Rates improving slightly this morning

Market Color:  Follow the bouncing ball.  Yes Virginia there is inflation, and no Virginia there is no inflation.   Yesterday we had market pricing in these concerns and today we have a so called benign reading on consumer inflation which makes the talking financial heads say the FED will not be forced to raise rates sooner. So we have housing starts in the U.S. rising in November and a gauge of consumer prices unchanged, supporting forecasts for an economic recovery that will generate little inflation or the ideal Goldilocks economy not to hot and not to cold.  Which for our mortgage rates will be great if only we did not have to deal with DU 8.0 and investor credit overlays.   Right now, the futures market is pricing in a 78% chance that the Fed keeps rates somewhere between 0% and .25% through March 16th, 2010.  Currently, the Ten Year yield is at 3.59%(3.59% yesterday).  30 year fixed rates opened positive and are currently trading at .125 to .25% better but it just posted. Give investors another 30 minutes to begin to reflect if this holds. 

 

 

Market News:  What are some of the issues coming up with the new year just around the corner?  One chief technology officer for a technology vendor thinks the biggest issues next year will be the 5% security retention issue or skin in the game proposals, regulatory compliance and cloud computing.  To that SI would add licensing of all loan originators, potential revised loan originator compensation courtesy of the Federal Reserve, continued investor guide revisions for borrower guidelines, although this is nearing the end we think, and organizations having to contend with a very adversarial regulatory environment from the Federal and State levels to ensure compliance with consumer lending laws, and finally the ongoing quest to ensure all loans meet a high level of documentation and performance with each investor. 

 

Speaking of the licensing of loan originators, it is being reported that 3 out of every 10 loan originators who have taken the national mortgage licensing test required under the SAFE Act have failed what is characterized as an “entry level” exam. The pass rate is better on the state-specific portion of the exam, but not by much. More than one in four applicants who have taken the tests so far have failed to achieve a passing grade, according to statistics released by the Conference of State Bank Regulators. The CSBS figures do not break out pass-fail rates by occupation. But Roy DeLoach of the National Association of Mortgage Brokers is certain his members have better scores than loan officers working directly for mortgage bankers or state-chartered financial institutions. (Although representatives of those groups may disagree.) “It’s not brokers (who are failing), I guarantee you that,” NAMB’s executive vice president told National Mortgage News. “If you parse that out, I’m betting that the pass rate is tremendously higher” among brokers. Bill Matthews, president of the State Regulatory Registry, the CSBS subsidiary which owns and operates the National Mortgage Licensing System, said its “hard to tell” who is passing the entry-level exams at this point because testing only began on July 30. During the four-month span between July 30 and Nov. 30, according to the CSBS tally, 10,421 mortgage loan originators took the national test but just 7,219 passed, a failure rate of 31%. Of the 6,097 originators who took the tests specific to the state or states where they want to be licensed, 4,461 earned the 75% score needed to pass, a failure rate of 27%. The figures include first-time test takers as well as those licensing candidates who took the exams again. When testing began on July 30, 11 unique state tests were available. In October, seven more state tests were released, bringing the total to 18 as on Nov. 30.  Regardless if the broker community wants to say it is not their members that are failing, it goes without saying, one will have to be prepared for whatever is presented on the licensing tests.