ARA MELKONIANS MORTGAGE REPORT/ Week of April 1, 2011

Good Morning Everyone and Happy Friday! The stock markets have had quite a choppy week, but the bulls have prevailed 3 out of the 5 trading days, with today looking to be the biggest winner of the five. The Dow was up about 100 points for the week as of the close last night; however, today's 100 point rally so far looks to doubled that number for the total weekly gain. Fortunately, the bond market is taking everything in stride and rates are actually improved today over yesterday's rate sheet offering. Today being the first Friday of the month, we get to see the always much anticipated jobs report for the previous month. Nonfarm payrolls for March increased by 216K, better than the 185K additions that had been expected, but nowhere near enough to get the economy kick started. Private payrolls topped expectations and came in at 230K, besting the 203K anticipated. The headline unemployment figure dropped a notch down to 8.8% from 8.9%. Hence we're making some progress, but so many now are discouraged workers and aren't even looking for a job at this point. The stock markets are using the data to fuel buying efforts are certainly enjoying a nice Friday rally. I'm sure you all have heard now about the LO Comp Rule implementation that was put on hold by the US Court of Appeals late last night. The Feds were awfully determined to make this rule a reality and never wavered through the many questions and challenges that were presented to them throughout the last several months. I would like to hope that this ruling will be permanently overruled, but chances are, we're going to have the LO Comp Rule in some form or fashion implemented soon. There are some facets of the rule that are not necessarily bad for LO's, especially those who have a difficult time holding their commissions. The down side, of course, is that the income will be capped, or at least locked in, for 90 days at a time. However, the commission being made by the LO will not have to be a part of the conversation with the client when choosing a rate and subsequent rebate or cost. The banks have been doing it this way for years. Clients will be able to look at the rate sheet and choose their rate whether they want rebate to cover closing costs or discount to buy their rate down. The LO's commission just simply will not be a part of the conversation any more. It will be a much cleaner sell for some. It's a nightmare, however, for mortgage brokers and especially for us hybrids who have a mortgage banking channel and a mortgage broker channel. This set up, though advantageous to the LO, is certainly not designed for a "one size fits all" kind of compensation plan. At least we have a little time now to figure things out and so do those who will be eventually implementing some form of the LO Comp plan in the future. I hope all of you have a terrific Friday and a very restful and relaxing weekend!