"Where do I go to find out about resources to mortgage lenders and mortgage brokers to learn about state specific requirements, licensing, the correct way to file mortgage call reports, and information about the SAFE Act?" That is pretty easy. The best source is generally thought to be the Resource Center of the Nationwide Mortgage Licensing System & Registry (NMLS). Although attending industry sponsored workshops and conferences is a good way to learn about the areas that you mentioned the NMLS is by far the most instructive. It has news and events, and "popular links" to the Uniform State Test, mortgage Call Report, state agency checklists, and study guides for the state specific tests.
On the jobs side, Digital Risk, the largest mortgage outsourcing provider in America, is hiring origination underwriters, processors, closers and managers at its Jacksonville, Orlando and Boca Raton offices. Specifically, Digital is seeking experienced mortgage loan origination professionals who have several years of experience and recent experience (within the last four years). "These are full-time positions with great benefits, career development opportunities and growth potential. Digital Risk is offering sign on bonuses and relocation assistance to individuals if applicable. However, we will only be hiring for a limited time, so apply now." Founded in 2005 and grown to eight offices with over 1,600 employees, Digital Risk offers mortgage risk, compliance and transaction management solutions to many of the country's largest banks and loan originators. Learn more.
And Navigator Lending Solutions, Inc. (NavPros) is expanding its operations and is seeking a Senior Closer, Closing Manager, Post Closer, and Post Closing Manager. NavPros is a national mortgage fulfillment service provider located in Reno, Nevada and Clearwater, Florida, and is seeking professionals who are excited about superior customer service. NavPros is a growing entrepreneurial company and is looking for seasoned back office staff interested in streamlining the closing, shipping, funding and loan delivery processes while providing the highest quality of services to banks, credit unions and emerging bankers. Why NavPros? Superior technology, training and career advancement! For more info, contact resumes@navpros. com.
It is simple bond market math that dictates higher coupons (bonds that pay a higher rate) have a premium price, and those with lower yields trade at a discount (less than 100). What about home loan rates near par? Nicole Yung with the STRATMOR Group writes, "There has been a shift in the market over the last five years toward zero point loans as lenders build the traditional 1% Origination Fee into the rate sheet price. This change has been driven by a consumer preference for low up-front costs and the historically low interest rates. There seems to be another emerging trend, however, and in recent client meetings STRATMOR heard that Lender Fees are now being included in the rate sheet price. Indications are that the 3% cap is causing lenders to fold the Lender Fees into the rate specifically on the Retail side. While we have seen Lender Fees increase approximately 20% in the last three years, the new regulatory limits may reverse this trend and push lenders to earn the bulk of their revenue in the Secondary Market."
Buyers of 10-year T-Notes and 30-year T-bonds are facing a potential shortage of supply! Huh? Can't the government just issue more? Excluding those held by the Federal Reserve, Treasuries due in 10 years or more account for just 5% of the $12.1 trillion market for U.S. debt. Bloomberg reports that, "New rules designed to plug shortfalls at pension funds may now triple their purchases of longer-dated Treasuries, creating $300 billion in extra demand over the next two years that would equal almost half the $642 billion outstanding, Bank of Nova Scotia estimates. Fewer available bonds, along with a lack of inflation and increased foreign buying, help to explain why longer-term Treasuries are surging this year even as the Fed pares its own bond purchases. The demand has pushed down yields on 30-year government debt by more than a half-percentage point to 3.37 percent, the most since 2000, data compiled by Bloomberg show." And as we all know, other things being equal, when demand goes up, prices go up, and rates go down.
There are 22 "primary dealers" who must bid on bills, notes, and bonds when they are issued by the U.S. Government. Lower financing costs matter because the U.S. government has more than doubled its marketable debt obligations since the financial crisis in 2008 after bailing out the nation's banks and running deficits to kick-start the economy. So far this year the bond market (i.e., rates) have proved forecasters wrong: they thought that U.S. borrowing costs would rise for a second year as the economy strengthens enough to enable the Fed to end its debt purchases. But investors instead poured into longer-term Treasuries and pushed yields lower.
"And pension plans, which oversee $16.3 trillion, are shifting into longer-term Treasuries to lock-in last year's stock gains by matching assets with their future liabilities as funding deficits narrow. The 100 biggest U.S. corporate pensions were about 88 percent funded at the end of last year, the highest since October 2008, according to data compiled by Milliman Inc., a pension advisory firm based in Seattle." Experts, perhaps the same one that thought rates would be higher, say that we should continue to see this de-risking of corporate pension plans.
"The smallest U.S. deficit in seven years is also reducing the supply of new bonds used to finance government spending. Net issuance of interest-bearing Treasuries will fall to $545 billion next year, estimates from primary dealer Deutsche Bank AG show. That's a 36 percent decrease from last year...Overseas investors own $5.9 trillion, or 48.5 percent of the market for U.S. Treasuries, more than double the amount they held in January 2008, according to the Fed. Foreigners have increased holdings of Treasuries every year since at least 2000. China, the biggest foreign creditor to the U.S., held $1.27 trillion in Treasuries as of Feb. 28, approaching the record $1.32 trillion the country owned at the end of November. Japan, the second-largest, had $1.2 trillion of U.S. government debt, an all-time high." Anyway, if you'd like to learn more check out the article (or the counterpoint to it: Secret Source of Bond Market Demand? Not so Fast).
There are many "things" which move our lending markets, many important indicators that lead investors to ultimately make the decision to invest, or not, in mortgages. One of these important numbers is the aggregate pre-payment rate, which is known to mortgage backed securities investors as "CPR", or Conditional Prepayment Rate (I believe some refer to it as Constant Prepayment Rate too, but they're just weird). In a perfect world, you and I invest in a pool of 30yr mortgages and every one of the borrowers make timely payments for the next 30 years. In that case CPR is zero. However, as we know borrowers are a finicky bunch, paying off their mortgage debt early if they sell their home, refinance to a lower rate, refinance to take cash-out (do people still do that?), etc. All those loans come off the pass-through securities book, and end-investors are left with diminished principle invested. CPR measures prepayments as a percentage of the current outstanding loan balance. The number is always expressed as a compound annual rate, so for example, a mortgage pool with an 8% CPR, equates to 8% of the pool's current loan balance which is likely to prepay over the next year. As you can imagine, CPR is a closely watched and highly analyzed number.
After years of the industry and special interest groups waiting, the Department of Housing and Urban Development (HUD) has finally proposed a rule to eliminate post-payment interest charges for Federal Housing Administration (FHA) insured loans. The proposed rule would prohibit mortgagees from charging borrowers interest on their home mortgages after a principal balance pay-off. In some cases when closings are delayed, borrowers are forced to pay close to an entire extra month of interest on loans they no longer have. NAR's comment letter might be worth a read (comment letter) - FHA's "antiquated policy has placed an unreasonable and often unexpected burden on FHA consumers who already face high housing and closing costs."
HUD published the following proposed rule in the Federal Register: "Federal Housing Administration (FHA): Adjustable Rate Mortgage Notification Requirements and Look-Back Period for FHA-Insured Single Family Mortgages." This rule proposes two revisions to FHA's regulations governing its single family adjustable rate mortgage (ARM) program to align FHA interest rate adjustment and notification regulations with the requirements for notifying mortgagors of ARM adjustments, as required by the regulations implementing the Truth in Lending Act (TILA), as recently revised by the Consumer Financial Protection Bureau (CFPB). The first proposed amendment of this rule would require that an interest rate adjustment resulting in a corresponding change to the mortgagor's monthly payment for an ARM be based on the most recent index value available 45 days before the date of the rate adjustment. The date that the newly adjusted interest rate goes into effect is often referred to as the "interest change date." The number of days prior to the interest change date on which the index value is selected is called the "look-back period." FHA's current regulations provide for a 30-day look-back period. The second proposed amendment would require that the mortgagee of an FHA-insured ARM comply with the disclosure and notification requirements of the 2013 TILA Servicing Rule, including at least a 60-day but no more than 120-day advance notice of an adjustment to a mortgagor's monthly payment. FHA's current regulations provide for notification at least 25 days in advance of an adjustment to a mortgagor's monthly payment.
Here is a solid write-up of the proposed changes. And here's the site to submit comments.
Rates just ain't doing much - a little up, and a little down. Yes, supply and demand have improved MBS prices relative to Treasury prices, but overall things have been pretty quiet, and there just hasn't been much news to move the market. The New York Federal Reserve Bank reported gross MBS purchases of $11.062 billion and $2 billion in dollar rolls in the week ending May 7. Net purchases of $9.062 billion equated to a daily pace of $1.812 billion, in line with expectations and modestly above the $1.3 billion per day average in mortgage banker supply (not including portfolio product and loans sold to the agency windows).
(Read More: Mortgage Rates Holding Ground at 6-Month Lows)
This week Fed Chair Janet Yellen did not surprise anyone as she pointed out the disappointing readings on housing activity and its potential risk to the Fed's baseline economic outlook. She also maintained that it would be a "considerable time" after ending QE before the Fed would begin to raise rates or start the process of normalizing its balance sheet, and that the Fed needs to see continued improvement in the jobs market to end QE in the fall and that the Fed's aim was to maintain accommodative policy until they see labor market recovery. And there is no substantive scheduled news today. For actual numbers, the yield on the 10-yr. at the close Thursday was 2.60% and this morning we're nearly unchanged at that level; agency MBS prices are a smidge better.