR LICENSING
Massachusetts Senate Bill S.B. 452 is an act
adopting the federal Secure and Fair Enforce-
ment for Mortgage Licensing Act of 2008. For all
individuals other than individuals described in
subsection (b) shall be July 31, 2010, or such
later date approved by the Secretary of the U.S.
Department of Housing and Urban Development.
For all individuals licensed as mortgage loan
originators as of the enactment of this chapter
shall be January 1, 2011. More information can
be found at http://www.mass.gov/legis/bills/
senate/186/st00pdf/st00452.pdf.
Effective Date: January 1, 2011
NEVADA – EDUCATIONAL REQUIREMENTS
FOR ESCROW AGENTS AND AGENCIES
Section 3 of Nevada Assembly Bill A.B.513 which
establishes education requirements for an es-
crow agent or agency is now effective. More
information can be found at http://
www. leg.state.nv.us/75th2009/Bills/AB/
AB513_EN.pdf.
Effective Date: January 1, 2011 (Licensed
Before July 1, 2009)
WEST VIRGINIA – MORTGAGE ORIGINATOR
LICENSING
West Virginia Senate Bill S.B. 532 implements
regulations necessary for compliance with the
secure and fair enforcement (SAFE) for mort-
gage licensing act of 2008. Modifies licensing,
educations, and background check standards for
consumer loan companies and mortgage loan
originators. Warning: there are multiple effec-
tive dates contained within this legislation.
Please check the effective dates carefully. For
all licensed mortgaged originators who were li-
censed before July 1, 2009, the bill’s provisions
are effective on January 1, 2011. For all others,
including new registrants for licensing, the bill’s
provisions are effective on January 31, 2010,
More information can be found at http://
www.legis.state.wv.us/Bill_Status/
Page 18
bills_text.cfm?billdoc=SB532 SUB2
enr.htm&yr=2009&sesstype=RS&i=532.
FED Meeting Date: January 25/26, 2011
FOMC TWO DAY MEETING
Federal Reserve’s Federal Open Market Com-
mittee two day meeting. The announcement of
the meeting results will become available on the
Federal Reserve website after 2:00 p.m. (EST) at
http://www.federalreserve.gov/monetarypolicy/
fomccalendars.htm.
Effective Date: July 31, 2011
MICHIGAN – MORTGAGE ORIGINATOR
LICENSING – PREVIOUSLY EXEMPT
PERSONS
Michigan Senate Bill S.B. 462 is an act to provide
for the licensing of mortgage loan originators; to
regulate the business practices of mortgage loan
originators; to establish certain obligations of
employees and principals of mortgage loan origi-
nators; to prescribe the powers and duties of
certain state agencies and officials; and to pro-
vide remedies and prescribe penalties. An indi-
vidual engaged in the business of a mortgage
loan originator is not required to obtain and main-
tain a license under this act until July 31, 2011 if
that individual is employed exclusively by a mort-
gage servicer; if that individual is authorized to
perform loan modification activities concerning
existing residential mortgage loans, and not to
originate new residential mortgage loans or per-
form any other activities of a mortgage loan origi-
nator, on behalf of that mortgage servicer; and if
this extension of time is not inconsistent with any
guideline, rule, regulation, or interpretative letter
of the United States department of housing and
urban development concerning the interpretation
of the SAFE act and its applicability to loan modi-
fication activities. More information can be found
at http://www.legislature.mi.gov/documents/2009-
2010/publicact/pdf/2009-PA-0075.pdf.
Effective Date: July 31, 2011
SOUTH CAROLINA – OMNIBUS LICENSING
BILL – ADDS MORTGAGE SERVICES TO
LICENSURE REQUIREMENTS
South Carolina Senate Bill S. 673 is “an act to
amend the code of laws of South Carolina, 1976,
so as to enact the ‘South Carolina Mortgage
Lending Act. “The definition of loan originator
does not apply to an individual servicing a
mortgage loan as that term is defined in this
chapter until July 31, 2011, unless the United
States Department of Housing and Urban Devel-
opment or a court of competent jurisdiction deter-
mines before that time that those individuals ser-
vicing mortgage loans are ‘loan originators’ as
that term is defined in the SAFE Act pursuant to
Section 1508 of Title V of The Housing and Eco-
nomic Recovery Act of 2008, Public law 110‑-
289.More information can be obtained at http://
www.scstatehouse.gov/sess118_2009-2010/
bills/673.docx.

Effective Date: January 1, 2012
REGULATORY AGENCIES – MODEL PRIVACY
FORMS
The Regulatory Agencies (Fed, OCC, FDIC,
OTS, NCUA, FTC, CFTC, and SEC) have pub-
lished their final amendments to their rules that
implement the privacy provisions of Subtitle A of
Title V of the Gramm-Leach-Bliley Act (``GLB
Act''). These rules require financial institutions to
provide initial and annual privacy notices to their
customers. Pursuant to Section 728 of the Finan-
cial Services Regulatory Relief Act of 2006, the
Agencies are adopting a model privacy form that
financial institutions may rely on as a safe harbor
to provide disclosures under the privacy rules. In
addition, the Agencies other than the SEC are
eliminating the safe harbor permitted for notices
based on the Sample Clauses currently con-
tained in the privacy rules if the notice is provided
after December 31, 2010. Similarly, the SEC is
eliminating the guidance associated with the use
of notices based on the Sample Clauses in its
privacy rule if the notice is provided after Decem-
ber 31, 2010. The rule is effective on December
31, 2009, except for the following amendments,
which are effective January 1, 2012: Instructions
3B, 10B, 17B, 24B, 31B, 38B, 45B, and 52B re-
moving paragraphs (g) to 12 CFR 40.6, 216.6,
332.6, 573.6, and 716.6, 16 CFR 313.6, and 17
CFR 160.6 and 248.6, respectively; and Instruc-
tions 7B, 14B, 21B, 28B, 35B, 42B, 49B, and 55B
removing Appendixes B to 12 CFR parts 40, 216,
332, 573, and 716, 16 CFR part 313, and 17
CFR parts 160 and 248, respectively. More infor-
mation may be found at h t t p : / /
frwebgate6.access.gpo.gov/cgi-bin/
PDFgate.cgi?WAISdocID=931171186187+2+2
+0&WAISaction=retrieve
Effective Date: January 1, 2014
FDIC – DEPOSIT INSURANCE RETURNS TO
$100,000
The FDIC has issued Financial Institution Letter
FIL-22-2009 which extends the temporary in-
crease in the standard maximum deposit insur-
ance amount (SMDIA) to $250,000 per depositor
through December 31, 2013. The SMDIA will
return to its former limit of $100,000 per depositor
unless this provision is renewed. FIL-22-2009
can be found at http://www.fdic.gov/news/news/
financial/2009/fil09022.html.
OTHER NEWS
WILL THEY NEVER LEARN?
The liberals, fond of pursuing their core con-
stituency by implementing programs for the
poor and disadvantaged are, once again, at-
tempting to promote legislative programs
which encourage unsound lending practices.
How many times has the FHA and others told
Congress that downpayment assistance pro-
grams, aka “laundered downpayment funds,”
Page 19
are a risk to the mortgage industry because
they essentially allow consumers to buy prop-
erties with little skin in the game? Even the IRS
has refereed to seller-funded downpayment
programs as scams.
Now we find Maxine Waters (D-CA), the Rep-
resentative who thought that Fannie Mae and
Freddie Mac were well-capitalized, soundly
managed and resisted all attempts at reform,
along with Representatives Al Green (D-TX)
and Gary Miller (R-CA) are introducing H.R.
600 to legislatively mandate the use of “seller
funded downpayment assistance.” Studies
from the HUD’s Office of the Inspector General
and the Government Accountability Office
have strongly suggested that this practice be
eliminated. Just another example of the gov-
ernment meddling in the housing market on
behalf of certain special interests – and then
disclaiming all responsibility when there is a
meltdown in the mortgage marketplace. For
those wishing to read a copy H.R. 600, it can
be found at http://frwebgate.access.gpo.gov/cgi-
bin/getdoc.cgi?dbname=111_cong_bills&docid=f:
h600ih.txt.pdf.
FORMER FED CHAIRMAN PAUL VOLKER
RE-SURFACES WITH “VOLKER RULE”
Former Fed Chairman Paul Volker likes the idea
of re-instituting a version of the Glass-Steagall
act which prohibited a bank holding company
from owning other financial companies and which
was repealed in 1999 by the Gramm–Leach–
Bliley Act. According to the Obama White House,
the Volker proposal would work with Congress
and regulatory agencies to ensure that no bank
or financial institution that contains a bank will
own, invest in or sponsor a hedge fund or a pri-
vate equity fund, or proprietary trading operations
unrelated to serving customers for its own profit.
And to limit the consolidation of our financial sec-
tor, the Volker Plan would attempt to place
broader limits on the excessive growth of the
market share of liabilities at the largest financial
firms, to supplement existing caps on the market
share of deposits. The White House statement
can be found at http://www.whitehouse.gov/the-
press-office/president-obama-calls-new-
restrictions-size-and-scope-financial-institutions-
rein-e.
FCC PROPOSES NEW “ROBOCALL” RULES
Mortgage originators and others in the financial
industry who use pre-programmed telephone
dialers might be facing stricter rules relating to so-
called “robocalls.” “The FCC has proposed revi-
sions to its rules under the Telephone Consumer
Protection Act (TCPA) to further empower resi-
dential telephone subscribers to avoid unwanted
telephone solicitations. The proposals would
require sellers and telemarketers to obtain written
consent from recipients before making prere-
corded telemarketing calls, commonly referred to
as “robocalls,” even when the caller has an es-
tablished business relationship with the con-
sumer.
(Continued on page 20)

(Continued from page 19)
According to the FCC, key revisions to existing
rules would include:
 Requiring sellers and telemarketers to obtain
telephone subscribers’ express written con-
sent (including electronic methods of con-
sent) to receive prerecorded telemarketing
calls, even when there exists an established
business relationship between the caller and
the consumer;
 Requiring that prerecorded telemarketing
calls include an automated, interactive
mechanism by which a consumer may “opt
out” of receiving future prerecorded mes-
sages from a seller or telemarketer; and,
 Exempting certain federally regulated health-
care-related calls from the general prohibi-
tion on prerecorded telemarketing calls to
residential telephone lines. (These calls are
currently not specifically exempted from the
prerecorded message rules.)
More information on this proposed rulemaking
can be found at http://hraunfoss.fcc.gov/
edocs_public/attachmatch/DOC-295839A2.pdf.
PRIVACY & SECURITY
GET RID OF YOUR OLDER BROWSER!
Internet security experts may be divided on which
browser is more secure, offers a better browsing
experience, is extensible to include new applica-
tions or is more robust – but they all agree on
one thing: get rid of older browsers, especially
those which have not been updated with the lat-
est security patches. For those operating with
anything less than Microsoft’s Internet Explorer
Version 8, bite the bullet and download IE8. The
inconvenience of relatively infrequent problems
cannot be compared with a compromised com-
puter and corrupted data resulting from a vulner-
able browser. And it’s not only the browser itself
that is at risk. Be sure that your other add-ins,
such as Adobe’s Flash are either updated or
disabled.
PASSWORD SURVEY PROVES SECURITY
MAY NOT SURVIVE LAZINESS AND STUPIDITY
In a very large sampling of passwords used on
popular systems, “123456” ranked number one;
followed by: “12345,” 123456789,” “password,”
“iloveyou,” “princess” and others of a similar na-
ture. Should you be among the users that pay
homage to your loved ones, celebrities or use
easily-remembered passwords like telephone
numbers, home addresses, why not resolve to
add another easy-to-remember element that
consists of special characters and alternate up-
per and lower case alphanumeric characters.
You can change this number frequently and still
maintain some level of control over your pass-
word collection. Remember, separate passwords
for all of your activities. And should you fail to
Page 20
remember a password, it is far easier to ask for a
reset than deal with the identity theft that comes
with trying all of your other passwords on a single
account.
FTC HITS MORTGAGE COMPANY WITH
PENALTY FOR IMPROPERLY DISCARDING
DOCUMENTS
“A mortgage broker who discarded consumers’
personal financial records in a publicly-accessible
dumpster paid a $35,000 civil penalty to settle
Federal Trade Commission charges. According
to an FTC complaint filed in December 2008, the
defendant improperly disposed of about 40 boxes
of sensitive consumer records collected by com-
panies he had owned, including tax returns, mort-
gage applications, bank statements, photocopies
of credit cards and drivers’ licenses, and at least
230 credit reports. In addition, two mortgage bro-
kerage companies he previously owned failed to
provide reasonable and appropriate security for
sensitive consumer information, despite promis-
ing they would do so.” It is amazing that the fine
is so small when measured against the amount
of information discarded. More information on the
FTC charges and settlement can be found at
http://www.ftc.gov/opa/2010/01/navone.shtm.
The page contains links to several informative
FTC publications on protecting non-public per-
sonal information.
IS YOUR DATA BEING TAKEN TO THE
CLEANER
My dry cleaner recently showed me a report in
his trade magazine that indicates more and more
USB thumb-drives are being left in the pockets of
pants and jackets than ever before. Since most
of the data on these thumb-drives is likely to be
unencrypted, there is a clear and present danger
for a company to expose “non-public personal
data” to the public and thus be sanctioned by
state and federal authorities for a database infor-
mation breach. It is important to know exactly
what is being stored on a thumb drive and what
“non-public personal information” may be con-
tained within the files. This is especially important
for those associated with the mortgage industry
and who may be carrying loan files containing
social security numbers, credit card account in-
formation and all the key elements needed for
first-class identity theft. Forewarned is forearmed.
TECHNOLOGY
ARE YOUR PROPRIETARY SECRETS “OPEN
SOURCE”
As more and more companies turn to open
source to curtail costs, very few companies un-
derstand the underlying risks in using software
licensed under so-called “public” licensing agree-
ments. Even though there appears to be no initial
software costs, there are hidden dangers. Imag-
ine a company that has extensively used open
source software as the basis for their proprietary
(Continued on page 21)

(Continued from page 20)
mortgage system. If this software was obtained
under the GNU General Public License, all of the
companies programs derived from or combined
with this code must be offered freely to any third-
party under the terms of the licensing agreement.
The right to examine such software, copy it, dis-
tribute it or derive additional works from it may be
possible. Not only does this severely impact the
proprietary nature of a company’s offerings; but
should they wish to sell the company, its valuation
may be substantially lower than anticipated. Of
course, if you are using unmodified “vanilla” soft-
ware to support your proprietary programs, they
appear to be protectable. You may wish to consult
qualified legal counsel with a specialty in protect-
ing intellectual property rights for more informa-
tion.
WARNING: ONLINE BACKUP SERVICES
The advertisements are seductive … do nothing
and your files are securely backed-up offsite; en-
crypted and safe. But compelling as it may seem,
there are a few caveats. One, if you have large
files or a large number of smaller files, you may
find that it will take a long time to fully backup your
files. Most systems use only a portion of your
computer’s power and Internet bandwidth to per-
form its magic. The smaller the payload to be
backed up and the faster the computer and Inter-
net connection, the quicker the backup will take to
finish. It may take days to back-up a large disk –
even longer if you use your computer sporadically
and do not leave the machine connected 24/7.
Because of the method in which files are backed
up, your most important files may be awaiting
backup at the time of system trouble – something
that you didn’t bargain for. If you generate a large
number of small files – such as common in the
mortgage industry – you may find that the backup
works perfectly or, possibly, not at all. The bottom
line is caveat emptor: let the buyer beware. Or as
the Better Business Bureau suggests:
“Investigate Before You Invest.”
ARE YOU FULLY PATCHED?
Once again the computer hardware and software
vendors are reminding you that evildoers are hard
at work to compromise your computer and har-
vest your data. Some recent items:
Microsoft
 Microsoft Security Advisory (979682) -- Vul-
nerability in Windows Kernel Could Allow
Elevation of Privilege (Published or Last Up-
dated: 1/22/2010) http://www.microsoft.com/
technet/security/advisory/979682.mspx.
 Microsoft Security Advisory (979352) -- Vul-
nerability in Internet Explorer Could Allow
Remote Code Execution (Published or Last
Updated: 1/21/2010) http://
www.microsoft.com/technet/security/
advisory/979352.mspx.
Page 21
 Microsoft Security Advisory (979267) -- Vul-
nerabilities in Adobe Flash Player 6 Pro-
vided in Windows XP Could Allow Remote
Code Execution (Published or Last Updated:
1/12/2010) http://www.microsoft.com/
technet/security/advisory/979267.mspx.
Adobe
 APSB10-02 -- Security updates available for
Adobe Reader and Acrobat (1/15/2010)
http://www.adobe.com/support/security/
bulletins/apsb10-02.html.
WINDOWS 7 SERVICE PACK 1 OUT BY
OCTOBER, NOVEMBER?
There is no doubt that there is an ongoing Micro-
soft project to compile the next service pack for
Windows 7. Some cynics believe that this release
will be forthcoming sooner than later, not for any
pressing technical issue discovered to date, but
to encourage the adoption of Windows 7 by
those organizations who traditionally wait for the
release of the first service pack before adopting
new operating systems. Of course there is no
guarantee that a service pack will not break exist-
ing applications. The only answer is to test the
service pack on non-mission-critical machines
first.
iPAD LAUNCHES AND FIZZLES AS A
POTENTIAL BUSINESS TOOL?
Bigger than an iPhone, less powerful than a lap-
top or notebook, not available immediately, pric-
ing based on storage capabilities, questions
about battery capacity and screen deficiencies in
bright daylight are all raising significant questions
about the useability and desirability of the iPad as
a serious development platform for consumer
applications. Truth-be-told, there are relatively
few iPhone apps that are consistently used over
time. Will iPad apps face the same fate?
Some of the complaints about a relatively pricey
iPad that were rocketing around the Internet in-
clude: lack of a physical keyboard, physical size
and storage issues; uses a phone operating sys-
tem rather than a more robust version suited for a
netbook; storage is relatively limited to 64 GB
max with no practical opportunity to increase the
storage; no HDMI video output or built-in camera
or microphone; no built-in USB ports to extend
connectivity to other devices; no flash memory
card capability; lock-ins to Apple connectors,
features and authorized stores; and worst of all,
no opportunity to change a battery – even though
you are expected to have a 10-hour battery life
before recharge. Some people note that you
cannot run Skype to make phone calls – perhaps
a deliberate competitive move – to lock you into
an Apple-designated network.
Unless you are a status seeker needing that
“must have” accessory or ego-boosting accouter-
ment, it appears that the iPad may be another
“ho hum” product; or a product waiting for that
killer app. Those wanting to satisfy their curiosity
(Continued on page 22)

(Continued from page 21)
can find a great description of the iPad at http://
news.zdnet.com/2100-9595_22-387614.html?
tag=nl.e539.
INTERESTING
PUBLICATIONS
SIGTARP: Special Inspector General for the
Troubled Asset Relief Program
 Quarterly Report to Congress (January
30, 2010) … “This report highlights the activi-
ties associated with the Congressional Bail-
out known as TARP, the Troubled Asset
Relief Program. The program was designed
to allow the government to purchase troubled
assets in order to prevent the collapse of our
financial institutions. Unfortunately Congress,
in an attempt to politicize the matter and as-
suage the public’s hard feelings about finan-
cial institutions giving large bonuses to ex-
ecutives and other key employees, linked
executive compensation with the receipt of
TARP funds by an institution. This did not sit
well with the major institutions and they, by
hook or crook, made an effort to repay these
government funds. Now the Congress is
intent on using the TARP funds as their own
personal piggy bank – for uses not envi-
sioned nor sanctioned by the enabling legis-
lation. According to this report, “The focus of
TARP has begun to shift, however, as the
early TARP programs that invested huge
sums in banks are now closed to further
investments and most of the largest bank
recipients have repaid their TARP funds.
Treasury has stated that, going forward,
TARP will focus on foreclosure mitigation
efforts, small-business lending, and a con-
tinuation of support for the asset-backed
securities (‘ABS’) markets.” The purpose of
the TARP payback was to reduce the debt
owed by the government and reduce the
future tax requirements on American citi-
zens. Now we find that Congress is unwilling
to reduce the debt and pursue their own
course of bailing out other special interests
who, I am sure, are contributing heavily in
the 2010 election cycle. To read the full re-
port in context, it may be found at http://
www.sigtarp.gov/reports/congress/2010/
January2010_Quarterly_Report_to_Congr
ess.pdf.
FHFA: Federal Housing Finance Agency
 Monthly House Price Index … “U.S. house
prices rose 0.7 percent on a seasonally ad-
justed basis from October to November,
according to the Federal Housing Finance
Agency’s monthly House Price Index. Octo-
ber’s previously reported 0.6 percent in-
crease was revised downward to a 0.4 per-
Page 22
cent increase. For the 12 months ending in
November, U.S. house prices rose 0.5 per-
cent. The U.S. index is 10.3 percent below
its April 2007 peak. The FHFA monthly in-
dex is calculated using purchase prices of
houses backing mortgages that have been
sold to or guaranteed by Fannie Mae or
Freddie Mac. For the nine Census Divisions,
seasonally adjusted monthly price changes
from October to November ranged from –0.4
percent in the East South Central Division to
+ 2.3 percent in the Pacific Division.” More
information can be found at http://
www.fhfa.gov/webfiles/15372/Monthly%
20HPI%201%2026%2010.pdf.
 Mortgage Interest Rates… “The average
interest rate on conventional 30-year, fixed-
rate, mortgage loans of $417,000 or less
decreased 4 basis points to 5.05 percent in
December. The average interest rate on 15-
year, fixed-rate loans of $417,000 or less
decreased 9 basis points to 4.54 percent in
December. These rates are calculated from
the FHFA’s Monthly Interest Rate Survey
(MIRS) of purchase-money mortgages.
These results reflect loans closed during the
December 24-31 period. Typically, the inter-
est rate is determined 30 to 45 days before
the loan is closed. Thus, the reported rates
depict market conditions prevailing in mid- to
late-November. More information can be
found at http://www.fhfa.gov/webfiles/15378/
January%20MIRS%20Jan%202010%
20final.pdf.
 Foreclosure Prevention & Refinance Re-
port (Third Quarter) … “As of November
2009, Fannie Mae and Freddie Mac, imple-
mented more than 405,000 trial and perma-
nent loan modifications under the Admini-
stration’s Home Affordable Modification Pro-
gram (HAMP) and refinanced 4 million
loans. The report, which now includes data
on delinquencies, loan modifications and
refinance activity for each Enterprise, details
the actions Fannie Mae and Freddie Mac
have taken to prevent foreclosures and keep
people in their homes. The report shows:
 As of Nov. 30, 2009, the Enter-
prises had implemented 405,700
HAMP active trial and permanent
loan modifications.
 Foreclosure starts on Enterprise
loans declined in the third quarter
by 15 percent.
 Loan modifications entered into on
Enterprise loans, excluding HAMP
trial loan modifications, increased
14 percent from the second quar-
ter, from 32,300 to 36,700.
 Nearly half of loan modifications
(Continued on page 23)

(Continued from page 22)
completed in the third quarter, ex-
cluding HAMP trial modifications,
resulted in borrowers’ payments
decreasing by over 20 percent.
 Loans modified in recent quarters
performed slightly better six
months after modification than did
earlier modifications.
 Short sales and deeds in lieu in-
creased by 39 percent during the
third quarter from 12,300 to
17,400.
 Loans 60-plus-days delinquent
increased by 260,300 loans or
nearly 20 percent during the third
quarter to 1.6 million.
More information can be found at http://
www.fhfa.gov/webfiles/15345/3Q2009Fore
closurePreventionRefinanceRpt10810.pdf.
 Status of the Conservatorship of Fannie
Mae and Freddie Mac … The FHFA’s letter
to Senator Chris Dodd, Chairman of the
Senate Banking, Housing and Urban Affairs
Committee and Barney Frank, Chairman of
the House Financial Services Committee to
update the regulators on “the conservator-
ships of Fannie Mae and Freddie Mac.”
“Recently there has been considerable
speculation regarding how the future direc-
tion of the Enterprises' business activities
interacts with their status in conservatorship.
A key motivation for this letter is to provide
greater clarity to policymakers and market
participants on the Federal Housing Finance
Agency's (FHFA) plans for the Enterprises'
business activities while they operate in con-
servatorship.” The entire letter can be ob-
tained at http://www.fhfa.gov/webfiles/15393/
Conservatorhsip%20Letter%202%202%
2010.pdf.
FED: Kansas City Federal Reserve Bank
 Adverse Conditions in Fed’s 10th District
… “Unemployment, lower income, lack of
insurance and poor housing choices are
cited in the latest survey as factors impairing
financial recovery among low- and moderate
-income (LMI) populations in the Tenth Dis-
trict. The quarterly LMI Survey measures the
economic conditions of low- and moderate-
income populations in the Tenth Federal
Reserve District and the organizations that
serve them.” The survey may be obtain at
http://www.KansasCityFed.org/LMIS/
LMISurvey.htm?ealert=LMI0129
 Basics for Bank Directors … “The 5th
edition of "Basics for Bank Directors," a
reference guide for today's bank directors, is
now available at the Federal Reserve’s new
directors portal which is highlighted in our
“Interesting Links” section below. http://
www.bankdirectorsdesktop.org/basics-for-
bank-directors.cfm.
Page 23
GAO: Government Accountability Office
 Financial Management: Improvements
Needed in National Flood Insurance Pro-
gram's Financial Controls and Over-
sight. This report addresses past systemic
weaknesses in the National Flood Insurance
Program in order to strengthen current op-
erations. The full report may be obtained at
http://www.gao.gov/cgi-bin/getrpt?GAO-10-
66 and the summary can be obtained at
http://www.gao.gov/highlights/d1066high.pdf
 Loan Performance and Negative Home Eq-
uity in the Nonprime Mortgage Market. This
report examines the evolution and condition
of the market for nonprime loans and in-
cludes data relating to the characteristics of
nonprime loans and borrowers, and the per-
formance of nonprime mortgages originated
from 2000 through 2007 (the last year in
which substantial numbers of nonprime
mortgages were made) as of March 31,
2009.
“This report (1) provides information on the
performance of these nonprime loans as of
June 30, 2009, and describes forecasts
made by others of future loan performance;
and (2) examines the extent of negative
home equity among nonprime borrowers in
selected metropolitan areas and nationwide.
In addition, enclosure VI describes the pre-
liminary results of our analysis of the demo-
graphic characteristics of nonprime borrow-
ers—including race and ethnicity—whose
loans originated in 2005. This report also
provides supplemental information on the
performance of nonprime mortgages by
annual loan cohort, product type, Census
division, state, and congressional district.”
For statistics wonks, more information can
be obtained at http://www.gao.gov/cgi-bin/
getrpt?GAO-10-146R.
JCHS: Joint Center for Housing Studies of
Harvard University
 Indicator Suggests Remodeling Upturn in
2010 … “Homeowner improvement spend-
ing is likely to reach a cyclical bottom in the
current quarter and steadily increase
through 2010 according to the Leading Indi-
cator of Remodeling Activity (LIRA), re-
leased by the Remodeling Futures Program
at the Joint Center for Housing Studies of
Harvard University. The LIRA projects an-
nual declines in home improvement spend-
ing will ease from the current rate of 12.0
percent to 3.1 percent in the third quarter of
2010.” Considering that home remodeling
may be a leading indicator of recovery in the
housing and financial sectors, you may wish
to review this report. The press release for
the report can be obtained at http://
www.jchs.harvard.edu/media/lira/
lira_09_4.html.

CONNECTIONS
CHUTZPAH: CITY ATTEMPTS TO BLAME
LENDER FOR DECAY
It appears that the Mayor and City Council of Bal-
timore (“The City”) has attempted to mine the
deep-pockets of Wells Fargo Bank by alleging
that Wells Fargo’s predatory lending and discrimi-
natory lending activities led to foreclosures that
harm the city. According to Court records, “The
City asserts that Wells Fargo engaged in the
practice of reverse redlining, targeting the City’s
underserved and vulnerable minority neighbor-
hoods. These lending practices allegedly have led
to a disproportionately high rate of foreclosure in
the City’s African‐American communities, causing an
increase in abandoned and vacant homes in those
areas, which in turn has allegedly caused finan-
cial harm to the City.”
“Specifically, the City argues that foreclosures
have caused:
a. A significant decline in the value of nearby
homes, resulting in a decrease in property
tax revenue;
b. An increase in the number of abandoned
and vacant homes;
c. An increase in criminal and gang activity as
abandoned and vacant homes become
centers for squatting, drug use, drug distri-
bution, prostitution, and other unlawful ac-
tivities;
d. Increased expenditures for police and fire
protection;
e. Increased expenditures to secure aban-
doned and vacant homes;
f. Additional expenditures to acquire and reha-
bilitate vacant properties; and
g. Additional expenditures for administrative,
legal, and social services.”
Of course, Wells Fargo disagrees and the Court
concurs. “In the present case, the City’s allega-
tions in the Amended Complaint of a causal con-
nection between Wells Fargo’s alleged miscon-
duct and the damages the City claims is not plau-
sible. Thus, using the City’s own figures, Wells
Fargo is responsible for only a negligible portion
of the City’s vacant housing stock. This fact alone
demonstrates the implausibility of any alleged
causal connection between Wells Fargo’s alleged
reverse redlining activities and the generalized
type of damages claimed by the City, e.g., decline
in value of homes and decreased property tax
revenues resulting, increased criminal and gang
activities, and increased police and fire protection
resulting from building vacancies. Moreover, the
alleged connection is even more implausible
when considered against the background of other
factors leading to the deterioration of the inner
city, such as extensive unemployment, lack of
Page 24
educational opportunity and choice, irresponsible
parenting, disrespect for the law, widespread
drug use, and violence.”
Perhaps if one were to consider the apparent
negligent and self-serving behavior of the City’s
elected officials and their general disregard for
improving the infrastructure in impoverished inner
cities, one might draw a different conclusion –
that the City was trying to blame others for their
neglect and/or malfeasance while simultaneously
attempting to pick their pockets.
United States District Judge J. Frederick Motz in
the United States District Court for the District Of
Maryland dismissed the complaint against Wells
Fargo, but also allowed the City to file a second
amended complaint or seek the opinion of an
appellate court. Should you wish to read the
Court’s opinion in context, it may be found at
http://www.mdd.uscourts.gov/Opinions/Opinions/
WellsFargo06jan10.pdf.
THE PROBLEM WITH MORTGAGE REFORM
The basic problem with mortgage reform is that
the legislators never admit that it was their legis-
lative and oversight efforts that led to the mort-
gage meltdown. Thus they often attempt to cure
problems which are in the past and are no longer
affecting the future or impose legislative burdens
on those who did not create or exacerbate the
current economic crisis, but are being punished
nevertheless.
Instead of repealing existing legislation in favor of
newly-crafted legislation, these congressional
bozos layer clause upon clause, bill upon bill,
until the result is a hodge-podge of conflicting
legislative initiatives which have loopholes to
allow prohibited behaviors and are almost impos-
sible to enforce. Where are the trade associa-
tions when it comes to repealing, not reforming,
older legislation which serves no regulatory pur-
pose?
 Page 25

ested in real estate and mortgage transactions to

INTERESTING LINKS upload videos for all to see. Some of these videos
are quite professional and informative. It will be a
RESOURCE FOR BANK DIRECTORS AND worthwhile few minutes to browse this video col-
OTHER SENIOR EXECUTIVES lection.
http://www.bankdirectorsdesktop.org FOR THOSE INTERESTED IN PRIVACY ISSUES
http://www.privacyrights.org/

This is a great resource for people interested in

privacy issue and the protection of privacy in this
technological age. There are many resources and
the articles themselves can serve as object les-
sons for those seeking to strengthen their own
document-handling systems and procedures.

The Federal Reserve has implemented a one-stop

portal for those who are serving as bank directors –
or others who have senior positions within the fi-
nancial industry – which contains a wealth of re-
sources. It is well worth the time to examine this
site.
COST EFFECTIVE TRAINING, TIPS AND TECH-
NIQUES
http://www.mortgagecoach.com/Community/
Video.aspx

The Mortgage Coach’s video community link pro-

vides a forum for vendors and other parties inter-

WE ARE YOUR DOC PREP COMPANY – NOT YOUR COMPETITOR

ICC does not use the information you provide for any purpose other than to prepare your loan docu-
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not engage in statistical analysis of your data nor do we suggest alternative loan programs, insurance
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