Today I read the news that we will get new rules from FANNIE related to underwriting guidelines. Rob Chrisman wrote, "The new DO/DU version will enforce underwriting changes that will allow buyers to use gifts and grants from nonprofit groups for their minimum 5% down payment. Currently, borrowers had to contribute a minimum 5% down payment from their own funds, but additional down payment money could be from a gift (though never from a home seller). The exception was for borrowers who put 20% down: all that money could come as a gift. But with overlays, many lenders now require a down payment of 10% or more, the new rules mean that borrowers will still have to come up with extra funds - either their own or gifts. But with Version 8.2 comes tougher DTI ratios: the maximum ratio for those seeking a conventional mortgage will drop to 45 percent from 55 percent under the new guidelines. Buyers who have missed a payment will have 5% of the total balance added to their ratios. And borrowers who have gone through foreclosure will be excluded from obtaining a Fannie-backed loan for seven years, up from four."
Wow, sure is going to see who will be able to buy these foreclosures. My bet the rich will get richer.
Tuesday, November 23, 2010
Tuesday, November 16, 2010
Wednesday, November 10, 2010
Rates..Always good to take stock of where we've been and where we are today.
I always track rates. I live for rates. Daily morning rates, mid-day price improvement, late market deterioration. It's as close as I will get to being a wall street trader ala my favorite hotel thrasher Charlie Sheen, which is just fine with this California boy.
When someone asks me what the rates are and I tell them. I will many times get back, "That's too high, and so and so is offering -0.009% with no fees at all. In fact, the lender said I would get a vacation to Hawaii, and a new car!!" Obviously the later is a shot at levity. But the point being is that many people say many things, and sometimes they are actually speaking the truth or at least comparing apples to apples. Sadly I'd say the majority of mortgage quotes given on websites are half truths at best and many times just plain wrong.
Go to bankrate.com and see the average lowest possible rates - then call the person you know or trust, whether they are a broker, lender, DRE, DOC, CRLMA, NMLS, NORML (the later again a shot at levity), and complete the loan process with them.
Until you complete the application process, and I mean ALL the loan application fields filled out, all income doc, all assets information. Yes, I want all the pages of the bank statements. No, I don't care you get massages at Madam Wong's in the city. Tell your mortgage professional what you want. If we can get it, we'll give it to you. Then and ONLY then, will you know what your loan terms will end up looking like.
But look at this chart - and marvel at your timing...Money is as close to free than it's ever been; whether you believe that is a good thing or not rates are dirt cheap.
When someone asks me what the rates are and I tell them. I will many times get back, "That's too high, and so and so is offering -0.009% with no fees at all. In fact, the lender said I would get a vacation to Hawaii, and a new car!!" Obviously the later is a shot at levity. But the point being is that many people say many things, and sometimes they are actually speaking the truth or at least comparing apples to apples. Sadly I'd say the majority of mortgage quotes given on websites are half truths at best and many times just plain wrong.
Go to bankrate.com and see the average lowest possible rates - then call the person you know or trust, whether they are a broker, lender, DRE, DOC, CRLMA, NMLS, NORML (the later again a shot at levity), and complete the loan process with them.
Until you complete the application process, and I mean ALL the loan application fields filled out, all income doc, all assets information. Yes, I want all the pages of the bank statements. No, I don't care you get massages at Madam Wong's in the city. Tell your mortgage professional what you want. If we can get it, we'll give it to you. Then and ONLY then, will you know what your loan terms will end up looking like.
But look at this chart - and marvel at your timing...Money is as close to free than it's ever been; whether you believe that is a good thing or not rates are dirt cheap.
Tuesday, November 2, 2010
Top Ten Mistakes Realtors Make in Today's Mortgage Market
Top Ten Mistakes Realtors Make in Today’s Market
Today more than ever Realtors play an even more critical role in determining financing options for their clients. Even though many Realtors are not familiar with the intricacies of today’s lending environment. Sure, they know it’s tougher, but do they know how to help? Here is a top ten list that Realtors can use to aid in the mortgage process for your clients.
#10 – Don’t even look at one property prior to receiving a pre-approval from a competent lender or mortgage broker. There once was a time when pre-approvals were silly because EVERYONE got approved. But now you need to review every piece of borrower income and asset documentation with a fine tooth comb to make sure there are no landmines within those documents and others that could potentially kill your transaction.
#9 – Condo’s are tough. Before you show a client a condo, make sure it is an FHA approved condo or has the ability to be financed for FHA. If your client is not an FHA buyer, then you should certainly make sure the condo project is lendable. Is there any litigation currently pending? Is there enough reserves? Is there a special monthly assessment that could affect borrower qualification and debt to income ratios?
#8 – Ask the borrower to immediately start gathering their financial documents. As noted in #10, borrowers need to complete this process prior to looking for a home. As a Realtor you should make sure you aren’t wasting time showing buyers properties that cannot afford.
#7 – Participate in the pre-approval process. Sure many of you just want to see the baby and you don’t want to hear about the labor pains. But seriously, the more involved you are in the financing side, the easier it will be for you on the real estate side. Plus you relay to your clients your expertise in finance as well as real estate.
#6 – Determine the long term goals for your client with this property. The sooner they start thinking about investments, exit plans, or how long they plan to hold and sell, or turn a primary residence into a rental property, the easier our job will be to find a suitable mortgage that fits the borrowers plans.
#5 – Get a pre-approval letter that can be easily modified. If your lender has prequalified a buyer to $500,000 but you are making an offer at 450,000. You certainly don’t want to tell the listing side you have more room. Get a WORD document and change the purchase price lower. This is a great tool when you are working up an offer at midnight and your loan officer has decided to finally get some rest.
#4 – Understanding closing times is critical for Realtors when determining how to present an offer. If you are making an offer for an REO property and the REO property manager wants a 15 day escrow and you have an FHA buyer then you need to know that won’t happen. Financed buyers are up against cash buyers all day, and for some sellers, a cash deal at a lower offer price is more desirable.
#3 – Work with your lender. Calling your lender and screaming at them to, “Close this deal now!!” This does nothing to help close the deal. The Loan Officer much like you has to close loans to get paid just like you. So next time, when you approach the lender, ask first is there anything I can do to help, and then if you get no response, yell and scream.
#1 – Work with Michael A. Foote, CMB. With over twenty years of finance experience you need a professional is today’s fast paced and ever changing market.
Today more than ever Realtors play an even more critical role in determining financing options for their clients. Even though many Realtors are not familiar with the intricacies of today’s lending environment. Sure, they know it’s tougher, but do they know how to help? Here is a top ten list that Realtors can use to aid in the mortgage process for your clients.
#10 – Don’t even look at one property prior to receiving a pre-approval from a competent lender or mortgage broker. There once was a time when pre-approvals were silly because EVERYONE got approved. But now you need to review every piece of borrower income and asset documentation with a fine tooth comb to make sure there are no landmines within those documents and others that could potentially kill your transaction.
#9 – Condo’s are tough. Before you show a client a condo, make sure it is an FHA approved condo or has the ability to be financed for FHA. If your client is not an FHA buyer, then you should certainly make sure the condo project is lendable. Is there any litigation currently pending? Is there enough reserves? Is there a special monthly assessment that could affect borrower qualification and debt to income ratios?
#8 – Ask the borrower to immediately start gathering their financial documents. As noted in #10, borrowers need to complete this process prior to looking for a home. As a Realtor you should make sure you aren’t wasting time showing buyers properties that cannot afford.
#7 – Participate in the pre-approval process. Sure many of you just want to see the baby and you don’t want to hear about the labor pains. But seriously, the more involved you are in the financing side, the easier it will be for you on the real estate side. Plus you relay to your clients your expertise in finance as well as real estate.
#6 – Determine the long term goals for your client with this property. The sooner they start thinking about investments, exit plans, or how long they plan to hold and sell, or turn a primary residence into a rental property, the easier our job will be to find a suitable mortgage that fits the borrowers plans.
#5 – Get a pre-approval letter that can be easily modified. If your lender has prequalified a buyer to $500,000 but you are making an offer at 450,000. You certainly don’t want to tell the listing side you have more room. Get a WORD document and change the purchase price lower. This is a great tool when you are working up an offer at midnight and your loan officer has decided to finally get some rest.
#4 – Understanding closing times is critical for Realtors when determining how to present an offer. If you are making an offer for an REO property and the REO property manager wants a 15 day escrow and you have an FHA buyer then you need to know that won’t happen. Financed buyers are up against cash buyers all day, and for some sellers, a cash deal at a lower offer price is more desirable.
#3 – Work with your lender. Calling your lender and screaming at them to, “Close this deal now!!” This does nothing to help close the deal. The Loan Officer much like you has to close loans to get paid just like you. So next time, when you approach the lender, ask first is there anything I can do to help, and then if you get no response, yell and scream.
#1 – Work with Michael A. Foote, CMB. With over twenty years of finance experience you need a professional is today’s fast paced and ever changing market.
Wednesday, October 27, 2010
We've been here before...
There was a great article today from Rob Chrisman that referenced a small article about the HOLC. A very old acronym from the Great Depression. HOLC the old/new mortgage bail out model . The article makes interesting comparisons to today's mortgage market and the tools that were used to save home during the the Great Depression. You will find the comparison encouraging.
Monday, October 4, 2010
FHA News Release from Caliber Funding
Important FHA MIP Changes
Effective 10/4/10 – Applies to all FHA Loans with a Case Number date on or after 10/4/2010
Upfront MIP will go down to 1% for all FHA loans with Case Number date on or after 10/4. This will impact the amount
disclosed in Block 3 of the GFE.
Monthly MI will go up significantly for all loans with Case Number date on or after 10/4. This amount is
disclosed in all places where the monthly amount owed appears on the GFE (several places). The premium
will depend on the Amortization Term and LTV:
LTV Annual Premium for Loans > 15 Years
= or < 95 percent 0.85
> 95 percent 0.90
LTV Annual Premium for Loans > 15 Years
= or <90 percent -None-
> 90 percent 0.25
Under-disclosure of the monthly amount owed on the GFE may result in a RESPA tolerance violation. There
is no cure for the tolerance violation.
FNMA Loan Quality Initiative
Policy Effective 10/4/10
Caliber Funding has established policies and procedures in compliance with Fannie Mae SEL-2010-01
Selling Guide for the Loan Quality Initiative (LQI).
1. Effective October 1, 2010 Caliber requires documentation in the submission package that all parties
to the loan transaction are to be verified against the LDP/GSA list for all files, including but not limited
to, Government and Conventional products.
2. As a reminder, all FHA files require the FHA Case Number Assignment and CAIVRS report.
Un-disclosed Liabilities and Re-underwriting Requirements
Caliber Funding requires that all loans, regardless of channel, be underwritten using a tri-merge credit
report from an accredited agency.
In order to assure that a borrower has not incurred any new debts between the date of their application
and the loan closing, Caliber Funding will obtain a “Gap” report from 1st American / Credco on every
transaction within 5 days of closing.
The responsible underwriter on the transaction must review and clear the gap report. In reviewing the
report attention should be paid to any debts, inquiries or balance increases which have occurred since
the original credit was pulled and the file was initially approved.
Social Security Number Validation
Caliber Funding requires that the Social Security Number associated with each borrower in the
transaction be validated outside of the documentation provided by the borrower / broker.
Excluded Party Lists
Caliber Funding requires that all parties to the transaction, regardless of product, including but not
limited to the borrower(s), broker, originator, processor, appraiser, and realtor(s) be checked against the
standard HUD Limited Denial of Participation (LDP) and GSA lists.
Borrower Occupancy Verification
Caliber Funding recognizes and shares concerns in the industry regarding occupancy misrepresentation
and has implemented several steps in underwriting to help insure the borrower’s occupancy is as stated
on the loan application.
Caliber
Effective 10/4/10 – Applies to all FHA Loans with a Case Number date on or after 10/4/2010
Upfront MIP will go down to 1% for all FHA loans with Case Number date on or after 10/4. This will impact the amount
disclosed in Block 3 of the GFE.
Monthly MI will go up significantly for all loans with Case Number date on or after 10/4. This amount is
disclosed in all places where the monthly amount owed appears on the GFE (several places). The premium
will depend on the Amortization Term and LTV:
LTV Annual Premium for Loans > 15 Years
= or < 95 percent 0.85
> 95 percent 0.90
LTV Annual Premium for Loans > 15 Years
= or <90 percent -None-
> 90 percent 0.25
Under-disclosure of the monthly amount owed on the GFE may result in a RESPA tolerance violation. There
is no cure for the tolerance violation.
FNMA Loan Quality Initiative
Policy Effective 10/4/10
Caliber Funding has established policies and procedures in compliance with Fannie Mae SEL-2010-01
Selling Guide for the Loan Quality Initiative (LQI).
1. Effective October 1, 2010 Caliber requires documentation in the submission package that all parties
to the loan transaction are to be verified against the LDP/GSA list for all files, including but not limited
to, Government and Conventional products.
2. As a reminder, all FHA files require the FHA Case Number Assignment and CAIVRS report.
Un-disclosed Liabilities and Re-underwriting Requirements
Caliber Funding requires that all loans, regardless of channel, be underwritten using a tri-merge credit
report from an accredited agency.
In order to assure that a borrower has not incurred any new debts between the date of their application
and the loan closing, Caliber Funding will obtain a “Gap” report from 1st American / Credco on every
transaction within 5 days of closing.
The responsible underwriter on the transaction must review and clear the gap report. In reviewing the
report attention should be paid to any debts, inquiries or balance increases which have occurred since
the original credit was pulled and the file was initially approved.
Social Security Number Validation
Caliber Funding requires that the Social Security Number associated with each borrower in the
transaction be validated outside of the documentation provided by the borrower / broker.
Excluded Party Lists
Caliber Funding requires that all parties to the transaction, regardless of product, including but not
limited to the borrower(s), broker, originator, processor, appraiser, and realtor(s) be checked against the
standard HUD Limited Denial of Participation (LDP) and GSA lists.
Borrower Occupancy Verification
Caliber Funding recognizes and shares concerns in the industry regarding occupancy misrepresentation
and has implemented several steps in underwriting to help insure the borrower’s occupancy is as stated
on the loan application.
Caliber
Thursday, September 2, 2010
Today and Tomorrows FHA Borrower: New changes to FHA lending guidelines and their effects on borrower qualification.
Well the summer is almost over and as we head into another fun filled school year in my home, FHA has some new rules for me to follow at the office. The job to qualify people for a home loan has never been tougher. As many recent mortgage borrowers can attest, the application process can be daunting, haunting, and overall intrusive to no end. Many borrowers feel the headache is not worth the reward.
Now we have word from HUD that FHA rules and guidelines will be changing yet again. Most notably and directly related to borrower qualification are the new MI requirements. These requirements were signed into law by President Obama on August 12, 2010 and gave the HUD secretary more authority and flexibility to change and modify the FHA program as needed to ensure continued liquidity in the mortgage market place.
Effective for originations in the beginning of October 2010, Upfront Mortgage Insurance goes from 2.25% to 1.0% for loans greater than 15 years in duration and over 95% loan to value. This is basically all low money down FHA purchase 30 year fixed loans. But wait, that’s good news. You thought this article would be glum didn’t you. Yes, that is good news, but HUD also changed the monthly mortgage insurance from the current .55% to 1.55% for the same type of transaction.
But what does this really mean to the average FHA borrower? Let’s take a simple hypothetical purchase transaction. The borrower is buying a home for $275,000 and is going to put down the 3.5% and will finance his upfront mortgage insurance premium. Here is how this deal looks today versus post October 2010 changes.
Old New
Borrowers pmt. @ 4.500% $1374.90 $1358.06
MMI Monthly MI Pmt $121.63 $346.00
Totals $1496.53 $1704.26
FHA has essentially raised the borrowers Principal, Interest and Mortgage Insurance Payments by $60 a month. This is an increase of 12+%.
While this increase seems timely considering the government’s spending of late and talk of expiring tax credits and new taxes too. This increase will get FHA much needed capital, more quickly, by requiring borrowers to pay more monthly versus financing a large amount of the overall insurance over the life of the loan.
With rates still hovering slightly above the all-time lows, this modest increase should not impact the purchase market a great deal. There maybe a few borrowers who are squeezed out of financing a higher priced home, but maybe that is the strange side-effect, some borrowers will not be able to buy as expensive of a home as they would like. And that is OK.
Now we have word from HUD that FHA rules and guidelines will be changing yet again. Most notably and directly related to borrower qualification are the new MI requirements. These requirements were signed into law by President Obama on August 12, 2010 and gave the HUD secretary more authority and flexibility to change and modify the FHA program as needed to ensure continued liquidity in the mortgage market place.
Effective for originations in the beginning of October 2010, Upfront Mortgage Insurance goes from 2.25% to 1.0% for loans greater than 15 years in duration and over 95% loan to value. This is basically all low money down FHA purchase 30 year fixed loans. But wait, that’s good news. You thought this article would be glum didn’t you. Yes, that is good news, but HUD also changed the monthly mortgage insurance from the current .55% to 1.55% for the same type of transaction.
But what does this really mean to the average FHA borrower? Let’s take a simple hypothetical purchase transaction. The borrower is buying a home for $275,000 and is going to put down the 3.5% and will finance his upfront mortgage insurance premium. Here is how this deal looks today versus post October 2010 changes.
Old New
Borrowers pmt. @ 4.500% $1374.90 $1358.06
MMI Monthly MI Pmt $121.63 $346.00
Totals $1496.53 $1704.26
FHA has essentially raised the borrowers Principal, Interest and Mortgage Insurance Payments by $60 a month. This is an increase of 12+%.
While this increase seems timely considering the government’s spending of late and talk of expiring tax credits and new taxes too. This increase will get FHA much needed capital, more quickly, by requiring borrowers to pay more monthly versus financing a large amount of the overall insurance over the life of the loan.
With rates still hovering slightly above the all-time lows, this modest increase should not impact the purchase market a great deal. There maybe a few borrowers who are squeezed out of financing a higher priced home, but maybe that is the strange side-effect, some borrowers will not be able to buy as expensive of a home as they would like. And that is OK.
Wednesday, September 1, 2010
FHA Changes
FHA is changing it's terms, yet again. FHA will increase it's MMI or monthly mortgage insurance premium to as high as .90% from the current .55% and it's UFMIP or upfront mortgage insurance premium to 1% from the current 2.25% for purchase transactions. The result, plenty of technology updates and confused Loan Officers. The question is how will the streamline refinances be affected by this?
Thursday, August 12, 2010
4% 30 year fixed...
It's official - we've hit 4% 30 yr fixed. I would offer a high balance client 4% 30 yr fixed today...4% has a small rebate, so smaller loan balances probably won't get that offer...yet.
Tuesday, August 10, 2010
Should you go with a Big Bank or smaller local mortage company
Posted on my blog a few days back was a link to an article regarding Realtors sending prospective buyers to direct lenders versus the big banks. The reason? Time.
I wanted to expand on that previous article and talk about the advantages of using a small or mid-size company versus the drawbacks of not using a big bank.
The simple truth is your loan will most likely end up with a big bank or at least their servicing group. Bank of America currently services several trillion dollars in mortgages. That’s “T” for trillion. But this doesn’t mean going direct to a big bank will provide a quick and painless refinance or purchase money loan. In fact, in many cases, big bank customers will pay a higher rate and fee combination.
Almost all big banks give access to their vast financial resources through intermediaries called correspondent lenders. These are direct lender that fund their own loans and then sell them to a bigger bank. This structure is common and has been in practice for decades.
So it would seem that going to a correspondent lender would increase prices. But it doesn’t, and here is how. The big banks have overhead and huge operations that eat into other division’s profits or losses. Another way to say it is the banks aren’t just in the business of making home loans. Mortgage Bankers and other direct lenders are solely interested in originating loans. The difference is the direct lender is focused on making loans and structures their company to provide the most efficient platforms in which to originate. As a result, turn times, pricing and overall customer service are generally far superior to the bigger bank.
This isn’t to say big banks are always slower or always higher priced. Ultimately your loan officer or mortgage consultant is the best indicator of how well your loan application process will go. But you can’t tell how good or how bad they are until you are deep in the process.
The best way to find a mortgage company is through due diligence and referrals. You can’t beat a trusted family member or friend who has something nice to say about the person or company that completed their transaction. And make sure that person works for a direct lender or small community bank and your service times should be reasonable.
So the top five reasons to NOT use a big bank are:
#1 You’ll be lost in the shuffle when applying. The big bank application volume is amazing since many think the big bank should have lower rates.
#2 Big banks take advantage of their brand and will provide rates that are above the national average
#3 You may not necessarily receive the personal touch with a big bank. Smaller companies are more nimble and better able to adapt to the changing needs of specific client needs. Turn times at some major banks are upwards of 90 days.
#4 Big bank closing times can take 60-90 days. Most purchase contracts are being written under 30-45 day close scenarios. If you can’t close within that time you may suffer per diem penalties for not closing on time. These fees can be anywhere from $75 a day to over $300 per day.
#5 The Big bank don’t care about you. Bank of America now holds a financial relationship with 1out of every 2 people in the country. Do you think they will miss or appreciate your business?
I wanted to expand on that previous article and talk about the advantages of using a small or mid-size company versus the drawbacks of not using a big bank.
The simple truth is your loan will most likely end up with a big bank or at least their servicing group. Bank of America currently services several trillion dollars in mortgages. That’s “T” for trillion. But this doesn’t mean going direct to a big bank will provide a quick and painless refinance or purchase money loan. In fact, in many cases, big bank customers will pay a higher rate and fee combination.
Almost all big banks give access to their vast financial resources through intermediaries called correspondent lenders. These are direct lender that fund their own loans and then sell them to a bigger bank. This structure is common and has been in practice for decades.
So it would seem that going to a correspondent lender would increase prices. But it doesn’t, and here is how. The big banks have overhead and huge operations that eat into other division’s profits or losses. Another way to say it is the banks aren’t just in the business of making home loans. Mortgage Bankers and other direct lenders are solely interested in originating loans. The difference is the direct lender is focused on making loans and structures their company to provide the most efficient platforms in which to originate. As a result, turn times, pricing and overall customer service are generally far superior to the bigger bank.
This isn’t to say big banks are always slower or always higher priced. Ultimately your loan officer or mortgage consultant is the best indicator of how well your loan application process will go. But you can’t tell how good or how bad they are until you are deep in the process.
The best way to find a mortgage company is through due diligence and referrals. You can’t beat a trusted family member or friend who has something nice to say about the person or company that completed their transaction. And make sure that person works for a direct lender or small community bank and your service times should be reasonable.
So the top five reasons to NOT use a big bank are:
#1 You’ll be lost in the shuffle when applying. The big bank application volume is amazing since many think the big bank should have lower rates.
#2 Big banks take advantage of their brand and will provide rates that are above the national average
#3 You may not necessarily receive the personal touch with a big bank. Smaller companies are more nimble and better able to adapt to the changing needs of specific client needs. Turn times at some major banks are upwards of 90 days.
#4 Big bank closing times can take 60-90 days. Most purchase contracts are being written under 30-45 day close scenarios. If you can’t close within that time you may suffer per diem penalties for not closing on time. These fees can be anywhere from $75 a day to over $300 per day.
#5 The Big bank don’t care about you. Bank of America now holds a financial relationship with 1out of every 2 people in the country. Do you think they will miss or appreciate your business?
Monday, August 9, 2010
10 Yr Hits 2.80%
In another sign of continuing pressure to keep rates lower and that mortgage production is not keeping with demand the 10 yr hit 2.80 @ 105.0+ !!
You can get a 4.25% 30 yr at no points and probably no fees if the deal is uber-clean and low LTV.
You can get a 4.25% 30 yr at no points and probably no fees if the deal is uber-clean and low LTV.
Thursday, July 29, 2010
National Mortgage News - Loan Closings Drag On and On at the Megabanks
More evidence we are moving toward mortgage bank and mortgage broker originations. Unless YSP is truly going away. However, when I checked this AM, we still show YSP on wholesale rate sheets.
Here is a great article about Realtors who are now starting to refer busines away from the MegaBanks. Nice article Mr. Muolo.
National Mortgage News - Loan Closings Drag On and On at the Megabanks
Here is a great article about Realtors who are now starting to refer busines away from the MegaBanks. Nice article Mr. Muolo.
National Mortgage News - Loan Closings Drag On and On at the Megabanks
Monday, July 26, 2010
Yield on the 10 Yr could hit 2.5%
According to one of the fathers of mortgage backed securities. Lewis Ranieri, the co-inventor of the mortgage backed security, believes the yield on the 10-year Treasury could fall to as low as 2.5% this year.
That would continue to further lower interest rates which are almost to 4% on a 30 yr fixed rate.
That would continue to further lower interest rates which are almost to 4% on a 30 yr fixed rate.
Wednesday, July 21, 2010
da' bidness
I watched this morning as "The Obama" signed FinReg 2010 today. I still have little understanding on how this is going to be implemented or what the impact really will be, but this guy has some great insights. One thing is for sure mortgage lending will continue to be an industry in the middle of a sea of change as we try to apply these new rules and business practices going forward and interact with a brand new agency to protect the consumer. I'm sure this will be a seamless integration of government entities, not.
The bad news for consumers is this will no doubt increase the costs of borrowing. Is that bad? Well to me it means less people will qualify for loans, which means less competition for homes, which equals lower home values, which will increase interest rates, which will further slow the pace of borrowing.
Future looks bright!
The bad news for consumers is this will no doubt increase the costs of borrowing. Is that bad? Well to me it means less people will qualify for loans, which means less competition for homes, which equals lower home values, which will increase interest rates, which will further slow the pace of borrowing.
Future looks bright!
Friday, July 16, 2010
FINREG - Grapevine Except from National Mortgage News
Found some interesting yet conflicting commentary on the bill. Here you go!
FINREG excerpt, ADIOS MTG BIZ
Feast your eyes on pg 1439:
ix) for which the total points and
fees payable in connection with the loan do
not exceed 2 percent of the total loan
amount, where the term ‘points and fees’
means points and fees as defined by Section 103(aa)(4) of the Truth in Lending
21 Act (15 U.S.C. 1602(aa)(4));
This relates to what is called "qualified mortgage" and is every fixed rate loan now being originated. EVERY FIXED LOAN
by frankenstyle July 14, 2010 8:53 AM
--------------------------------------------------------------------------------
It also dictates your max rate. Line 12 on pg 1436.
by frankenstyle July 14, 2010 8:56 AM
--------------------------------------------------------------------------------
Frank, you have a link handy to that?
by BuySide July 14, 2010 10:34 AM
--------------------------------------------------------------------------------
It's a bit more complicated than that. Frankenstyle, you may be looking at an older version of the measure. Below is a link to the Conference Committee version of the bill. See Title XIV of the bill starting on page 26 of that title, where it defines a "qualified mortgage". This entire bill is a real mess, but especially the mortgage provisions. Anyone voting for it needs to be voted out of office. More can be done to fix financial regulatory problems with much less legislation and gamesmanship by politicians. Call your Senator and compain if they are voting yes on this.
http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/Financial_Regulatory_Reform062410.html
(vii) for which the total points and fees (as defined in subparagraph (C)) payable in connection with the loan do not exceed 3 percent of the total loan amount;
‘‘(C) POINTS AND FEES.—
‘‘(i) IN GENERAL.—For purposes of
subparagraph (A), the term ‘points and
fees’ means points and fees as defined by
section 103(aa)(4) (other than bona fide
third party charges not retained by the
mortgage originator, creditor, or an affil21
iate of the creditor or mortgage origi22
nator).
‘‘(ii) COMPUTATION.—For purposes of
computing the total points and fees under
this subparagraph, the total points and
fees shall exclude either of the amounts described in the following subclauses, but not
both:
‘‘(I) Up to and including 2 bona
fide discount points payable by the
consumer in connection with the mort7
gage, but only if the interest rate
from which the mortgage’s interest
rate will be discounted does not ex10
ceed by more than 1 percentage point
the average prime offer rate.
‘‘(II) Unless 2 bona fide discount
points have been excluded under sub14
clause (I), up to and including 1 bona
fide discount point payable by the
consumer in connection with the mort17
gage, but only if the interest rate
from which the mortgage’s interest
rate will be discounted does not ex20
ceed by more than 2 percentage
points the average prime offer rate.
22 ‘‘(iii) BONA FIDE DISCOUNT POINTS
23 DEFINED.—For purposes of clause (ii), the
24 term ‘bona fide discount points’ means
25 loan discount points which are knowingly
paid by the consumer for the purpose of
2 reducing, and which in fact result in a
3 bona fide reduction of, the interest rate or
4 time-price differential applicable to the
5 mortgage.
6 ‘‘(iv) INTEREST RATE REDUCTION.—
7 Subclauses (I) and (II) of clause (ii) shall
8 not apply to discount points used to pur9
chase an interest rate reduction unless the
10 amount of the interest rate reduction pur11
chased is reasonably consistent with estab12
lished industry norms and practices for
13 secondary mortgage market transactions.
HAD ENOUGH??...
by oldbe July 14, 2010 10:55 AM
--------------------------------------------------------------------------------
This is the amended version:
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:s3217as.txt.pdf
by frankenstyle July 14, 2010 11:00 AM
--------------------------------------------------------------------------------
So, in a nutshell, Barney Frank has succeeded in the disassembly of an industry. Unless I'm misinterpreting something.
by wherewasi July 14, 2010 11:22 AM
--------------------------------------------------------------------------------
correct, this basically removes any chance of a subprime product from entering back into the market based on a limit of 1.5% above the "prime offer rate"
Wasn't it yesterday that said 25% of citizens are below 599 now? Housing market, meet your doom.
by frankenstyle July 14, 2010 11:34 AM
--------------------------------------------------------------------------------
I think the opposite. Brokers will be limited on fees. Subprime will be originated through the finance companies that can service the loan. The Beneficials of yesterday should be making a comeback. Self Employed will be getting a cash flow loan that documents their ability to repay through bank statements. Those with big money will rule again. Originators used to today's big splits and making big money on a loan will exit.
by the voice of reason July 14, 2010 12:04 PM
FINREG excerpt, ADIOS MTG BIZ
Feast your eyes on pg 1439:
ix) for which the total points and
fees payable in connection with the loan do
not exceed 2 percent of the total loan
amount, where the term ‘points and fees’
means points and fees as defined by Section 103(aa)(4) of the Truth in Lending
21 Act (15 U.S.C. 1602(aa)(4));
This relates to what is called "qualified mortgage" and is every fixed rate loan now being originated. EVERY FIXED LOAN
by frankenstyle July 14, 2010 8:53 AM
--------------------------------------------------------------------------------
It also dictates your max rate. Line 12 on pg 1436.
by frankenstyle July 14, 2010 8:56 AM
--------------------------------------------------------------------------------
Frank, you have a link handy to that?
by BuySide July 14, 2010 10:34 AM
--------------------------------------------------------------------------------
It's a bit more complicated than that. Frankenstyle, you may be looking at an older version of the measure. Below is a link to the Conference Committee version of the bill. See Title XIV of the bill starting on page 26 of that title, where it defines a "qualified mortgage". This entire bill is a real mess, but especially the mortgage provisions. Anyone voting for it needs to be voted out of office. More can be done to fix financial regulatory problems with much less legislation and gamesmanship by politicians. Call your Senator and compain if they are voting yes on this.
http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/Financial_Regulatory_Reform062410.html
(vii) for which the total points and fees (as defined in subparagraph (C)) payable in connection with the loan do not exceed 3 percent of the total loan amount;
‘‘(C) POINTS AND FEES.—
‘‘(i) IN GENERAL.—For purposes of
subparagraph (A), the term ‘points and
fees’ means points and fees as defined by
section 103(aa)(4) (other than bona fide
third party charges not retained by the
mortgage originator, creditor, or an affil21
iate of the creditor or mortgage origi22
nator).
‘‘(ii) COMPUTATION.—For purposes of
computing the total points and fees under
this subparagraph, the total points and
fees shall exclude either of the amounts described in the following subclauses, but not
both:
‘‘(I) Up to and including 2 bona
fide discount points payable by the
consumer in connection with the mort7
gage, but only if the interest rate
from which the mortgage’s interest
rate will be discounted does not ex10
ceed by more than 1 percentage point
the average prime offer rate.
‘‘(II) Unless 2 bona fide discount
points have been excluded under sub14
clause (I), up to and including 1 bona
fide discount point payable by the
consumer in connection with the mort17
gage, but only if the interest rate
from which the mortgage’s interest
rate will be discounted does not ex20
ceed by more than 2 percentage
points the average prime offer rate.
22 ‘‘(iii) BONA FIDE DISCOUNT POINTS
23 DEFINED.—For purposes of clause (ii), the
24 term ‘bona fide discount points’ means
25 loan discount points which are knowingly
paid by the consumer for the purpose of
2 reducing, and which in fact result in a
3 bona fide reduction of, the interest rate or
4 time-price differential applicable to the
5 mortgage.
6 ‘‘(iv) INTEREST RATE REDUCTION.—
7 Subclauses (I) and (II) of clause (ii) shall
8 not apply to discount points used to pur9
chase an interest rate reduction unless the
10 amount of the interest rate reduction pur11
chased is reasonably consistent with estab12
lished industry norms and practices for
13 secondary mortgage market transactions.
HAD ENOUGH??...
by oldbe July 14, 2010 10:55 AM
--------------------------------------------------------------------------------
This is the amended version:
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:s3217as.txt.pdf
by frankenstyle July 14, 2010 11:00 AM
--------------------------------------------------------------------------------
So, in a nutshell, Barney Frank has succeeded in the disassembly of an industry. Unless I'm misinterpreting something.
by wherewasi July 14, 2010 11:22 AM
--------------------------------------------------------------------------------
correct, this basically removes any chance of a subprime product from entering back into the market based on a limit of 1.5% above the "prime offer rate"
Wasn't it yesterday that said 25% of citizens are below 599 now? Housing market, meet your doom.
by frankenstyle July 14, 2010 11:34 AM
--------------------------------------------------------------------------------
I think the opposite. Brokers will be limited on fees. Subprime will be originated through the finance companies that can service the loan. The Beneficials of yesterday should be making a comeback. Self Employed will be getting a cash flow loan that documents their ability to repay through bank statements. Those with big money will rule again. Originators used to today's big splits and making big money on a loan will exit.
by the voice of reason July 14, 2010 12:04 PM
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