Jan. 6, 2011: Continued NMLS input on slow news day; stories of lower locked pipelines
Rob Chrisman

Oops. http://www.washingtonpost.com/wp-dyn/content/article/2011/01/05/AR2011010501233.html.

This year both Groundhog Day and the State of the Union address occur on the same day.  "It is an ironic juxtaposition of events; one involves a meaningless ritual in which we look to a creature of little intelligence for prognostication, while the other involves a groundhog." (In an effort for equal billing: "Hi. This is Sarah Palin. Is Senator Lieberman in?" "No, governor. This is Yom Kippur." "Well, hello, Yom. Can I leave a message?") Congress has opened for business, and the financial markets will be closely tracking any potential changes in our deficit. But the new government didn’t help fixed-income securities yesterday.

"Those aren't bumps in the road, that's the road." Fixed-income prices went down yesterday, and rates moved higher, after the private-sector jobs report from ADP painted a brighter picture of the U.S. economy. The 10-yr yield hit 3.50%, although it finally closed at 3.48%, and current coupon mortgage-backed securities dropped by about .75 in price. 4.5% conventional securities, which would include 4.75-5.125% 30-yr mortgages, are trading around a 1.5 point premium (101.50). When a buyer throws in some servicing value, some buy-ups or buy-downs, some par note-rate adjustments, and a little profit margin, suddenly one is talking about borrowers locking around 5%.

The report showed an expansion of 297,000 jobs in December, according to payroll processor ADP. That was nearly triple economists' consensus forecast, and caused economist to ratchet up their estimates for tomorrow’s nonfarm payrolls data. Estimates now are coming in around 175,000 for a pick-up in non-farm employment instead of the 140,000 prior to the ADP number. Still, keep in mind that historically the ADP number has not had the best track record for predicting the government’s official report. Should the payrolls report tomorrow turn out to be strong, it is likely to raise questions about how much longer the Federal Reserve will conduct its Treasury buying program to stimulate the economy, and stimulate conjecture about the Fed possibly raising short term rates.
 
And as we know, any kind of decent recovery is going to rely on jobs and housing. Housing has been pretty dismal, but if jobs pick up, that is a huge step. The mortgage-related thinking goes that if more people are working, more will qualify for loans, buy houses, inventory levels will drop, and more home markets will either stabilize or improve. But that takes a while to happen, of course. And agents and companies who have based their business on refinancing will feel the pain. In fact, I am hearing antidotal stories of locked pipelines and applications dropping 50% in recent weeks, given the combination of rates moving higher, existing pipelines funding, and new business being slow.
 
I continue to receive input on the NMLS situation. "Regarding the NMLS process in my state, my experience has been positive and I love the automated system. I signed up for the test on December 8, did the finger print test the day after registration, and got the e-mail alert the next day that my background check was completed and cleared. I took the state test on 12/17 & national exam on 12/20.  On 12/21, I got an e-mail that I am approved for both the state and NMLS.  I also learned from some brokers that they got the quick approvals as well but others took very long time - possibly due to very bad credit problems or something else on their background."

"I am so tired of everyone complaining about the NMLS stuff. I hold NMLS approval on my California DRE license and my California DOC license, as well as Colorado and Utah PLM licensing...If you actually tried to do this during last year it got done. I finished my continuing ed, my testing (didn’t even take crash course or any course for that matter I actually read the law). You file the forms pay the fees, and let the staff at NMLS help on the phone. Basic government processes in my opinion.  This is another case of the old school way of thinking, waiting until the last minute, and then complaining that someone else can't act quick enough...much the same as a LO would complain about underwriting or funding not rocking a file in a day, when it took he/her two weeks to get the paystubs. If they were so worried they could have done all this over the last 12 months like I did."

"I have a clarification for those being critical of “lazy” Loan Officers who applied “late” for license renewals.  Here in Massachusetts, I thought I got ahead of the game by taking my SAFE Act course in 2009, as soon as it was available.   A few months later I learned that this was not a smart move, because having taken the test in 2009, rather than 2010, I then had to take 8 more hours of Continuing Education, which was waived for those who waited until 2010 to take the SAFE Act class.  To make matters worse, the state didn’t approve continuing education courses that would satisfy their requirements until late summer.  And then there is the credit requirement which wasn’t up and running on NMLS until the fall."

"The point they are missing is that in California the DRE has record of licensee requests dating back to April of 2010 that they still have not fulfilled. Yes, it is true some are ridiculous and should be put out to pasture, but most broker shops and loan officers we have dealt with have done everything required of them and have the communications and paperwork to prove it. The DRE is being overwhelmed by the volume and understaffed not the broker always being the one who is at fault. Maybe they need to be dealing with a higher quality of brokers and loan officers. I don’t see how it was even possible to file for a renewal before October.”

Occasionally the question comes up, "Who does dreaded cash-out refi's in Texas?" I am sure that many companies do them, although the latest to publicize it is AmTrust, uh, I mean NYCB Mortgage Company. "All Texas Home Equity Mortgages (Texas Cash-Out Refinances) will continue to be underwritten to the guidelines listed in the Seller's Guide pages in Gemstone. Owner-Occupied/Primary Residence (Homesteads) only, one unit, urban homesteads only with a maximum of 10 acres.” There are other requirements, and as always it is best to check with NYCB for specific underwriting and appraisal details.
 
MountainView Capital Group sent the word out that it “has facilitated the purchase of approximately 2,500 performing second-lien closed-end loans and home equity lines of credit. The loan portfolio had an unpaid principal balance of $110 million and a nationwide geography. MountainView represented a buyside institution in the acquisition of these assets from a mortgage originator.” You’ll have to contact them if you want more details – here is the announcement: http://www.mvch.com/news/21-press-release
 
Moving back to the markets, as I mentioned at the beginning of the commentary, it is all jobs and housing, jobs and housing, jobs and housing. The direction of any investor bets is likely to be heavily influenced by projections on the U.S. economy, with jobs data the most important indicator. Fortunately for mortgage rates, mortgages typically trade well (relative to Treasury rates) at the beginning of new quarters as investors start making new allocation decisions and January 2011 has been no exception to this guideline.
 
We were seeing a little bit of bounce here this morning after Wednesday’s sell-off, and the yield on the 10-yr had moved from a close Wednesday of 3.48% down to 3.43%. At 5:30AM PST we had our usual weekly jobless claims, which is about the only scheduled economic news for the day aside from next week’s auction amounts. Weekly Jobless Claims came in at 409,000 from a revised 391k, up 18k. The 4-week moving average dropped 3,500. After the number we find the 10-yr still sitting around 3.43% and MBS prices better by about .250.


This old story out of Texas.  Seems a guy cruises thru a stop sign, or whatever, and gets pulled over by a local policeman.  Guy hands the cop his driver's license, insurance verification, plus his concealed carry permit.
"Okay, Mr. Smith," the cop says, "I see your CCW permit.  Are you carrying today?"
"Yes, I am."
"Well then, better tell me what you got."
Smith says, "Well, I got a .357 revolver in my inside coat pocket.  There's a 9mm semi-auto in the glove box.  And, I've got a .22 magnum derringer in my right boot."
"Okay," the cop says.  "Anything else?"
"Yeah, back in the trunk, there's an AR15 and a shotgun. That's about it."
"Mr. Smith, are you on your way to or from a gun range...?"
"Nope."
"Well then, what are you afraid of?"
"Not a darned thing."