New Underwater Mortgage Program HARP 3?

From Rob Chrisman's blog today....

"Not enough can be said about the importance of silence!" But there is no silence on rumors that the Treasury Department might try to push through a new initiative, referred to as the "Market Rate Modification Program," which will allow underwater borrowers with non-agency mortgages to refinance to today's low interest rates. That's right, anyone with an Alt-A, subprime, option ARM, jumbo, etc., should pay attention. As one lender wrote to me, "Katy bar the door!" This group has definitely been left out of all the fun, although the Treasury Department, and plenty of major servicers, has determined that borrowers with current LTV's north of 125% who have such loans are more likely to default, despite being current on payments. It is believed that what will be suggested is if a borrower is one of those "Significantly Underwater Borrowers" that is current on mortgage payments, they'll need to do is provide a hardship affidavit with the loan application which is meant to prove a "reasonably foreseeable default" under mortgage securitization rules. And this would supposedly satisfy investors who might otherwise prefer their higher original yield. Each month during the five years after the modification took place, the Treasury would pay loan servicers the difference in interest between the borrower's old rate and new. After the five years are up, the Treasury would stop compensating servicers, regardless of whether said loans were above water or not, and the borrower's interest rate would remain at the lower rate.

Posting live rates...

I think I'm tired of seeing low rate ads that never quote real scenarios. These are not automated junk, but real deals that I am quoting on a daily basis. I finally got tired of see Fixed Rate on TV @ 2.5% not telling you it's a 10 year fixed rate and the payment is based on $75000 loan amount. That's great for the one borrower is Fresno. But in California we need to see examples of real loan amounts and now you can see that at www.michaelfoote.com

Today's Rate Update

Mortgage Bonds are trading slightly higher today ahead of some big supply set to hit this week from the Treasury Department in the form of T Note offerings. 

In economic data, Durable orders were unchanged in October, while the case Shiller Home Price 20-city index rose to its 6th straight monthly gain.  

In addition, Lender Processing Services reported that home prices rose in September from the prior month and are higher from a year ago while Consumer Confidence jumped to its best level in more than four years. 

A Floating recommendation continues for it is tough to see home loan rates move significantly higher from current levels.

The Federal Reserve continues to keep home loan rates near record lows in an effort to shore up the housing market and that should continue well into 2013 or until such time that the sector can stand on its own two feet.

                                                                                                                                                                

 

MBS 16bps

Thanksgiving.

There are many things to be thankful for from the air we breath to the dirt we walk on and everything in between.

So please take time this week to be thankful for all the wonderful and glorious things we get to see and experience in our lives.

Happy Thanksgiving.

Purchase Sale and the mortgage process

OK you want to buy a house, now what? Buying a home is great and there are plenty of articles on the benefits etc. But let;s talk about just buying a home. More specifically, the financials associated with buying a home.

Can you afford it? The most basic qualifications allow you to finance and purchase a home with ratios as high as 45-50% of your gross income. Though most agree a number in the 33-38% range would be more preferred. So even today, we as lenders are able to offer a homebuyer good financing and allow for a reasonable amount of debt to income levels.

How much money do I need to bring in to close? Just because you are putting down 10% doesn't mean you won't bring in a amount at 10-15% of the sales price. In addition to the down payment most buyers will need to bring in interest and taxes for a prorated amount of time, you also may need to bring in closing costs for escrow, title, recording, notary, transfer tax, hoa fees, appraisal, tax service, etc etc. Many of these fees can be credited by the lender for an increased interest rate, or by way of seller or broker credits. These amounts and percentages may be capped on some mortgage programs.

How much documentation does it take. Pretty much everything over the last 90 days from bank statements to paycheck stubs, Your gonna need a ton of information, But if you are organized and retain your records as recommended you should be fine.

Get your trusted mortgage advisor involved before you start shopping. Get Pre-Approved by a lender like me to know EXACTLY what you are getting into.

180 days down just over 12 months ago...Approved

This business never ceases to amaze me. Today, I was able to get an approval for a client who was OVER 180 DAYS DOWN on their mortgage just last year. Their credit scores were over 700 already and they even had a few small paid collection accounts.

The moral of this post is; don't assume you are declined or can't get an approval until you have researched all the possibilities with a qualified licensed mortgage originator. You may be surprised by what you find out.

Post Election and Obama Mortgage Market Predictions

Ok.. finally it's over. All the ads, misrepresentations and taking everything out of context is over for a while - maybe.

Now we have to look at our businesses and determine where we think we are headed with current administration. This morning the market adjusted a fair amount and to the down side, with Treasury's rallying - resulting fantastic mortgage rates. It's a good day to lock, but where are we headed?

In my opinion, the Obama administration means we will see a longer period of low mortgage rates than we would have had with Romney. You will also see government maintain a greater share of mortgage lending backing. With recent announcements from Freddie Mac on earnings, its clear the government and the GSE's are enjoying making money again.

I think with the Obama admin you will also see a consistent barrage of new government intervention, compliance, audits, rules and regulations being continually beat with. Best case is we will continue to see consolidation in our industry as the purchase market continues its uptick and refinances continue to moderate after big rate drops.

The continued government involved will continue to limit private party money from entering the ring.
This will limit the pace of new mortgage products. Although a few may be able to navigate the government waters for reassurance that dipping their toes into the water won't get them bit off.

FHA vs Conventional? Is one really slower?

I had an interesting coversation with a client yesterday. The clients are making offers on properties and the listing agent made it clear that - FHA offers were not going to be accepted. It reminded me of a classic Blazing Saddles scene where everyone is accepted except for the Irish (rough language kids). Now at first glance this could be perceived as racist and I am sure some would make that arguement that it is. However, the truth is the uneducated Realtor makes that assumptions themselves.

The methaphor is clear, that there is a preconceived belief that FHA loans are harder and slower to close than a conventional loan. As an Origintor that does both, I can tell you that any loan can be difficult and it makes relatively no sense what product is necessarily chosen.

Of course there are exceptions, most notably condominiums. There are cases where a project is not HUD approved and as such cannot typically be financed with FHA funds.

But other than that, Realtor should educated themselves about the FHA process which is much more streamlined that in years past, and as a FHA approved lending institution, I have first hand knowledge that HUD or the local HOC's have little involvement in the FHA lending process once a lending institution is approved.

So stop limiting the real estate recovery and sell to FHA borrowers!

Support Small Business? History of Credit

You may not realize it but not only are you probably receiving poor service from your big bag of...I mean Big Bank, but you are also hurting small business (Big Bank Article). Smaller direct lenders and mortgage brokers can typically offer more attractice programs and pricing along with providing better overall service.

It sound strange to think a small company that may actually sell your loan to a big bank could offer terms better than that same big bank. But it's true. Smaller lenders and brokers have found ways to cut costs and create better operating efficiencies than their bigger counter-parts and in many cases pass those savings onto the consumer.

So next time you thing about a refinance - give the little guy a try!

Also, If you are interested in FICO scores... and how the hell they became so damn important - read this post.

Waiting Periods for Significant Credit Events

I received a good amount of positive feedback on my post regarding waiting periods after significant credit event such as BK, Foreclosure, Short Sales etc. So for those that missed it, please click the link and share with whomever you like. Please keep in mind many factors other than these affect the ability to receive an approval for a new home purchase and its best to consult a certified mortgage banker such as myself.

Waiting Periods for Significant Credit Events

From "the streets" not the "Street"

The mortgage business and the finance industry in general are still under attack. Because we didn’t self-police or use a moral compass (or even past historical performance) when considering the extension of credit and the creation of certain subprime and Alt “A” products years ago, we are paying the price as an industry today with over regulation and knee jerk proposals under the auspices of helping consumers who are ending up paying for it all, again.

This is no news flash. But many outside of the lending industry just don’t realize how much our government continues to try and over-correct the problems that created the crisis. These knee jerk decisions may in fact, further delay our economic recovery by further impairing the access to credit. Are we really to think the new GFE did anything to improve the consumer experience or help clarify terms? The lending climate is so frightening, that many believe it’s the reason why private equity hasn’t entered the RMBS arena in any large way since the collapse. These investors just don’t know where we are headed with government intervention and frankly yields are higher and the risks lower in other non-mortgage investments.

The changes being proposed by the CFPB do not serve to protect consumers or clarify terms and conditions of mortgage. In fact, I would argue many of the CFPB proposals will in fact, increase costs and fees, further confuse both consumers and the lending industry, and force further consolidation in a business and employment pool that has already been decimated. Just look at turn times. And do I really need to comment on the Appraisal AMC’s and appraisal costs doubling? We can’t even keep up at most lenders. It’s a fact that mortgages and costs associated with mortgages are already an all-time low – wasn’t that the goal?

Business owners and those tasked with managing a mortgage company’s compliance and policies and procedures don’t like the government changing the rules in the industry without a really good reason and certainly not without reasonable forethought and planning.

Such is the case in mortgage lending. In just a few years, we’ve created a brand new government agency, the CFPB, to protect the consumer. While I applaud and support any efforts that REALLY help consumers, forming an agency with NO ONE from the industries they regulate on their staff seems utterly ridiculous. Just a couple of “mortgage” people could have squashed the whole flat fee proposal quickly, and avoided further stressing an already “scared to death” lending industry and environment. I know that having an agency stacked with all finance people would be counter-productive.  But, it’s akin to a “mortgage” person, telling the nuclear industry how to dispose of nuclear waste and spent fuel rods.

Most should agree that consumers need to be protected. But some of the ideas the CFPB are offering appear to be totally irrational and not thought through nearly enough prior to announcement. Let just talk about two issues—1) Loan Originator compensation/requirement to offer no points and no fee mortgages, and 2) the SAFE Act and Loan Originator licensing.

So let’s talk about LO comp. Just this week the proposal of flat-fee compensation was dropped.  Here is a fine example of a government body presenting an idea that doesn’t even sound good in theory.  Immediately everyone in our business realized this would do nothing but further raise prices or downright eliminate the access of credit to the most underserved part of our population-- the low income homeowner/homebuyer with small loan amounts and/or sales prices. This proposal created months of debate and responses to the CFPB which undoubtedly were probably something like, “Are you guy’s nuts!”  The lowly LO already gets paid on basis points based on loan amounts, which is basically flat. Did they really think a borrower with $50,000 balance would be treated or serviced like a borrower with a $500,000 balance? If anything, we need variable comp to support those borrowers.

Most of us on the “street” already offer no points and no fees structures regularly. There is no advantage for me to offer a loan with discount points or without, or for offering a FHA loan versus Conventional. Yes, I know some pay varying comp on those products still. And I assume they will correct that once their company’s CFPB audit is complete. When I quote from our rates sheets, I am quoting with loan officer compensation already built in.  And what about payday loans…You mean to tell me my 3.25% fixed rate APR is a serious problem, and a 199.99% APR from a payday lender is fine?

We are already offering loans with APRs the same as the start rate. When I examine no points and no fees, the only purpose is to analyze the financial benefit and recoup period compared to the buyer/borrowers goals with the subject property-both short and long term, not because I make more on the loan. So why regulate and create new policy for something that is already in place?

Now let’s talk about the SAFE ACT and the creation of the NMLS?  Yes, I know the CFPB did not create the SAFE ACT or the NMLS, but they are certainly involved in the administration and oversight as the be-all-end-all financial oversight agency. I think we must have 5 regulatory agencies involved to some degree now…But I’ve lost count.

Prior to Dodd Frank and the SAFE ACT, we already had state licensing agencies, educational requirements, testing, finger printing, background checks etc. So let’s go ahead and add another federal layer to the mix. I agree that bank LO’s should be licensed the same as non- depository lenders, that hasn’t even happened yet. I’ve been fingerprinted over 20 times in the last several years – does that seem reasonable or provide any kind of protection for consumers?

How about a state agency like the CA Department of Corporations that needs to approve the “transfer of existing active approved licenses from one approved NMLS company to another NMLS approved company”?

During a change in my employment recently, I needed to wait over two weeks to receive approval from the CA DOC that already knew I was approved, active, and working. The DOC prevented me from originating new mortgages in my name, which is required to be paid for originating a mortgage. According to the NMLS, “the state CAN approve the transfer the same day”? I suppose that is possible, but states are broke and most state agencies have seen massive cut backs and furlough days. So a same day approval may turn out to be longer than many hope for. Either way, I as the dastardly LO, have to pay the price and cannot earn a living until my license receives the “rubber stamp” blessing. Many companies have resorted to boarding loans in other licensed originators names and then either transferring or paying those LO’s once the loan is funded. And from everything I’ve read, you can’t do that either.

Finally, I am not saying the government shouldn’t try to protect us. I don’t think banks should charge $5 a month for an ATM card, or charge $3 when I need a $100 from my checking account when there isn’t a branch of my bank nearby, or charge $35 late fee on a credit card with a $100 balance.  But then again, I don’t run their businesses which were formed to make a profit. And I guess that is my real point, free trade makes markets, not government agencies.  If I don’t like those fees, I can take my business elsewhere.

 I will leave the CFPB with a few easy fixes that would actually help consumers.

1.       If a borrower pays for an appraisal, it should be transferrable--no questions asked. We have “awesome” AMC’s, who now charge a premium above appraisal costs, and since there is no longer collusion between LO’s and Appraisers, that would actually provide the opportunity for consumers to take their business and paid for appraisals elsewhere if needed. I just had an appraisal for a $150,000 investment property cost $625.00 - utterly ridiculous.

2.       Put a signature line on the GFE. The amount of incorrect GFE’s out there is probably pretty frightening – and I hope wholesalers out there take note from this Stearns audit.  

3.       Use the APR as it is intended. The APR is a mandated disclosure under Truth in Lending. Mortgage shoppers confront it as soon as they search for interest rate quotes, because the law requires that any rate quote must also show the APR. With further consumer education on the APR, consumers should be able to easily shop for the best mortgage offer.

Mortgage Credit Tight?

Watching CNBC today and it amazes me that the press is talking about tight mortgage credit.
OK if you compare credit guidelines today versus 2005-2006 yes, it's tighter.

If you write off all your income and try to hide from the tax man, access to credit is limited. But you and I both know if you aren't paying ALL your taxes, you don't deserve the lowest rates available.
Those rates are always going to be for those who can document their income.

But the fact is Roughly 69% of American homeowners with mortgages at the end of the second quarter had rates of 5% or higher and about 33% of them had rates above 6%, according to detailed mortgage data provided to The Times by Santa Ana research firm CoreLogic."

So why haven't these people refinanced? Most likely, valuation, credit score or credit issues, or, and I hear this a lot. They want to wait for lower rates! Really? With the G- Fee increase and QEIII coming to fruition, don't bet on it. The banks and large lenders are just going to take the increased profits.

In 24 years I've never seen rates this low, and that's becuase they've never been this low.

So if you haven't looked at refinancing, take a look today, even if you refinanced over the last 18 months.

Shocked

I had a meeting today with my financial advisor. I needed to get some things in order for my family and my retirement. Anyway, while I'm in the meeting my advisor's boss asks me what's new in lending, you know products, rates, etc. I tell him business is good, rates are ridiculous, and the HARP program has really helped keep lending going.

Like it or not, the government intervention has keep the real estate market from completely imploding (Yes, it could have been worse). The low rates provided by our Fed along with the HARP program have really helped millions of families lower their housing costs.

He asked? "What's HARP" After being surprised that a senior financial advisor doesn't know, I realized that with all the marketing out there, many still have not heard about this program.

So here are the basics. HARP II allows for underwater homeowners to take advantage of today's low rates by providing the liquidity in today's residential mortgage market for lenders to fund these types of transactions. This program is for not only for primary residences, but second homes and investment properties qualify too.

In some cases the program HARP II will allow unlimited loan to value. And what does loan to value mean? Well if your home is worth $300,000 and you owe $600,000 your loan to value is 200%. If you home is worth 100,000 and you owe $80,000 your loan to value is 80%. Pretty simple right?

With HARP, homeowners that are underwater AND want to hold onto their properties have the opportunity to lower their overall mortgage payments on these properties. This helps keep homes out of foreclosure and ultimately keeps property values higher as reduced inventory creates limited options to today's home buyers who have begun bidding up properties in many areas.

You need to make sure your mortgage is owned by Fannie Mae or Freddie Mac and needs to have been funded prior to June 2009. But these rules may change soon too.

Although we are not out of the woods. A recent study shows 50% of Nevada homeowners are still underwater. But the private market has begun to come back into lending with unique programs for self-employed borrowers and borrowers with less than perfect credit or who may not be able to show as much income as needed on their tax returns.

The bottom line, it makes sense to talk with your mortgage advisor (like me www.michaelfoote.com) about ALL the options that are available for you and what is best for your short and long term homeownership goals.

So give me a call or email me today.

What a Loan Officer shouldn't tell you...

I had an interesting call from a client. I lost the loan to another loan officer because Bait and Switch is still alive and well. It is always my policy to "l.eave the door" open. I figure if I lost your loan to a competitor, its my fault, not yours. Anyway, I followed up with the client to see how they were doing and sure enough the loan officer changes the story AFTER the appraisal fee was paid. So I quoted the rate and cost again and told him the rates would probably settle down. Of course, the other lender told the client that they HAD TO LOCK today since the appraisal was done. I told the client if he came with me I would pay his appraisal fee and he ASSURED me he was going with me and he was only talking with myself and the other company but since they tried to raise the rate on him, he was going with me. Great! And off we go.

We get all the disclosures done and we are ready to order the appraisal and the client writes me back saying he was going with his old mortgage guy from 10 years ago. What probably happened was he went back to the other lender since rates settled down and they were probably able to get close to the original quote.

The moral to my story is this, mortgage people AS WELL AS BORROWERS are capable of lying and being deceitful. So when you ask why all these fees or the higher rate, its becuase the consumer has been trained to not trust anyone when dealing with mortgages or any other financial products and because there is little loyalaty between mortgage companies and consumers fall-out if higher and therefore costs per closed loan are higher. 

This particular borrower, had he gone with me, would have saved even more money since the market continue to move to the better after he went to the first person that had lied to him- undoubtedly he was in a rush to close (which never makes sense) unless you are a purchase transaction.
This deal isn't funded yet....so let's see if the story changes again.

So save yourself the grief and trust your mortgage advisor.

For My Loan Originator Brethren

Not too long ago, I decided that recruiters were all pretty much full of crap and for that matter NON-PRODUCING BRANCH MANAGERS too. Their sole job is to get you into a seat and if they were on retainer it really didn't matter too much about if you performed. If they were pay to play....the performance of the "recruited" mattered a little more. But still the recruiter is typically short sighted. Or the non producing branch managers were trying to justify their guarantees by throwing bodies up to the altar of production for slaughter.

It became apparent to me, that the only way to know what you are getting into with a new company was to put a loan through and see for yourself, know someone inside that would tell you the truth, or never take the chance. The other option is to process everything yourself. Which works great and you'll never know a file better, but you can forget about doing any real volume. Processing is once again critical.

I've kissed a few frogs (mortgage companies) lately, trying to find the right mix of product, culture, leadership, low rates, and compensation. Then I realized, it wasn't about the lender or their lack of experience, it was about me.

Once I decided I would never be help accountable for a lenders horrible service, operation errors, and mistakes, I noticed my production improved.

Now I offer this security to you. All you need to do is contact me and I will share the details of my success and the tricks to never having your production get screwed up again.

There once was a reason we called ourselves, "Loan OFFICERS" because we mattered, and we do again.
You should feel this way, and if you don't, please reach out today.

I'm very happy to announce I have been retained by a mid size direct lender, Citywide Home Loans, to expand to the Southern California region

CHL Mortgage has the culture, desire, and execution to deliver results for like minded loan originators and branch managers. There are many companies out there looking to grow and they talk a good game. I know because I am an originator. But it ultimately comes down to can you deliver hot food or cold food.

I am very excited about the prospects of Citywide in Southern California and encourage you to contact me if you are an industry professional looking at new options for you loan production.

Everyone is making money today, but are you happy and being supported in the manner you know if right?

Call me today to discuss.

Michael Foote
949 584 4600
michael.foote@chl.cc

So glad Barclay's, a reputable company, bought Lehman

The mortage broker ruined the globalo economy. I got tired of hearing that over the last several years. As we all learn from the economic diasaster that was 2007-present, it is clear to me that some things will never change. And somethings are the insatiable greed of our best and brightest in the financial world. Whether it's a $50 billion dollar ponzi scheme or trillions of dollars of loans that should never have been made. You can be sure that where there is a will there will be someone making the way. In today's case of greed and corruption - I give you pure cost of money manipulation....And huge settlements, err I mean payoffs to the government. I can guarantee you the banks made more with the fraud than with the penalties and fines they paid. So was this a good business decision? And is a business decision always good when it makes money?

http://finance.yahoo.com/news/barclays-pay-400m-plus-settle-130159247.html

What does it mean rates will stay low for the near-term

I swear the ubersmart financial prognosticators of the world have a way of stating opinions with out every being specific. A client commented to me yesterday that he was going to wait a little and try to improve his credit scores, as he said, "I think rates will stay low for a long time, so I am in no rush". It is true that rates will probably stay low for a good amount of time (see I did it there too).

The real question of course is, what is "low"?  Well everything I read means low rates are considered lower than 5%. Around 29 million people still have mortgages over 5%. Big number. So clearly many have not, or been unable to, take advantage of today's super-duper-duper low rates. These rates are artificially low, and as such, any delay in taking advantage could be foolish and just a plain bad decision financially.

The government is buying the vast majority or mortgage production and they are continued to be involved. But big changes to banking rules and the projected devaluing of residential servicing for the depositories could spell big increases in the cost of mortgages going forward. Any increased incosts for banks and non-depositories will be directly reflected in the rate and price of mortgages.

I've sold double digit mortgage rates. I've seen rates rise 4% in a year. Don't think it can't or won't happen again. I can promise you, that by the time you realize mortgage rates have risen dramtaically, you will already be too late.

A bird in the hand is worth two in the bush.

Summer Lending...happened so fast...

The beach was perfect this weekend. These are the weekends you really have to wonder why everyone doesn't live in California. Rates continue to stay low and the Fed recently announced continuation of the Operation Twist, which is basically providing funding for all you guys refiancing your mortgages. I find it ironic. Twist, implies to me, to manipulate, and I think that everyone would agree the markets are manipulated. So you want your piece of the government cheese? Then refinance your mortgage that is underwater or purchase a new primary residence with 1% down. Or buy a investor property with 10% down. Financing is out there, and the market is being manipulated to keep that borriwing as cheap as possible. Take advantage.

A real estate bottom?

Harvard Study: Bottom Has Been Reached It's one thing when special interests declare "the end" of the housing debacle, but it's another when such an august organization as the Joint Center for Housing Studies at Harvard University calls the bottom.

QEIII...doesn't look like it yet..rates are still lower today...amazing.

The U.S. economic recovery faces significant risks, including from the European sovereign debt crisis and uncertain U.S. fiscal policy, Fed Chairman Ben Bernanke said in testimony prepared for a congressional hearing on Thursday.

The Fed chairman stopped short of signaling Fed action to combat these risks, other than to say that the Fed remained “prepared to take action” to protect the U.S. economy and financial system if stresses on the financial system escalate.

HARP refinances

Very specialized. Apply on my website today. Www.michaelfoote.com ....also QEIII comments coming shortly.

HARP refinances topped 180,000 in the first quarter of this year compared to approximately 93,000 in the fourth quarter of 2011. Last fall, of course, was when several changes took place: the removal of the LTV ceiling and the elimination/lowering of fees for certain Fannie or Freddie borrowers. Per the FHFA, one in seven refinanced loans during the quarter was through HARP - in March alone, there were nearly 80,000 HARP refinances, a quarter of them on loans with LTVs greater than 105 percent. More than 4,400 loans with LTVs greater than 125% were refinanced since the beginning of the year; over half these loans were refinanced in the states of California, Florida and Arizona.

June Gloom? Not really.

Will the Fed lower rates further? Are we in a recession... again? Is Europe screwed? The answer is probably yes to all three. Rates are just ridiculous, programs are extremely liberal. Believe me, the news talks about it being hard to get a loan done, and it's not. And while it can be a slow process, there are amazing programs available today, and many of these programs can't be offered by the big banks and large direct lenders. Your mortgage broker again, can provide the best value. FHA, Conventional, Super Jumbo, VA, Portfolio, Investor Purchase and Refinance, HomePath, HomeStyle, 203K, HUD $100 down....Heck we even have a bank statements as income documentation program these days. 

Want to check out a great CPA, vist www.hayniecpa.com and ask for Mike Zurovski, a great guy and very talented.

On to personal news. The CrossFit/Paleo diet combo is starting to take hold. New record weight of 219 down from 250 two years ago, and now the weight drop is starting to pick-up speed. I have to say dieting is the hardest part. Just this morning we had donuts for Dad's day and I obtained from my free Crispy Creme deliciousness... No heart burn and wasted calories, but passing on a donut, let's be honest, is just sad.  And going out with the family for dinner and special occasions makes it hard to not "give in". Last week was a bit choppy with ball games and dinners...Definitely paying for it this week. But we are committed and staying on track, are you?

Looking for a great Real Estate firm, try California Property Resources, serving selected California markets.
Specializing in distressed situations. They like the tough stuff!

Borrrrring...but still an amazing time.

Mortgage rates haven't changed much lately. The good news of course, is rates are still incredibly low.
Purchase activity seems to be picking up in Orange County and many of the areas in California especially in the lowest priced home markets.

Nothing really new latly, except the expansion of the HARP refinance program and increased FHA mortgage insurance premiums.  If you need a lower rate and haven't applied recently or been turned down over the last two-three years. Now is a great time to have someone check your individual situation (like me of course).

There are a few jumbo programs coming to the market and we are seeing some increases to LTV requirements - which is just higher leverage. Many programs are available with 85-90% leverage for high net worth individuals requiring financing for luxury properties. 

I love closing loans for new buyers and new realtors in the same transaction. We had a few of those last week and if you are new to real estate or require a very high level of interaction with your lender/broker. Then consider this company.

Please Mother May I...talk about what's happening in the mortgage and real estate industries

Well to start a new month, I've decided to start a Paleo diet. Wish me luck and I apologize in advance if my blog reads a bit cranky...But you eliminate your cream and sugar from your coffee, starches, legumes, dairy and see how you feel...it changes you... ;)

Did you know reverse mortgages can be used to finance the purchase of owner occupied residential property? Click on the link above to see how the reverse mortgage structure works.

Home prices are still falling, albeit much slower that in previous years. Buyers of some residential properties purchase from 2009-2010 are already underwater. This isn't true for all neighborhoods and you should remember to consult a local Realtor when you want specific market information click here to find our if you are in the black or in the red.

Recently we've been doing a number of purchase transactions and if you are a Realtor or a Buyer/Borrower, work with a licensed mortgage banker who specializes in purchase transactions. Your refinance chop chops out there do not have the experience necessary to faciliate a purchase mortgage or have knowledge of all the additional moving parts. Work with a mortgage banker WITH a real estate brokers license. I don't do Real Estate, but understand the Realtor and Buyer needs better than most.

OK, as we close out the month end and head into May, it's always good to note the big changes out there and the good news bad news going forward. The good news is rates are still fantastic and look to remain near these levels for the near term certainly. And mortgage companies are making good money along the way. So why when money is cheap and profits high would MetLife exit forward mortgage originations and reverse mortgage origination last week. Clearly, the Dodd Frank Act is making those "too large" to fail institutions just too interconnected with the government. And in MetLifes case, why originate when its only 1-2% of their earnings AND have the governement up your craw making decision with and maybe even for you.



So why do I bring this up? The reality is it can be tough for many people to find consistent service, rates, programs. With so many companies going out of business or closing business divisions, the borrower needs to find a single person, licensed, educated, experienced that udnerstands the industry, products, and the details. Today, mortgages are technicall and demand expertise to makes closings smooth.

California DRE warns of property deed scams

A serious warning from the State of California. Last week the California Department of Real Estate (DRE) issued a warning about property deed scams, which are apparently on the rise thanks to the depressed economic climate.  The Consumer Alert that DRE released notified homeowners of a number of red flags that indicate fraud: changes made to a recorded document after signing ("Is that my signature?"), recorded documents signed by a deceased person ("Look - Marilyn Monroe's autograph!"), documents indicating that the a portion of the property was sold without the homeowner's knowledge ("Who's living in our front yard?"), receipt of documents for a mysterious loan or transaction ("We owe how much to who?"), or receipt of a Notice of Default or Trustee's Sale when the property is owned outright ("What happened on the courthouse steps?") are all tip-offs. Seriously, the California DRE encourages homeowners that experience any of the above to notify the County Recorder's Office and their insurance company if their title policy covers forged deeds.  It's also worth contacting local law enforcement, as the District Attorney offices in several counties now have real estate fraud divisions, and, if the real estate broker or salesperson is the likely culprit, filing a complaint with DRE itself.  Employing an attorney familiar with real estate law is advisable, as they can help with annulling or voiding bogus deeds.

FHA deadline fast approaching. The difference waiting may cost you thousands.

APRIL 9TH FHA will start requiring new up front AND monthly mortgage insuarance  factors. The difference is potentially worth tens of thousands of dollars over the life of the loan. Email me today for a quote and to get your case number assigned Michael@michaelfoote.com

FHA Streamline Refinance MIP refund chart

Curious about FHA UFMIP refunds? What is the calculation for refunds on FHA loans up front mortgage insurance.

Don't call it a comeback I've been here for years

From Rob Chrismans email today. Are mortgage brokers making a comeback? After the financial crisis, drop in originations, regulatory tsunami (a "Reg-plosion"), and the recent exit from the sector by many large institutions, many thought the days of the mortgage broker were numbered. However, it may be too soon to count them out. According to the Q4 2011 Quarterly Data Report from the NMN, third-party originations jumped to 11.4% of all originations, or $51.3 billion, up sharply from the $29 billion brokers originated in the third quarter. Going back the previous five quarters, market share was 8.2%, 7.9%, 6.8%, 10.7%, and 11.8%. Putting things into perspective, broker market share peaked at nearly 30% in 2007. Perhaps reports of the brokers' death were exaggerated.

Changes you may not have heard about.

With the new settlement with the banks, states and lenders are expecting to see in increase in approved short sales. Since the amount of the settlement includes deductions for approval short sale deficiencies.

It looks like your entire california property tax bill is not going to be tax deductible. With the 2012 tax bill you see a breakdown between regular property tax and special assesments which are no longer tax deductible.

Also, in what may be an even bigger announcement is that mortgage insurance will also no longer be tax deductible after the expiration of that rule and 58 other. Congress failed to nenew these rules in December. Thanks! I love backdoor tax increases.

If there is good news it is that rates are still very good, the HARP II refinance is picking up steam. FHA is still offering loans to credit impaired borrowers.

Any day above ground is a good day!  

Treasury Makes Bank

Remember all the hub bub when the Treasury announced they would purchase MBS to support the mortgage market...everyone worried it was just more wasted tax dollars. Well today announced the completion of of the orderly windown and turns out they made over $25 billion from investing approx $225 over 2008 and 2009. That's a 10% return.

Where's our cut?

Filed Under Shameless Self Promotion

Looking good for the mortgage broker community. We provide a valuable service and may be the only advocate for the client left. The main difference is the Loan Originator working for a direct lender or bank has ZERO pull. The Loan Originator that controls his product between investors has better overall leverage.

HARP II Refinance, More Assets, Rate Trend

HARP II Refinance Applications. You can submit your new loan application for HARP II refinance loans. These loans offer refinance of first mortgage loans current over the last 12 months owned (not serviced) by Fannie Mae and Freddie Owned loans with fund dates prior to March 2009. #CalPropRE #MMSToday #MichaelAFoote

These loans offer zero limitation on Loan to Value and Combined Loan to Values. Second liens can be subordinated to the new first mortgage. credit score, debt to income ratios and assets requirements have been drastically reduced. Rates are sub 4% for some applicants.

In other news lenders are tightening on some programs, notably Fannie Mae will begin requiring 12 months assets for certain primary residence and investment refinances.

Rates overall are slightly higher over the last couple weeks, but are still remarkably attractive from historical perspectives.

http://www.michaelfoote.com/

Lehman BK, FHA Mortgage Insurance, HARP2

Well CNBC just announced lawyers made the biggest payday ever, billing 1.6 billion --SO FAR.... What's that like $4,500 a hour? 

FHA new MI goes into effect on April first, if you are planning on streamlining your FHA loan get your FHA case number assigned before that happens...

HARP 2 continues to be launched and we now have no CLTV limitation on DU Refi PLus loans, or loans owned by Fannie Mae. While this program will not pay off your second mortgage, it can substantially reduce your first mortgage rate and it doesn't matter how underwater you are.

It's Friday...what's going on.

Lot's of little stuff to talk about today. 24% of home sales are distressed according to a recent report. I would argue the number is much higher, and with the recent history of revising sales figures, I personally never take the first number anymore. I will wait until the first revision generally guaranteed by the release of the next quater results. One thing is for sure, we are seeing some signs of like with the HARP 2 refinance coming online and purchase activity creeping up. Mortgage applications have popped and lenders are still scrambling to hire more sales people, including the 1400 announce by Quicken today.

There was also some news about the federal moratorium program for homeowners who have or will short sold/sell or received the dreaded 1099 from their lenders. The program is set to expire end of this year, so Realtors are pushing homeowners who need to short sell to do it now rather than later. Since a short sale can easily take six months start to finish, it is an important consideration...But Congress could certainly vote to extend such a moratorium since it has little impact on our economy. But does the program encourage people to strategically default - of course it will.

FHA is raising it's premiums on mortgage insurance front and back kids...get your guides updated!

Rates have held nicely over the last few weeks with Freddie reporting a 5 bps drop in averages - which brings in calls everytime.

Reverse mortgages may work out well for retirees.

http://mobile.nj.com/advnj/pm_29224/contentdetail.htm?contentguid=vnmFDvbb

#purchase #reverseloan

FHA announces UFMIP and MMI hikes

1.75% UFMIP now versus 1.00% and MMI will increase by another .10%
This is a pretty big jump and will eliminate some from pursuing FHA loans. When at all possible try to go conventional versus fha

If Warren Buffet could buy a couple hundred thousand homes he would.

Great morning to watch Warren Buffet..He really is credit to our country. If we could vote for an economic president, I would nominate him. Warren spoke today about many things including the tax code, and more importantly to me personally, the housing market which is says has gone through a depression, not recession, and is still the only engine not firing in our economy.  He stated that is it were feasible he'd buy homes at a record clip. Clearly he feels the combination of low rates and record home price drops makes this a good time to buy.  While a 7% owner of Wells Fargo, Buffet feels the banks have done a good job in the US to shore capital and clear balance sheets. I love this guys plain sense approach to all things including his calls on the economy - We need more people to be vocal and GET the air time to express his beliefs. Great job today CNBC.

FHA premiums set to rise

FHA is set to get even more expensive.

http://www.insidemortgagefinance.com/blogs/FHA-Plans-Premium-Hikes-1000019018-1.html

BofA - Drops Fannie Mae - No more sales to Fannie from BofA

Wow. big news. I guess they plan on selling to Freddie and portfolio for the rest...Or maybe there is a big secondary buyer out there. It will be interesting to see how this plays out.

Mortgage Recruiting the good and bad

I had a looooooonnnnggg conversation with a recruiter yesterday. No I am not necessarily looking for a new job so please don't drop a LinkedIn note, FB, Tweet Me, Poke Me or otherwise socially molest my inbox.

That being said, I think the gentleman from Hammerhouse called about a post on LinkedIn where I basically called out the mortgage recruiters out there. He wanted to explain that his business is about relationships. I agreed with him on most of his points. It's always a good idea to talk to people in related, connected or your personal industry. You just can't beat street knowledge.

Do I think they (recruiters) add value, yes. All they all honest, no. But I think Eric was yesterday. Let's face facts if you are in the mortgage business still, it's feast or famine for sales and marketing people. There are some doing very well, some not so well, and some are on there way out. Operations people have jobs, not making what they did, but salaries and benefits are why people are in operations. Sales takes balls - yeah I said it.

But, the fact is mortgage licenses have increased year over year. Everyone tells you what you want to hear. If you are new to the business you don't know different. If you are a seasoned vet, which I am (scary), then you know people will lie to you in this business. Some have said salespeople are the easiest close. And I think that may be true in many respects. But there is always truth even within a lie. The hard part is figuring our what is what.

Recruiters have contracts with specific companies and are therefore obviously trying to place you within a good organization. They get paid if you are successful and if you aren't then not only does the recruiter lose income, but potentially their reputation, by hiring "Clown shoes" (learned that one yesterday) instead of a seasoned vet with pipeline, marketing, and a working origination platform.

Stay tuned....Let's see what all these recruiters are really worth.

Newer Newest New Refinance Program brought to you by you?

In the immortal words of Dan Akroyd, 'Obama, you ignorant slut'. Clearly Obama is bright guy, well he can read the heck out of the teleprompter. But I struggle to find the reasoning behind announcing a mortgage refinance plan that has little to no possibility of being voted on and passed prior to the election?

Is it just so the average Joe thinks he 'cares'? It seems to me that throwing out unsupported programs to the general public during a speech has the appearance of catering to the mob mentality. Mind you the last plan with unlimited LTV has yet to kick off. Why, shockingly, the banks are scared s&^$less. They don't know what's coming next, and oh yeah, banks are going to pay for this new new program too! You thought $5 ATM was steep. According to Jamie Dimon the average bank account costs $300 a year for the bank - slap another tax on those banks and dang it you've got trickle down economics, where the increased tax and banks translate to increased borrowing and banking fees. Do you think the banks will take the hit?

It's 2012, the crisis really began in 2006/2007 and hit hard publicly in 2008. Isn't it a little late to go after the people who were responsible for the crisis? And those people are....well all of us. From the first time home buyer who HAD to have the bigger house; they couldn't stomach a condo! they deserve an SFR. To the mortgage broker who rather than just originate conforming loans (those loans were always available) decides to produce subprime loans, hearing there would be big returns, to the mortgage lender who set guidelines, pricing and loan terms along with the investment bankers who packaged them and sold them to funds who bought these hot potatoes on the hopes of high yield returns for their investors, or the rating agencies who rates this crap AAA. Well they all weren't rated that high, but clearly there appear to be conflicts looking back.

How a stated income loan for a fixed income elderly borrower with less than perfect credit was allowed to purchase with no money down with a loan that had a fixed rate for only 2 years and huge prepayment penalties along with a monster adjustment schedule and life cap is beyond me. Did I originate those, probably. I am no innocent victim here; nor am I am accomplice in a crime. The fact is we all drank the cool aid and believed the ride would go forever..reminds me of a time like the "Roaring Twenties", which was followed by a little period of time called the great depression.

My point, I hope is clear, we were all to blame, and it will happen again, maybe not in mortgage (but probably) but maybe tech again, energy, fertilizer, semi conductors, etc. There will always be bubbles. I guess the only thing you can hope for is you cash-out at the right time. Those are the people who deserve the credit and maybe even some of the blame.

You know come to think about it, its 2012, which mean the 20's are coming, by that time maybe we will experience some roaring growth again. Time will tell, but one thing is for sure, history repeats itself.

To all those LO's looking at the million job opportunities out there. Here is a list of places you do not want to do retail at in my opinion:

GMAC
B of A
Chase
Prime Lending
Prospect
Freedom

Good places

Caliber Funding
Wells Fargo
or be a broker and own you own business.

Top Ten 7a Lenders in California

Here is the latest top ten SBA lender list for California. This list compiled from NAAGL shows the top lenders in California for 7a gross approvals for the 2011 year to date ending 09/2011

BankName BankStreet BankCity BankState BankZip # Loans AppvGross AppvSBA


CENTER FINANCIAL CORPORATION 3435 WILSHIRE BLVD, STE 700 LOS ANGELES CA 90010 254 230,642,800 191,588,020

WILSHIRE BANCORP, INC 3200 WILSHIRE BLVD LOS ANGELES CA 90010 253 183,096,700 153,569,240

AMERICAN HERITAGE HOLDINGS 7777 ALVARADO RD, STE 515 LA MESA CA 91941 741 160,761,300 132,478,560

SEACOAST COMMERCE BANK 678 3RD AVE, STE 101 CHULA VISTA CA 91910 204 151,010,600 127,518,085

NARA BANCORP INC 3731 WILSHIRE BLVD, STE 1000 LOS ANGELES CA 90010 129 130,198,000 108,235,225

HANA FINANCIAL, INC. 1000 WILSHIRE BLVD, SUITE 2000 LOS ANGELES CA 90017 127 125,580,000 108,045,200

CAPITALSOURCE BANK 633 W 5TH ST, STE 3300 LOS ANGELES CA 90017 93 105,033,000 87,728,550

HANMI BANK 3660 WILSHIRE BLVD PH-A LOS ANGELES CA 90010 71 88,580,700 66,771,000

PACIFIC CITY FINANCIAL CORPORA 3701 WILSHIRE BLVD, STE 401 LOS ANGELES CA 90010 143 87,379,700 72,365,575

OPEN BANK 1000 WILSHIRE BLVD, STE 100 LOS ANGELES CA 90017 83 84,555,400 70,079,390

Purchase market

Well I can't make heads or tails on what these guys are really saying.

  http://video.cnbc.com/gallery/?video=3000068596

That being said, houses are cheap as hell. There are many for sale, but rates are super cheap too? So does that make sense to buy today? Are you waiting for house prices to fall? But we also expect rates to eventually rise. But no one knows for sure.

You need to live somewhere and if you can buy today, you can cover a mortgage with rent today if you get the right mortgage with the right down payment. 

If you feel confident in your own personal financial conditon - buy. If you are unsure, then hangtight...One thing is for sure with housing...pricing will NOT skyrocket anytime soon.

You pay more for your mortgage so MBS prices improve? Thanks Government!?

From today's Rob Chrisman email. Clearly the change in pricing coming down the pipe is starting to wake up most of us originators. Frankly, this is no different than a business increasing prices to improve margins or cut losses. But in this case, since the government is there to prop up the market I am failing to see the point...Unless you read below.

Some Wall Street MBS analysts believe that it is likely that the g-fee needs to increase by another 15-45bp over the next two years (on top of the 10bp increase) if the FHFA changes g-fee level such that it reflects the risk of loss as well as the cost of capital allocated to similar assets by other fully private regulated financial institutions as required by H.R. 3630. The analysts note that conventional securities could be worth .375-.625 more because of g-fee increase's impact on current production, and older securities could be worth 1.5-2.0 points more since it will be more expensive to refinance, so fewer will do it, meaning that the securities are on the books longer.

Make no mistake, your payroll tax cut, that was extended, is being financed by an increase in Fannie Freddie Fees, or what's referred to as G Fees. The press noted 10 bps increase in cost...That is really nothing. The reality is the cost of a comparable rate today versus locking for 45 days can go up as much as 80 bps or .80% of your anticipated loan amount. There you go - enjoy you new tax.

G Fee Increase Read Here

The mortgage broker will replace the the direct lender LO very shortly.

http://www.originationnews.com/blogs/hearing/proof-wholesale-lending-cheaper-1028332-1.html?ET=origination:e2270:31512a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=ON_Bulletin_011312

MetLife - MetDead

No more MetLife mortgages...shocking.

http://www.bloomberg.com/news/2012-01-10/metlife-to-exit-origination-of-residential-mortgages-u-s-insurer-says.html

Filed under...Obama trying to kill the mortgage market

Well the G fee increase of 10 bps is starting to trickle down to the consumer. Wells today announced changes to pricing due to the increase. To save $20 in payroll tax mortgage prices will rise up to 80 bps. Or slightly more than .785% of the loan amount. Put another way on a $400,000 loan the cost of a similar rate will cost almost $4000! Nice job congress!

Wells Fargo wrote "In order for a loan to meet the April settlements, it must close by Feb. 29. The G-fee increase will worsen prices by up to 80 bps depending on note rate." (An 8:1 ratio? Come on...) Continuing, "Wells Fargo Wholesale Lending is staggering the impacts of that increase by Rate Lock Period in an effort to offer lower rates to consumers in the market for as long as possible. On January 11 the G-fee increase will impact 45- and 60-day pricing. You must begin calling Priceline for Rate Lock Extensions rather than extending online for Conventional Conforming loans (extensions will not be available online for Conventional Conforming loans), on 1/31 the G-Fee increase will impact 30-day pricing, and on 2/13 the G-fee increase will impact 15-day pricing. Conventional loans locked prior to the dates above must fund by Feb. 29 - no standard extensions. If the loan extends, you will be charged 55 bps to cover the G-fee plus normal extension fees. Non-Conforming pricing is impacted since pricing is set as a spread to conforming base price."

Rate go Down - Costs go Up - Just because the 10 yr drops doesn't mean mortgage rates will respond alike.

For Rob Chrisman today...

Fannie and Freddie will increase their guarantee fee on all residential loans being pooled by 10bp on April's Fool's Day, but most believe that this increase should start to reflect on mortgage applications in February, if not sooner. Other increases might be needed over the next couple years, especially if g-fees are raised to match what a non-government institution would charge for the risk. Some estimates that I have seen on this are another 15-35 basis points over the next two years (on top of the 10bp increase effective 4/1). Lastly, yesterday the commentary mentioned a buydown ratio of 2:1. As several astute readers pointed out, the actual ratio is closer to 4:1, so a 10 basis point increase could easily cost borrowers 40 basis points, or roughly .125% in rate. And all to support a two month payroll tax waiver extension! One can just shake their heads in disbelief...




A research piece from Morgan Stanley noted that, "The FHFA will need to increase fees again to "make up" for fees not collected in Q1. This increase would depend on how much issuance would occur in Q1 versus how much will be expected in Q2-Q4, meaning if issuance was expected to go up, the additional fee increase could be smaller. In addition, it is likely that the average fees collected for HARP loans will be lower in 2012 relative to 2011 due to reduction in the LLPA cap under HARP 2.0 from 200 bps to 75 bps, and the FHFA will need to "make up" that shortfall as well. There are two ways in which the FHFA could increase fees again: another across-the-board increase, and/or an increase in risk-based fees."



Morgan goes on to say, "As part of the HARP 2.0 program changes, 30-year HARP loans will have an LLPA cap of 75bps (loans with terms of 20 years or less will have a cap of 0. This presents a significant restriction on how many additional fees can be collected from those loans. Any across-the-board fee increase will get passed on to HARP loans as well, in our view. However, any risk-based fees are more likely to be capped at 75 bps. Any future risk-based guarantee fee increase, therefore, must take into consideration how many loans are likely to be refinanced through HARP versus the non-HARP channels."

And if you thought there couldn't be MORE compliance changes, here you go...

Domestic Partnership and Civil Union Requirements
Policy & Addendum

Background 

A number of states have enacted laws that extend additional rights to people who are registered within those states as domestic partners or who have formed civil unions. These state laws have granted registered domestic partners and civil union couples the legal rights and responsibilities that mirror those of married persons for purposes of state law.

In order to meet our obligations under the state Domestic Partnership/Civil Union laws, we are issuing the attached Domestic Partnership and Civil Union Requirements policy.

Effective Date 

We will condition for these immediately.

States Where This Is Required

In order to comply with state property laws, it must be determined during the applicant process whether the applicant is a resident of a state with domestic partnership or civil union rights or if the subject property is located in one of these states. Therefore, Caliber requires a completed Domestic Partnership Addendum to be provided by the loan originator and completed by the borrower in the following states:

·         California – An executed California Combined Disclosure (already required)

·         Delaware

·         District of Columbia

·         Hawaii

·         Illinois

·         Nevada

·         New Jersey

·         Oregon

·         Rhode Island

·         Vermont

·         Washington

Notes

·         If all applicants indicate that they are married on the Loan Application, execution of the addendum is not required.

·         If any borrower is marked “Unmarried” on the 1003, an executed Domestic Partnership Addendum (CA Combined Disclosure in CA) will be required PTD in the states listed above.

And we pass the savings on to you!

Hey way to go congress...Keep making it more expensive for people to refinance and purchase homes. That will help for sure.

You've been taxed!

More positive refinance news

Droiiiiid.

There's an application for that! I guess in today's environment the phone is the new laptop and therefore primary connection to the internet. So it is no wonder there is an app for my blog... and this is my first Droid post.

I updated my site for a little more social sharing ease along with the basics. And that is my mission for 2012 more face time, more communication, less missed calls. Less internet, less email, more phone calls. More marketing and a better focused messages. Those are my professional wants for 12. What are yours?

The business continues to evolve for those of us left. Please make 2012 a great year...