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."
Thursday, January 5, 2012
Wednesday, January 4, 2012
And if you thought there couldn't be MORE compliance changes, here you go...
Domestic Partnership and Civil Union Requirements
Policy & Addendum
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!
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!
Monday, January 2, 2012
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...
Friday, November 4, 2011
Realtor standards?
I hate to be the bearer of bad news, but it appears the Real Estate industry is still ripe with fraud.
Here is my best advice for sellers trying to sell in today's market. This will ensure you receive ALL offers and not what your Realtor wants to show you. Yes, they are supposed to present all offers, but they may not. How do you really know?
Demand your realtor list your email address in the private comments of your properties MLS listing...assuming they did in fact list it in the MLS and haven't kept a pocket listing.
Simply create a new gmail address at gmail.com show you can trash it after your closing. Tell your Realtor to add this email address for ALL offers in the private remarks section of the MLS listing. This area is only available to MLS agents. Now you'll know you are getting all offers and prevent your Realtor from selling to a friend at a reduced price.
Hint Hint...This save asset managers from unscrupulous Realtors as well...
Here is my best advice for sellers trying to sell in today's market. This will ensure you receive ALL offers and not what your Realtor wants to show you. Yes, they are supposed to present all offers, but they may not. How do you really know?
Demand your realtor list your email address in the private comments of your properties MLS listing...assuming they did in fact list it in the MLS and haven't kept a pocket listing.
Simply create a new gmail address at gmail.com show you can trash it after your closing. Tell your Realtor to add this email address for ALL offers in the private remarks section of the MLS listing. This area is only available to MLS agents. Now you'll know you are getting all offers and prevent your Realtor from selling to a friend at a reduced price.
Hint Hint...This save asset managers from unscrupulous Realtors as well...
Wednesday, October 26, 2011
Obama's or really FHFA's new expansion of the HARP refinance program.
There is little need to worry you'll miss a chance to apply for the new Obama/FHFA refinance program. These are for loans underwater, refinanced before March 2009, and are owned (not serviced by) Fannie Mae and Freddie Mac. Comments to the main lenders and servicers will by submitted by November, expect to be able to apply for consideration of these changes no earlier than mid December.
Here is some insider commentary from Rob Chrisman.
"The hype from Monday's HARP 2.0 announcement about making it easier for credit-impaired borrowers to refinance might give the impression that it will filter through into the economy and the housing market. It is a good step, but in a conference call from Credit Suisse, analysts pointed out "this is not a game changer" to housing or the economy. They estimate 720k borrowers will be able to refinance which translates to between $2 and $3 billion in interest savings; so not much impact to the economy or housing. But many investors are focused on HARP 2.0's reps and warrants information. The biggest surprise may have been that Fannie and Freddie will waive their rights to demand refunds from lenders after flawed loan underwriting in many cases. FHFA Acting Director Edward DeMarco told reporters the companies would offer "substantial" relief from buyback demands when HARP is used without providing "blanket or absolute" waivers, except for fraud. Fannie Mae and Freddie Mac also will remove ceilings on the permitted difference between loan amounts and property values and reduce or eliminate certain upfront fees charged for weaker credits, the FHFA said. The mortgage-finance companies will also nix appraisals in more instances and require on-time payments only over the prior six months, rather than as long as one year. Look for specifics by 11/15.
Here is some insider commentary from Rob Chrisman.
"The hype from Monday's HARP 2.0 announcement about making it easier for credit-impaired borrowers to refinance might give the impression that it will filter through into the economy and the housing market. It is a good step, but in a conference call from Credit Suisse, analysts pointed out "this is not a game changer" to housing or the economy. They estimate 720k borrowers will be able to refinance which translates to between $2 and $3 billion in interest savings; so not much impact to the economy or housing. But many investors are focused on HARP 2.0's reps and warrants information. The biggest surprise may have been that Fannie and Freddie will waive their rights to demand refunds from lenders after flawed loan underwriting in many cases. FHFA Acting Director Edward DeMarco told reporters the companies would offer "substantial" relief from buyback demands when HARP is used without providing "blanket or absolute" waivers, except for fraud. Fannie Mae and Freddie Mac also will remove ceilings on the permitted difference between loan amounts and property values and reduce or eliminate certain upfront fees charged for weaker credits, the FHFA said. The mortgage-finance companies will also nix appraisals in more instances and require on-time payments only over the prior six months, rather than as long as one year. Look for specifics by 11/15.
Thursday, September 1, 2011
Freddie Mac Loan Prospector LP Open Access Relief Program
By: Michael A. Foote
A frequent occurrence today in the life of a loan originator involves telling your optimistic potential borrowers that they don’t have enough equity to refinance and lower their payments. A fact that rubs salt in the wound is that the clients have undoubtedly made all their mortgage payments of time for many years.
To aid in helping underwater or low equity borrowers refinance into a new lower fixed rate interest rates, Fannie Mae and Freddie Mac have developed and launched a very successful refinance program. Fannie Mae’s program has seen wider adoption as LP Open Access was not pushed to many third party providers. Most likely the lack of interest was due to the banks potential losses from the program.
In any event LP Open Access is now more widely available from brokers and banks alike.
The program offers up to 105% LTV and unlimited CLTV which basically means if your home was worth $100,000 and you owed $105,000 on your first mortgage and $100,000 you would potentially be able to refinance that $105,000 first mortgage and leave the 2nd mortgage where it is at.
Although the second lien holder needs to subordinate, that lender has an incentive to approve the subordination since the borrower is most likely saving money on the first leaving an even less likely chance the borrower would default on the second mortgage.
So, if a borrower is at 6% fixed he could easily get a new mortgage rate in the 4% range with NO Mortgage Insurance. A full appraisal is required for this product and the existing loan cannot currently contain MI and the loan also must have been originated/funded prior to May 31, 2009. Minimum required FICO scores are also near or as low as 620. This program follows the temporary and permanent high cost loan limits. 1-Unit to $729,750 for another couple weeks then it will drop to $625,500 in high cost areas. 1-4 Units are eligible up to $1,403,400 and will drop to $801, 950 as noted earlier.
The program is clearly worthwhile and to find out if you are qualified you only need your mortgage professional to look-up your property address. This requires the last four numbers of the borrower as well.
If you are preliminarily qualified for the LP Open Access Relief Refinance Program, the process is very similar to getting a regular mortgage, in fact, it is almost identical.
Rates and programs are 30 and 15 year fixed are the only options available and rates are in the range of regular 30 year fixed agency paper. In some cases even lower.
So if you’ve been turned down recently for a refinance make sure you’ve looked at all options. Don’t fret. Call your local mortgage broker professional and ask about the LP Open Access Relief Refinance Program and its sister product, Fannie Mae DU Refinance Plus.
Michael Foote is a twenty plus year real estate and mortgage professional with multiple state licensing and over $1 billion dollars in personal production.
Thursday, August 25, 2011
More refinance help?
According to this article, the government may be seeking to prime the pump for refinances once again. It's already possible for some homeowners to refinance at todays low rates even if they are underwater. But most underwater borrowers still dont qualify. Although no details have been released, additional loosening of credit guidelines could help spur the economy by allowing those with no equity to seek payment relief and ultimately have more disposable cash. We'll see what turns out and I will of course get you all timely information.
http://www.cnbc.com/id/44269404
http://www.cnbc.com/id/44269404
Wednesday, June 29, 2011
There are approximately 4.1 million loans nationwide that are 90 days delinquent or in foreclosure, according to Lender Processing Services’ May Mortgage Monitor report.
LPS said in its report that foreclosure sales totaled 78,676 at the end of May. The combination of serious delinquencies and foreclosures outnumber foreclosure sales by 50:1.
LPS said the East Coast has experienced the worst fall in foreclosure sales, led by Washington, DC with a decline of 96%, then Maryland at 80%, New York at 79% and lastly New Jersey at 75%.
“There are still significantly fewer foreclosure sales than there were before moratoria were put into place, and foreclosure sales are declining,” the Jacksonville-based mortgage processing and technology firm said.
The overall delinquency rate for the nation is 7.96%, a month-over-month decline of only 0.1% and a yearly drop of 18.3%. However, the firm said delinquencies are almost double and foreclosures are eight times higher historical norms.
More than 40% of loans that are 90 or more days delinquent have not made a payment in over a year, while 33% have gone two years without any payments.
New problem loans—loans that were current six months ago and were 60 or more days delinquent at the end of May—are now at 1.27%, which is less than half the peak high experienced in 2009.
The firm is also concerned about negative equity loans, in which 30% of current loans are at risk of having negative equity. Of the 70% of loans in foreclosure with negative equity, over 35% have a combined LTV of more than 150%.
“The equity impact on new seriously delinquent loans is significant, with loans significantly underwater defaulting up to 10 times as much as loans with equity,” the firm said.
.
LPS said in its report that foreclosure sales totaled 78,676 at the end of May. The combination of serious delinquencies and foreclosures outnumber foreclosure sales by 50:1.
LPS said the East Coast has experienced the worst fall in foreclosure sales, led by Washington, DC with a decline of 96%, then Maryland at 80%, New York at 79% and lastly New Jersey at 75%.
“There are still significantly fewer foreclosure sales than there were before moratoria were put into place, and foreclosure sales are declining,” the Jacksonville-based mortgage processing and technology firm said.
The overall delinquency rate for the nation is 7.96%, a month-over-month decline of only 0.1% and a yearly drop of 18.3%. However, the firm said delinquencies are almost double and foreclosures are eight times higher historical norms.
More than 40% of loans that are 90 or more days delinquent have not made a payment in over a year, while 33% have gone two years without any payments.
New problem loans—loans that were current six months ago and were 60 or more days delinquent at the end of May—are now at 1.27%, which is less than half the peak high experienced in 2009.
The firm is also concerned about negative equity loans, in which 30% of current loans are at risk of having negative equity. Of the 70% of loans in foreclosure with negative equity, over 35% have a combined LTV of more than 150%.
“The equity impact on new seriously delinquent loans is significant, with loans significantly underwater defaulting up to 10 times as much as loans with equity,” the firm said.
.
Tuesday, June 21, 2011
California Pending Home Sales Rise - Finally some not so bad news
This is a excerpt from National Mortgage News published today.
California pending home sales increased in May, resulting in the first year-over-year increase in 18 months, according to the California Association of Realtors.
The index in May rose 1.6% from the previous month, which is based on contracts signed. Compared to May 2010, this year’s index was up by 12%.
“May marked the largest annual increase since August 2009,” said Beth Peerce, president of the California Association of Realtors.
“May’s increase in pending sales is consistent with our expectation that home sales in the second half of 2011 should be higher compared with the second half of 2010. As a result, annual sales for all of 2011 should match or exceed last year’s annual pace.”
The total share of distressed properties sold remained the same from April to May at 48%. However, the total is up 2% in May 2010. Madera County had the most distressed homes sold last month at 90%, followed by Lake County at 80% and Solano County at 71%.
Of the distressed properties sold throughout the state, REO sales was the same from month-to-month at 28%. This share is also up 2% from the same time period last year.
Statewide short sales were down from May 2010 by 1%, currently at 19% of the total monthly sales.
California pending home sales increased in May, resulting in the first year-over-year increase in 18 months, according to the California Association of Realtors.
The index in May rose 1.6% from the previous month, which is based on contracts signed. Compared to May 2010, this year’s index was up by 12%.
“May marked the largest annual increase since August 2009,” said Beth Peerce, president of the California Association of Realtors.
“May’s increase in pending sales is consistent with our expectation that home sales in the second half of 2011 should be higher compared with the second half of 2010. As a result, annual sales for all of 2011 should match or exceed last year’s annual pace.”
The total share of distressed properties sold remained the same from April to May at 48%. However, the total is up 2% in May 2010. Madera County had the most distressed homes sold last month at 90%, followed by Lake County at 80% and Solano County at 71%.
Of the distressed properties sold throughout the state, REO sales was the same from month-to-month at 28%. This share is also up 2% from the same time period last year.
Statewide short sales were down from May 2010 by 1%, currently at 19% of the total monthly sales.
Tuesday, May 31, 2011
New Opportunity for Loan Consultants with NMLS Identifier
If you are looking for a home with great technology, great pricing, all the products you desire, brick and mortar for your client meetings in a high end office, fantastic processing, AND leads, AND a draw, AND benefits, then please shoot me an email to michael.foote@caliberfunding.com and I will share the details.
Friday, May 20, 2011
SBA Lending is back
In another sign of improving business climate, SBA Chief Karen Mills talks about the rebirth of SBA Lending. Click Here to Read More.
If you are a small business owner and are interested in finding out more about SBA loans, please give me a call at 949-584-4600 and ask for Michael Foote. We can discuss your business needs and see what programs are best suited for you and your future.
If you are a small business owner and are interested in finding out more about SBA loans, please give me a call at 949-584-4600 and ask for Michael Foote. We can discuss your business needs and see what programs are best suited for you and your future.
Friday, May 13, 2011
Ethics?... Morals? ...
The definitions of ethics and morals are below for you review, but I believe most of us know what the definitions of those words are, or at least have a vague notion of their connotation.
In my industry many of us have had to take courses specifically focused on teaching us about the ethical moral considerations in the real estate and mortgage businesses. Realtors, specifically, are required to adhere to a specific set of ethical and moral behavior.
Of course many Realtors don't believe in actually applying these ethical and moral considerations in their business practices. You mean I have to show my seller ALL the offers, for reallies! But I have a buyer too, and I can double-end the deal??? What is a real estate agent to do. Well how about doing the right thing dammit!
It's my belief that, for many, ethics and morals are topics they need to know so they answer questions on their real estate agent examination. By the way the process for obtaining a real estate license is about as easy as it was to get a stated income loan in 2005...Pulse, check, Signature check, Willing lender, Check check! Honestly I think the DMV's written test may be more difficult.
So why am I blowing the whistle on my own peers? I mean its tough out there. People are just trying to get by. Because the disease of greed seems to have gotten a bit worse in some respects, or has it?
It seems the mortgage business is much more legitimate these days, with the elimination of certain products, a redonkulous expansion of disclosure requirements, very tight caps on commissions and the fact the feds will put your cute little butt in federal F-you in the a## prison. Mortgage companies, banks, and brokers seem to get it...Or do they?
Law enforcement and industry reporting indicate that mortgage fraud activity continued to increase in 2009 and 2010. FBI mortgage fraud pending investigations increased 71 percent from 2008 to 2009. HUD-OIG pending investigations increased 31 percent from 2008 to 2009. FBI mortgage fraud-related FinCEN SAR filings increased 5.1 percent from 2008 to 2009.
OK so maybe the mortgage business is still working on itself....
But surely the real estate community has improved itself?
http://www.fbi.gov/boston/press-releases/2011/two-defendants-sentenced-in-real-estate-scam
Google "Real Estate Fraud" and you get 36,600.000 results...Ok that's not fair because I googled "Cupcake Fraud" and still get 7,690,000 results
OK, so maybe the real estate community is still working on things too...
So what have we learned...the mortgage and real estate industries will always have a few bad apples at least - probably more like half the barrel in reality. But what about the rest of them/us. Well short of committing an actual crime, there are ethical and moral boundaries. These apply to ONLY REALTORS® and I'm not going to type the registered sign everytime either, so if I say Realtor I mean REALTOR®. So let's talk a look at a few as they are good rules for all: The complete list can be found here.
Standard of Practice 1-5 : REALTORS® may represent the seller/landlord and buyer/tenant in the same transaction only after full disclosure to and with informed consent of both parties. (Adopted 1/93)
This one is a classic and I was able to see it broken first hand today. Do you really think a Realtor or real estate agent or broker can truly represent both the buyer and a seller in a transaction? Well maybe, I am sure it can happen...sometimes...maybe.. But this should not be allowed. Does a sports agent represent both the team and player? Does a divorce attorney generally represent both the husband and wife (husband/husband or wife/wife in Massachusetts)? Does a alleged criminal mind if the prosecuting attorney represents him too? Seriously folks, if you let a broker, agent or Realtor represent both side, be prepared to lose.
Standard of Practice 1-6 : REALTORS® shall submit offers and counter-offers objectively and as quickly as possible. (Adopted 1/93, Amended 1/95)
Another timeless classic. What is better, an offer from a true third party represented by a Realtor not related to the listing agent or an offer from the listing agent? Well that certainly depends on who you ask doesn't it? What is the listing agent brings an offer in from one of his buyers? It happens, not all the time but it goes on...And this counts if the listing agent used the name of his wife, sister, brother, uncle, aunt, college frat brother, or any other moron that will rent his/her license and share his/her side of the commission with the listing agent.
If a Realtor, agent, broker has an offer from a client they represent for a property they have a listing on, that amounts to a potential 100% increase in their commission. The deal I saw today, amounted to an extra $18,000 dollars into the pocket of the listing agent, not to mention the bonus/spiff/pop/desk fee the agent received from the mortgage company he/she referred the loan to, because the rate being offered is well above the rate I saw quoted from another "lender".
If you were making an offer on that property and weren't being represented by the listing agent, do you really, honestly,ever think your offer has a chance. Maybe...but I would bet $18,000 you would lose out. "Sorry, we went with highest and best"..and the shocker...The listing agent is the ONLY one who knows what the next highest and best offers were and guess what, you just missed it.
I will finish with Articles 4, 5, and 6, wherein my day ended finally and again resulted in a pretty frustrated yours truly left holding the bad and a stakc of paper and wasted toner. I'm not a hater, I don't want to lie cheat and steal. So if someone is willing to do that to beat me out, and the client is too stupid to realize it, then I guess that is what it is.
Article 4 : REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00)
Standard of Practice 4-1 : For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS® prior to the signing of any contract. (Adopted 2/86)
Article 5 : REALTORS® shall not undertake to provide professional services concerning a property or its value where they have a present or contemplated interest unless such interest is specifically disclosed to all affected parties.
Article 6 : REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent.
When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®’s firm may receive as a direct result of such recommendation. (Amended 1/99)
Standard of Practice 6-1 : REALTORS® shall not recommend or suggest to a client or a customer the use of services of another organization or business entity in which they have a direct interest without disclosing such interest at the time of the recommendation or suggestion. (Amended 5/88)
When a Realtor, agent or broker receives compensation, a bribe, fake desk rental fee, bogus marketing agreement, or cash in a paper bag, in return for referring clients to these companies WITHOUT full disclosure you have violated your ethics as a Realtor and RESPA. Hell even with full disclosure this is wrong. It's actually wrong even if it's disclosed and the money came in a paper bag. But you get the point.
When a Realtor, agent or broker unjustly disparages a mortgage company or a professionally licensed originator, knowingly, to the detriment of your client, you've violated your ethical code and violated RESPA.
When a Realtor, agent or broker takes a short sale listing and misrepresents the parties of the transaction to a state or federal bank, they've committed bank fraud and wire fraud. When a Realtor, agent or broker misleads a buyer into taking a more expensive loan from a related company or connected third party to line his/her own pockets, they've committed a federal crime, Truth In Lending, RESPA, Business and Professions Laws, California Real Estate Law....and probably a whole host of other crap an prosecutor can lay on you.
And so I say to the, Future Defendent #1, be prepared to be prosecuted and go to jail.
And when that day comes, please know I will NOT be able to put money on your books. But please say hello to Mr. Madoff. He's kind of butch and maybe you can be his next back door deal. I know you won't like it, because I didn't enjoy it today.
Say hello to Bubba for me.
********************************************************************************
Learn it, Live it, Love it!
ethics — n
1. ( functioning as singular ) See also meta-ethics the philosophical study of the moral value of human conduct and of the rules and principles that ought to govern it; moral philosophy
2. ( functioning as plural ) a social, religious, or civil code of behaviour considered correct, esp that of a particular group, profession, or individual
3. ( functioning as plural ) the moral fitness of a decision, course of action, etc: he doubted the ethics of their verdict
moral –adjective
1. of, pertaining to, or concerned with the principles or rules of right conduct or the distinction between right and wrong; ethical: moral attitudes.
2. expressing or conveying truths or counsel as to right conduct, as a speaker or a literary work; moralizing: a moral novel.
3. founded on the fundamental principles of right conduct rather than on legalities, enactment, or custom: moral obligations. capable of conforming to the rules of right conduct: a moral being. 5. conforming to the rules of right conduct ( opposed to immoral): a moral man. 6. virtuous in sexual matters; chaste. 7. of, pertaining to, or acting on the mind, feelings, will, or character: moral support. 8. resting upon convincing grounds of probability; virtual: a moral certainty. COLLAPSE
–noun
9. the moral teaching or practical lesson contained in a fable, tale, experience, etc.
10. the embodiment or type of something.
11. morals, principles or habits with respect to right or wrong conduct.
In my industry many of us have had to take courses specifically focused on teaching us about the ethical moral considerations in the real estate and mortgage businesses. Realtors, specifically, are required to adhere to a specific set of ethical and moral behavior.
Of course many Realtors don't believe in actually applying these ethical and moral considerations in their business practices. You mean I have to show my seller ALL the offers, for reallies! But I have a buyer too, and I can double-end the deal??? What is a real estate agent to do. Well how about doing the right thing dammit!
It's my belief that, for many, ethics and morals are topics they need to know so they answer questions on their real estate agent examination. By the way the process for obtaining a real estate license is about as easy as it was to get a stated income loan in 2005...Pulse, check, Signature check, Willing lender, Check check! Honestly I think the DMV's written test may be more difficult.
So why am I blowing the whistle on my own peers? I mean its tough out there. People are just trying to get by. Because the disease of greed seems to have gotten a bit worse in some respects, or has it?
It seems the mortgage business is much more legitimate these days, with the elimination of certain products, a redonkulous expansion of disclosure requirements, very tight caps on commissions and the fact the feds will put your cute little butt in federal F-you in the a## prison. Mortgage companies, banks, and brokers seem to get it...Or do they?
Law enforcement and industry reporting indicate that mortgage fraud activity continued to increase in 2009 and 2010. FBI mortgage fraud pending investigations increased 71 percent from 2008 to 2009. HUD-OIG pending investigations increased 31 percent from 2008 to 2009. FBI mortgage fraud-related FinCEN SAR filings increased 5.1 percent from 2008 to 2009.
OK so maybe the mortgage business is still working on itself....
But surely the real estate community has improved itself?
http://www.fbi.gov/boston/press-releases/2011/two-defendants-sentenced-in-real-estate-scam
Google "Real Estate Fraud" and you get 36,600.000 results...Ok that's not fair because I googled "Cupcake Fraud" and still get 7,690,000 results
OK, so maybe the real estate community is still working on things too...
So what have we learned...the mortgage and real estate industries will always have a few bad apples at least - probably more like half the barrel in reality. But what about the rest of them/us. Well short of committing an actual crime, there are ethical and moral boundaries. These apply to ONLY REALTORS® and I'm not going to type the registered sign everytime either, so if I say Realtor I mean REALTOR®. So let's talk a look at a few as they are good rules for all: The complete list can be found here.
Standard of Practice 1-5 : REALTORS® may represent the seller/landlord and buyer/tenant in the same transaction only after full disclosure to and with informed consent of both parties. (Adopted 1/93)
This one is a classic and I was able to see it broken first hand today. Do you really think a Realtor or real estate agent or broker can truly represent both the buyer and a seller in a transaction? Well maybe, I am sure it can happen...sometimes...maybe.. But this should not be allowed. Does a sports agent represent both the team and player? Does a divorce attorney generally represent both the husband and wife (husband/husband or wife/wife in Massachusetts)? Does a alleged criminal mind if the prosecuting attorney represents him too? Seriously folks, if you let a broker, agent or Realtor represent both side, be prepared to lose.
Standard of Practice 1-6 : REALTORS® shall submit offers and counter-offers objectively and as quickly as possible. (Adopted 1/93, Amended 1/95)
Another timeless classic. What is better, an offer from a true third party represented by a Realtor not related to the listing agent or an offer from the listing agent? Well that certainly depends on who you ask doesn't it? What is the listing agent brings an offer in from one of his buyers? It happens, not all the time but it goes on...And this counts if the listing agent used the name of his wife, sister, brother, uncle, aunt, college frat brother, or any other moron that will rent his/her license and share his/her side of the commission with the listing agent.
If a Realtor, agent, broker has an offer from a client they represent for a property they have a listing on, that amounts to a potential 100% increase in their commission. The deal I saw today, amounted to an extra $18,000 dollars into the pocket of the listing agent, not to mention the bonus/spiff/pop/desk fee the agent received from the mortgage company he/she referred the loan to, because the rate being offered is well above the rate I saw quoted from another "lender".
If you were making an offer on that property and weren't being represented by the listing agent, do you really, honestly,ever think your offer has a chance. Maybe...but I would bet $18,000 you would lose out. "Sorry, we went with highest and best"..and the shocker...The listing agent is the ONLY one who knows what the next highest and best offers were and guess what, you just missed it.
I will finish with Articles 4, 5, and 6, wherein my day ended finally and again resulted in a pretty frustrated yours truly left holding the bad and a stakc of paper and wasted toner. I'm not a hater, I don't want to lie cheat and steal. So if someone is willing to do that to beat me out, and the client is too stupid to realize it, then I guess that is what it is.
Article 4 : REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00)
Standard of Practice 4-1 : For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS® prior to the signing of any contract. (Adopted 2/86)
Article 5 : REALTORS® shall not undertake to provide professional services concerning a property or its value where they have a present or contemplated interest unless such interest is specifically disclosed to all affected parties.
Article 6 : REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent.
When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®’s firm may receive as a direct result of such recommendation. (Amended 1/99)
Standard of Practice 6-1 : REALTORS® shall not recommend or suggest to a client or a customer the use of services of another organization or business entity in which they have a direct interest without disclosing such interest at the time of the recommendation or suggestion. (Amended 5/88)
When a Realtor, agent or broker receives compensation, a bribe, fake desk rental fee, bogus marketing agreement, or cash in a paper bag, in return for referring clients to these companies WITHOUT full disclosure you have violated your ethics as a Realtor and RESPA. Hell even with full disclosure this is wrong. It's actually wrong even if it's disclosed and the money came in a paper bag. But you get the point.
When a Realtor, agent or broker unjustly disparages a mortgage company or a professionally licensed originator, knowingly, to the detriment of your client, you've violated your ethical code and violated RESPA.
When a Realtor, agent or broker takes a short sale listing and misrepresents the parties of the transaction to a state or federal bank, they've committed bank fraud and wire fraud. When a Realtor, agent or broker misleads a buyer into taking a more expensive loan from a related company or connected third party to line his/her own pockets, they've committed a federal crime, Truth In Lending, RESPA, Business and Professions Laws, California Real Estate Law....and probably a whole host of other crap an prosecutor can lay on you.
And so I say to the, Future Defendent #1, be prepared to be prosecuted and go to jail.
And when that day comes, please know I will NOT be able to put money on your books. But please say hello to Mr. Madoff. He's kind of butch and maybe you can be his next back door deal. I know you won't like it, because I didn't enjoy it today.
Say hello to Bubba for me.
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Learn it, Live it, Love it!
ethics — n
1. ( functioning as singular ) See also meta-ethics the philosophical study of the moral value of human conduct and of the rules and principles that ought to govern it; moral philosophy
2. ( functioning as plural ) a social, religious, or civil code of behaviour considered correct, esp that of a particular group, profession, or individual
3. ( functioning as plural ) the moral fitness of a decision, course of action, etc: he doubted the ethics of their verdict
moral –adjective
1. of, pertaining to, or concerned with the principles or rules of right conduct or the distinction between right and wrong; ethical: moral attitudes.
2. expressing or conveying truths or counsel as to right conduct, as a speaker or a literary work; moralizing: a moral novel.
3. founded on the fundamental principles of right conduct rather than on legalities, enactment, or custom: moral obligations. capable of conforming to the rules of right conduct: a moral being. 5. conforming to the rules of right conduct ( opposed to immoral): a moral man. 6. virtuous in sexual matters; chaste. 7. of, pertaining to, or acting on the mind, feelings, will, or character: moral support. 8. resting upon convincing grounds of probability; virtual: a moral certainty. COLLAPSE
–noun
9. the moral teaching or practical lesson contained in a fable, tale, experience, etc.
10. the embodiment or type of something.
11. morals, principles or habits with respect to right or wrong conduct.
Wednesday, May 11, 2011
How long do you have to wait to buy a home after short sale, foreclosure, or BK?
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