This week will likely prove to be very active in terms of mortgage rate movement due to the economic data and other events that are scheduled. There are six economic reports scheduled for release, but in addition to the data, another Federal Open Market Committee (FOMC) meeting will be held this week. Together, we have the makings of a potentially volatile week in the financial and mortgage markets.

There are two housing related reports scheduled for release this week, but neither is likely to cause any movement in mortgage rates. May’s New Home Sales will be released tomorrow morning while Existing Home Sales will be posted Tuesday morning. These reports give us a measurement of housing sector strength and mortgage credit demand, but usually do not cause much movement in mortgage rates.

Tuesday also brings us the first important report of the week with the release of June’s Consumer Confidence Index (CCI). The CCI is extremely important to the financial markets because it measures consumer willingness to spend, which is important because consumer spending makes up two-thirds of the U.S. economy. If it shows an increase in confidence from last month, we can expect to see the bond market falter and mortgage rates rise slightly. Current forecasts are calling for a reading 103.0, close to last month’s 103.2 reading.

The only relevant economic data scheduled for release Thursday is the final reading to the1st Quarter GDP and weekly unemployment claims. The GDP data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Last month’s first revision showed a 5.3% rate of growth, but analysts are expecting to see an upward revision to 5.6%.

The FOMC meeting that began Wednesday afternoon will adjourn Thursday afternoon. It is widely expected that Mr. Greenspan and company will boost short-term interest rates at this meeting by another quarter point. But, as we have seen so many times in the past, it is the post meeting statement that often creates the most volatility in the markets. They could give an opinion of the overall economy, hinting at a possible future move or lack of one. Statements like these could cause a knee-jerk reaction in the markets and pos sibly mortgage pricing Thursday afternoon.

There are two reports due Friday morning. The first is the release of May’s Personal Income and Outlays data. This report gives us an indication of consumer ability to spend and current spending activity. Analysts are expecting to see an increase of 0.2% in income and a 0.4% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

The second report of the day is the University of Michigan’s Consumer Sentiment Index’s final reading for June. Unless we see a significant change to the preliminary reading of 82.5, I expect this data to be a non-factor in the market.

Overall, tomorrow will likely be the quietest day of the week. The most active should be Tuesday or Thursday due to the importance of the data and FOMC meeting. Wednesday doesn’t have any factual data to be concerned with, but there is a 5 year Treasury Note auction that may lead to volatility in the bond market if investor interest is relatively strong or poor. Friday’s news could also affect mortgage rates, but likely not as much as earlier days.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

a la mode

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After 18 months of pushing for a uniform licensing system for state residential mortgage regulators, The Conference of State Bank Supervisors (CSBS) is pairing up with the National Association of Securities Dealers Inc. (NASD) to make it a reality.

CSBS, the American Association of Residential Mortgage Regulators (AARMR) and the industry have been working for the past year and a half to develop a national licensing system and database that will provide uniform applications for residential mortgage lenders and loan brokers, as well as a central repository of information about licensing and publicly adjudicated enforcement actions. 

The system is targeted at the more than 90,000 companies with 63,000 branches and 280,000 loan officers and other professionals, said a recent CSBS/AARMR survey of 50 state mortgage regulators.

“The national licensing system and repository will enhance the state regulator’s ability to protect consumers through an increased ability to hold industry professionals accountable for their actions,” said CSBS President and CEO Neil Milner. “Fraud and other illegal or unethical behavior, such as predatory lending, should decline as states participate in the system.”

Taking the lead

The system was the brainchild of CSBS when they recognized a need for more consistent regulation and supervision of the mortgage lending industry. CSBS also discovered that no government or self-regulatory organization existed to provide state regulatory agencies, consumers, businesses and law enforcement organizations with information on a regional or national basis about mortgage lenders, brokers and loan officers.

The new system will be a secure Web-based central licensing system and repository containing licensing information, enforcement actions and background data for every participating state-licensed mortgage broker, loan originator and lender. The system will be accessible over the Internet, allowing prospective and current licensees to apply for or renew licenses for one or more jurisdictions over the Internet through a secure Web site. The system will also collect licensing fees at the time of application or renewal and disburse these to the respective state agencies. The system will only process license application or renewals. Each state agency will retain its regulatory authority to approve, deny, suspend or revoke a license.

The database will contain licensing information, enforcement actions and background data. Professionals operating in states without licensing requirements will have the opportunity to submit information voluntarily.

Implementation

Development of the system continues through the summer and expects to be deployed on Jan. 1, 2008. About 10-12 states will participate in the first year, and more than 30 states are expected to join in 2009 and 2010.

“Companies and professionals will only have to complete one online application when applying for license in one or more jurisdictions,” said AARMR Vice President and Taskforce Co-Chairman Chuck Cross. “Both groups will benefit from access to a national licensing and enforcement repository and more homogeneous state regulations that will likely result from the uniform application.”

The system will be accessible to state regulators, licensees and consumers.

“Regulators will have access to licensing, enforcement, criminal, other background information and annual report data as part of the licensing approval and ongoing regulation process,” said CSBS. “(They) will benefit by capitalizing on current technology, centralizing duplicative functions, providing a central point of contact for submitting license applications and assisting the industry in policing itself.

“Licensed lenders and brokers will have access to their license data. Consumers will have access to public licensing and enforcement actions related to licensed mortgage lenders, brokers and loan officers. Both regulators and licensees will be able to generate standard reports from the central licensing repository. Access will vary by group, with regulators having the broadest system-access entitlements.”

CSBS also said industry professionals will benefit from a more streamlined process. 

Eventually, the system will be expanded to offer a call center, a national repository of public enforcement actions, document collection (financial statements, SOS, etc.), fingerprints and criminal checks, background checks, and surety bond and continuing education reporting.

CSBS chose NASD, a self-regulatory organization for the U.S. securities industry, because of the company’s experience operating two national licensing systems for state regulators in the securities and investment advisory industries: the Central Registration Depository and the Investment Adviser Registration Depository. NASD also provides regulatory examiners and investigators with compliance and enforcement tools.

Footing the bill with Ameriquest funds

The system will be developed in multiple phases, the first phase estimated at $4.3 million. Annual operating costs are projected to be between $6.5 and $7.5 million over the next five years. 

CSBS said the costs “will be born by the states, and operating costs will be paid for by the industry in the form of set-up and processing fees.” 

CSBS is currently soliciting funds from state mortgage regulators to fund the system. It will also use funds from the Ameriquest settlement, in which the mortgage giant paid $325 million in restitution and fines to settle allegations that it falsified home values and borrower incomes and used other high pressure and unfair tactics that trapped consumers into burdensome debt. That money, however, has been tagged for system development costs only.

In a recent survey conducted by CSBS and AARMR, 44 state agencies use paper applications for prospective licensees while only six collect new applications electronically. Thirty state agencies indicated they will mandate the use of the system. Seven agencies will make the system available on a voluntary basis, and five agencies indicated that they will not participate in the system at this time.

“The system will streamline the licensing process for state agencies and the industry,” said Bill Matthews, CSBS senior vice president, “through the use of modern technology and centralizing redundant state agency operations.”


Broker Newswire

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