See our MortgageBlog.com posting dated January 2008
Senate action was predicted in January 2008
May 17th, 2010Senate Bill to change Mortgage Broker commissions
May 17th, 2010Senators voted 63-36 to amend an underlying financial regulation bill to place restrictions on how mortgage brokers and bank loan officers get compensated. The measure’s lead sponsor, Sen. Jeff Merkley, D-Ore., argued that consumers were steered into higher rate mortgages that they were unable to pay, resulting in foreclosures and toxic mortgage-backed securities that poisoned the markets.
Borrowers would have to provide evidence of their income, either though tax returns, payroll receipts or bank documents. That provision seeks to eliminate so-called stated-income loans where borrowers offered no proof of their ability to pay.
Senate votes to rein in mortgage lenders
May 17th, 2010Taking aim at deceptive lending, the Senate on Wednesday voted to ban mortgage brokers and loan officers from getting greater pay for offering higher interest rates on loans, and to require that borrowers prove they can repay their loans.
The Senate, however, rejected a measure that would have required homebuyers to make a minimum downpayment of 5 percent on their loans. The votes were part of the Senate’s deliberations on a broad overhaul of financial regulations designed to avoid a repeat of the crisis that struck Wall Street in 2008.
President Barack Obama weighed in on the Senate debate Wednesday, criticizing efforts to exclude auto dealerships that offer car loans from the oversight of a proposed consumer financial protection bureau. Auto dealers — influential figures in their communities — have been aggressively lobbying for an exemption from the law, and the amendment, offered by Sen. Sam Brownback R-Kan., could win bipartisan backing.
“This amendment would carve out a special exemption for these lenders that would allow them to inflate rates, insert hidden fees into the fine print of paperwork, and include expensive add-ons that catch purchasers by surprise,” Obama said in a statement.
Historical Mortgage Rates for 30 Year Mortgage
May 16th, 201030-Year Fixed-Rate Mortgages Since 1971
Historical mortgage rates for the last 37 years
http://www.freddiemac.com/pmms/pmms30.htm
Forbearance vs Mortgage Loan Modification
May 13th, 2010How to Buy a Mortgage (and not lose your mind)
December 9th, 2008I have decided that the phrase “shopping mortgage rates” is an oxymoron. There is no such thing. A mortgage rate is a mortgage rate is a mortgage rate. What you are actually shopping is truth. I will skip the dishonest mortgage broker rant here and cut to the chase.
How to Buy a Mortgage
NOTE: Carve out some time to call all of these brokers on the same day.
Steps:
1. Ask friend near your home or office if they know a decent mortgage broker. Get 3 names.
2. Call broker.
3. Be pleasant and professional. These are generally nice hardworking people and deserve respect.
4. Tell him/her the amount of the mortgage, downpayment if purchase, estimated value of home and term you want (1, 3, 5, 7, 10, 15, 20, 30, 40 years) . Be prepared to give him/her recent credit scores for the borrower/co-borrower.
5. Once that information has been delivered simply ask “From all of your wholesale sources please tell me the lowest par rate you can lock my loan at today?” Also mention that you want to be fair and let them know you are calling 2 other brokers but you are asking the same question.
(At this point they may feel compelled to ask you what rates you have so far and may attempt to sell against the others – cut them off and tell them you are keeping all rates confidential and will do the same with their rate.)
6. Ask broker if there are any discount points priced into the rate.
If answer is yes then go back to Step 5 and stress PAR RATE.
If answer is no then ask to confirm the wholesaler lender’s name. Write it down and the rate quoted next to the broker’s name.
Step 7. Go back to Step 2 and repeat until you have 3 par rates.
Step 8. When you are done you should have 3 VERY similar rates. Wholesale loan rates reflect a commodity – the time value of money on a certain day. If 2 of the rates are close and 1 is much higher – throw that rate out.
Step 9. Now take the lowest 2 rates and call each back to confirm the rate. Also ask them to email or fax you the rate and the wholesale lender name confirming this is “the lowest par rate you can lock my loan at today”. If they refuse to do this then scratch them from the list.
Step 10. Once you have a winner (lowest rate or person you prefer if rates are same) then call them tell them you would like to buy a mortgage for ___ rate for a term of _____ and there will not be any origination fees or junk fees but you would be willing to pay them a flat fee of $1,500 for their time and expertise. Also promise them you will not further shop the loan and you will not respond to all the phone solicitations you will receive once they run your credit (these phone calls are from unethical loan officers that buy trigger leads from the unethical credit bureaus that sell them – you become a trigger lead when you have your credit pulled by a mortgage broker or bank. (Make sure your loan officer DOES NOT provide your email or phone number when they pull your credit.)
If they agree then you buy the mortgage if not go back to Step 1. They won’t like this method as mortgage brokers love to control the information flow. Some may even tell you this is not legal. Hogwash. Again move on you will eventually find someone honest enough that would rather make $1,500 for performing a service than play games in an attempt to make $4,500.
Good luck and be strong.
This post was inspired by a post by Terri Ewing
US Plans Recapitalization Plan For Financial Firms
October 11th, 2008
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Bottom Fishing?
October 10th, 2008Vultures circle Wall Street, but hesitate to feed
Vulture” investors, as they are called, have raised tens of billions of dollars over the past year in anticipation of opportunities to scavenge distressed assets and debt at discounted prices.
Speculators are eyeing potential profits in many of the same areas now at the center for the financial mess: real estate in foreclosure-plagued Florida, high-yield commercial paper, and pools of questionable mortgages.
Yet, so far, most have hesitated to swoop in. Instead, they have circled and watched for nearly a year as the turmoil worsened, wary about committing to anything with the financial system in chaos.
http://www.theoaklandpress.com/articles/2008/10/10/business/doc48efa637920a0295625254.txt
Regulatory Arbitrage created MBS market ?
October 10th, 2008This says it all….
1. An FDIC document on the risk weights of different bank assets. The higher the weight, the more capital the bank has to hold against that asset. As I read table 1 and table 3, if you originate a loan with a down payment of 20 to 40 percent, the risk weight is 35. But if you buy a AA-rated security, the risk weight is only 20.
So if a junk mortgage originator can pool loans with down payments of less than 5 percent, carve them into tranches, and get a rating agency** to rate some of the tranches as AA or higher, it can make those more attractive to a bank than originating a relatively safe loan.
If you want to know why securitization dominated the mortgage market, this explains it. Regulatory arbitrage, pure and simple.
http://www.fdic.gov/news/news/financial/2008/fil08069a.html
http://econlog.econlib.org/archives/2008/10/some_useful_not.html
**
Sept. 24 (Bloomberg) — Frank Raiter says his former employer, Standard & Poor’s, placed a “For Sale” sign on its reputation on March 20, 2001. That day, a member of an S&P executive committee ordered him, the company’s top mortgage official, to grade a real estate investment he’d never reviewed.
S&P was competing for fees on a $484 million deal called Pinstripe I CDO Ltd., Raiter says. Pinstripe was one of the new structured-finance products driving Wall Street’s growth. It would buy mortgage securities that only an S&P competitor had analyzed; piggybacking on the rating violated company policy, according to internal e-mails reviewed by Bloomberg.
“I refused to go along with some of this stuff, and how they got around it, I don’t know,” says Raiter, 61, a former S&P managing director whose business unit rated 85 percent of all residential mortgage deals at the time. “They thought they had discovered a machine for making money that would spread the risks so far that nobody would ever get hurt.”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ah839IWTLP9s
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ax3vfya_Vtdo
Loan Modification Update-New Programs take Effect
October 9th, 2008There was some good news for troubled homeowners this week as new programs were announced that are aimed at helping delinquent borrowers more easily obtain a loan modification to avoid foreclosure. First, Bank of America, owner of Countrywide, introduced a new systematic mortgage loan modification program as part of a predatory lending settlement. Countrywide customers may qualify for these new benefits:
$8.7 billion earmarked to assist in loan modifications
400,000 loans to be reviewed
Loan modifications offering a lower interest rate and reduced principle
Foreclosures on delinquent loans to be suspended pending loan reviews
Late fees and pre-payment penalties to be waived
Lump sum payments to borrowers who can’t afford their monthly payment after a loan modification and who lose their homes thru foreclosure in the future
Also, Hope for Homeowners, signed into law July 2008, took effect October 1 and offers to refinance troubled borrowers into a low, fixed rate, government insured loan. This new program is expected to help thousands of homeowners refinance into an affordable monthly mortgage payment. Here is a brief outline of the program:
$300 billion allotted to assist distressed homeowners
Qualified borrowers must live in their homes and have loans that were originated between 1/1/2005 and 6/30/2007
Borrowers must be spending at least 31% of their gross monthly income on their current monthly mortgage payment
To participate, lenders are required to forgive all debt above 90% of the homes current appraised value-this means a reduction in the loan balance to accurately reflect the home’s current market value
This is a voluntary program and borrowers must ask their lender if they are willing to agree to it
http://www.trulia.com/blog/susan_gregory/2008/10/loan_modification_update
Stressed About Money? The Kids Might Be, Too
October 9th, 2008With nothing but dire financial news ruling the airwaves lately, you can be certain children have pricked up their ears. As hard times begin to hit home—and purse strings yank tighter—how much of your worries should you share with the kids? U.S. News asked David Palmiter, a Scranton, Pa., clinical psychologist expert in counseling children and families, for advice on how and when to discuss difficult topics with children—without upending their whole world. Excerpts:
http://health.usnews.com/articles/health/childrens-health/2008/10/09/stressed-about-money-the-kids-might-be-too.html
Mutual Fund Withdrawals a Record as Investors Flee
October 9th, 2008Oct. 9 (Bloomberg) — Investors pulled a record $52.1 billion from U.S.-managed stock and bond mutual funds in the past week, seeking the safety of government-insured bank deposits as the financial crisis worsened.
Shareholders took $43.3 billion from stock funds and $8.8 billion from bond funds in the week ended Oct. 8, according to data compiled by TrimTabs Investment Research in Sausalito, California. The exodus followed $72.3 billion of outflows in September, the most in a single month. Investors deposited $185.5 billion into bank accounts last month through Sept. 22, TrimTabs said, citing U.S. Federal Reserve data.
“People are scared,” Conrad Gann, TrimTabs’ chief operating officer, said in an interview. “This market is different from what we’ve seen before.”
The five largest diversified U.S. stock fund managers, including Fidelity Investments and Vanguard Group Inc., posted an average 28 percent loss this year through Oct. 6, about 2 percentage points worse than the Standard & Poor’s 500 Index, according to Morningstar Inc. Investors mostly switched into fixed-income through August, putting $97 billion into bond funds while withdrawing $74 billion from stock funds, TrimTabs said.
http://www.bloomberg.com/apps/news?sid=aTB_zifIPxIM&pid=20601213
Trulia Launches Housing Crisis Center
October 9th, 2008http://www.trulia.com/voices/marketcrisis/
Dodd, Shelby Roll Out Senate Housing Bill
June 19th, 2008After working behind the scenes to negotiate on differences with House Financial Services Committee chairman Barney Frank (D-MA), Senators Chris Dodd (D-CT) and Richard Shelby (R-AL) on Wednesday rolled out a housing proposal that could be put to the Senate floor for a final vote as early as this week.
“Americans are looking to Congress to deliver solutions to the housing crisis, which has forced millions of homeowners to file for foreclosure, reduced home values for millions more, crippled the mortgage markets, and significantly weakened the American economy,” said Dodd.
The comprehensive housing legislation contains provisions from a Dodd-Shelby bill that was approved by the Senate Committee on Banking, Housing and Urban Affairs on May 20, as well as measures from the Foreclosure Prevention Act, which passed the Senate in April.
more at
http://www.housingwire.com/2008/06/18/dodd-shelby-roll-out-senate-housing-bill/
A bit of good news for real estate values ?
May 29th, 2008From TucsonMortgageBlog.com
http://www.tucsonmortgageblog.com/18-of-20-real-estate-markets-show-signs-of-improvement/
In 18 of the 20 largest metropolitan areas, home values declined at a slower pace than in the previously measured month. The report also showed that national home prices are down 14.4 percent from March 2007.
Unfortunately, it’s the more sensational 14.4% figure that newspapers chose to report this morning. If you never went further than the headline, you’d miss a key piece of analysis.
Comparing today’s market to last year’s market is a lot less valuable than comparing it to last month’s market. That’s a better way to analyze the market’s health.
Domain Names and the Mortgage Business
May 25th, 2008Its amazing in 2008 you would still have to convince small business and big business that they need a REALLY GOOD domain name. Need a loan in Arizona? How about Arizonaloans.com. Want to read a blog on the Tucson Mortgage market? Perhaps TucsonMortgageBlog.com is a good place to start.
In the rush to find new interactive marketing methods, we should always remember what we learned from the old ones.
Such as the original interactive direct-response brand: 1-800. The one that is closest to set the gold standard model for dotCOM domain valuation. And the one which proved through 888, 877,855 and 866 that got too easily confused with the proliferation of local new area codes, and inevitably sent misdials to the 800 variant, why dot (anything else except a country code) won’t work.
800’s where we first learned that a great brand name and a great call to action are the same. In every ad medium — TV, radio, print or billboard — toll-free numbers boosted response rates, attracting not only more callers but more qualified callers — those with both the desire and ability to buy.
And any size business could do it.
Ranging from the South Florida Honda dealer who grabbed 1-800 NEW HONDA . . . to the national and global marketers who brought you:
1-800 MATTRESS
1-800 FLOWERS
1-800 THECARD
1-800 DENTIST
1-800 PetMeds
Simple. Memorable. Effective. Because the name and call to action are exactly what the customer is thinking — what interactive marketing authority Judith Oppenheimer calls vernacularly dominant. And she distills the lesson for today’s interactive marketers: “Common sense dictates that the pronounced assertive ‘I WANT’ behavior, its benefits and value, would apply to the vernacularly dominant domain name too.”
We know it does. And so did the 800# pioneers who migrated into this business early on. They simply took the words they knew customers embraced, costs they knew that could be eliminated online and a benchmark what a number sold for to determine what a name was worth.
And since they lived through the introduction of 888 extensions which proved nothing could say what 800 said, they knew not to embrace any other extension except those same words and dotCOM.
All of the top-of-mind 1-800 numbers have become top-performing dotCOM domains, generating the same type of results as their interactive forebears.
No surprise 800 guys became fantastic marketers from that industry and successfully migrated to the Internet and are amongst some of the most successful Web entrepreneurs today.
There is no question that call-to-action domain names are the easiest to remember and produce higher response rates. That’s because just like the people who dial 1-800 YOUR NAME, people who type in or click on YOUR DOMAIN.com are raising their hand to buy.
Look at the auction inventories and history not from multiples and overture scores but from taking off the dotCOM prefacing an 800# in your mind and asking “would that have had value? And would it have more value now?
Source
http://fragerfactor.blogspot.com/2008/05/1-800-duh-why-didnt-i-think-of-that-com.html
Pent-Up Mortgage Demand – Buyers are Ready to Buy
May 19th, 2008Source: http://uk.reuters.com/article/bankingFinancial/idUKN1643735120080516
A new policy on mortgage down payment requirements from Fannie Mae (FNM.N: Quote, Profile, Research) is “sound,” and could help unleash pent-up demand, James Lockhart, director of the Office of Federal Housing Enterprise, said on Friday.
“There is pent-up demand for housing,” Lockhart told reporters after a speech at the Federal Reserve Bank of Chicago’s bank structure conference.
“Maybe people are thinking that now is the right time to get a mortgage.”
Fannie Mae on Friday announced a new, national policy on downpayment requirements for conventional, conforming mortgages.
The guidelines supercede more stringent requirements adopted in December, requiring higher downpayments in markets where home prices are falling.
“It’s still sound underwriting and makes sense in this type of market,” Lockhart said. “They’re doing it in a controlled and good manner … they are trying to help people get into houses.”
Lockhart also said components of the Senate Banking Committee’s housing bill that touch on the government-sponsored enterprises, or GSEs, regulated by OFHEO, “look like a good, solid bill.”
“Hopefully they’ll vote on Tuesday and get moving on this,” Lockhart said. “If they can’t get the legislation done now, then when?”
Fannie Mae sees sharper home-price declines, loses $2.2B
May 6th, 2008WASHINGTON — The steeper slide in home prices is accelerating the pace of foreclosures, Fannie Mae said Tuesday as it outlined plans for shoring up its finances following a $2.2 billion first quarter loss.
While the nation’s largest buyer of home loans will slice its dividend and attempt to raise $6 billion, mostly by issuing new shares, federal regulators loosened Fannie’s capital requirements as the government looks for ways to bolster the housing market.
Moody’s Investors Service downgraded the company’s financial strength rating because of the potential for further losses from soured home loans over the next two years, but investors pushed Fannie’s shares higher, in anticipation of the bigger role Fannie will play in the mortgage market.
http://wire.jacksonville.com/pstories/business/20080506/276067311.shtml
Fannie Mae reported a larger-than-expected first-quarter loss of $2.2 billion, and said it plans to lower its dividend and raise $6 billion in additional capital. But it also estimated its market share increased to about 50 percent of the new single-family mortgage related securities issued. Fannie Mae shares rebounded to rise $1.68, or 5.9 percent, to $29.97.
http://www.katc.com/Global/story.asp?S=8279190
Live conference from Washington DC on Bear Stearns bailout
April 3rd, 2008$15B housing fix gets fast-tracked by Senate
April 3rd, 2008from http://money.cnn.com/2008/04/02/news/economy/housing_bipartisan_draft/index.htm
Democrats and Republicans agree to compromise on bill aimed at averting foreclosures and helping those hurt in housing crisis.
By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: April 3, 2008: 11:35 AM EDT
NEW YORK (CNNMoney.com) — With unusual speed, leading Senate Democrats and Republicans have negotiated a bipartisan, $15 billion housing relief package that the Senate will start debating Thursday, and will likely vote on by next week.
The package contains funding to help borrowers refinance unaffordable loans and help boost activity in neighborhoods with properties in foreclosure. It also includes a big business tax break for homebuilders, as well as a new tax credit and deduction for homeowners and home buyers. Additionally, the package has measures to make loans that are insured by the Federal Housing Administration – which helps borrowers with weak credit or little or no cash for a downpayment – more accessible.
Lawmakers have been under election-year pressure to do more about the mortgage crisis. The Senate package reflects concessions from both sides of the aisle. But the package will be subject to amendments and the House will have its say next week after the Senate votes.
eMortgages – electronic signatures for Mortgages
April 3rd, 2008As Downturn Rages On, Lenders Consider eMortgages
Seattle-based DocuSign said Wednesday that it was selected as an approved electronic signature vendor for Wells Fargo, and will provide its service to major correspondent lenders working with the bank. DocuSign provides a on-demand platform for electronic signatures of key disclosure documents, including truth-in-lending notifications and 1003 applcations.
“We have enabled our correspondent customers to double their close rates and eliminate 80 percent of the cost from their expensive paper signature process,” said DocuSign CEO Matthew Schlitz.
http://www.docusign.com/
Bear Stearns CEO Sells His Holdings For $61.3 Million
March 28th, 2008If you are looking for a street price for Bear Stearns stock price I guess this may give you a hint…
Source: http://www.huffingtonpost.com/2008/03/27/bear-stearns-ceo-sells-hi_n_93790.html
NEW YORK — Bear Stearns Cos. Chairman James Cayne on Thursday sold his holdings in the embattled investment bank ahead of its expected acquisition by JPMorgan Chase & Co.
Cayne sold 5.66 million shares for exactly $10.84 a share for $61.3 million. However, it was not known if those shares were dumped into the open market or if Cayne sold them to another party.
A spokesman for Bear Stearns would not comment on the sale.
JPMorgan has offered about $10 per share in its acquisition of Bear Stearns. That was increased from the original offer of $2 per share amid speculation that major shareholders would not accept the deal on those terms.
Shares of Bear Stearns have traded above the prices offered since the deal was announced as some investors felt a rival bid might be in the offing. There has also been speculation that Cayne might try and muster a competitive offer with Joseph Lewis, a billionaire financier who is Bear Stearns’ second-largest shareholder.
Billionaire invests $1.1 Billion in Sub-prime Mortgages
March 19th, 2008This got missed due to the Bear Stearns circus…..
Option One Mortgage sold for $1.1 Billion
Billionaire investor Wilbur Ross has reached an agreement to acquire the mortgage loan servicing business of H&R Block’s Option One Mortgage, forming the second largest mortgage servicing company in the United States.
The $1.1 billion deal adds to the acquisition by WL Ross & Co. of American Home, giving the company $95 billion in mortgage financing. The deal is expected to close by May 30. “We’ve been focusing on the mortgage area, and on the monoline insurance people. We have not been focusing on the brokerage investment banking companies,” Ross told CNBC.
“I think it’s very, very hard, particularly from the outside, to figure out what one of these is worth.”
Option One currently services about $53 billion of subprime mortgages, ranking it the fourth-largest in the nation.
Perhaps the sub-prime shakeout is moving faster than people thought ? Why would you buy the servicing rights if people aren’t paying their monthly payments?
Flat Fee Mortgage
March 19th, 2008Please read up on the Flat Fee Mortgage if you are considering a future as a mortgage broker.
Did Bear Stearns Fail due to Sub-prime Mortgages last summer?
March 19th, 2008Did Bear Stearns fail due to sub-prime mortgages way back last Summer?
Found this from JULY 2007
Bear Stearns admits two subprime mortgage funds are worthless
Submitted by cpowell on Wed, 2007-07-18 01:05. Section: Daily Dispatches
By Joey Bel Bruno
Associated Press
Tuesday, July 17, 2007
NEW YORK — Bear Stearns Cos. told clients Tuesday that a meltdown in the subprime mortgage market has made the assets from two of its flagship hedge funds almost worthless.
Both funds were squeezed after Bear Stearns made wrong-way bets on the home mortgage market and was caught as loans to risky investors began to default. The assets in one of the funds are essentially worthless, while another is worth 9 percent of its value at the end of April, according to a document obtained by The Associated Press.
Bear Stearns, the nation’s fifth-largest investment bank, began disclosing in March that the two hedge funds had sustained heavy losses tied to subprime loans extended to risky borrowers. At the time, its High-Grade Structured Credit Enhanced Leveraged Fund was worth about $638 million — and now has no value.
Meanwhile, the larger and less-leveraged High-Grade Structured Credit Fund lost 91 percent of its value. It was worth about $925 million before taking on losses in March.
“In light of these returns, we will seek an orderly wind-down of the funds over time,” Bear Stearns said in a letter that will be sent to clients who might have questions about the funds. “This is a difficult development for investors in these funds, and it is certainly uncharacteristic of Bear Stearns Asset Management overall strong record of performance.”
A spokeswoman for Bear Stearns didn’t return calls seeking comment.
In June, Bear Stearns said it would spend $1.6 billion to bail out the High-Grade Structured Credit fund. About $1.4 billion of that remains outstanding, Bear Stearns said in the letter.
James Cayne, Bear’s longtime chief executive, has said the bailout would not have “any material adverse effect” on the company’s business.
The problems began when the funds’ assets — mostly securities backed by risky mortgages to investors with poor credit, known as subprime loans — lost value amid rising defaults in a persistent housing slump.
Defaults have been rising quickly, and a large volume of subprime loans with variable interest rates are slated to reset at higher levels in the next two years.
Meanwhile, securities regulators have started a dozen inquiries related to how hedge funds place a value on the complex securities called collateralized debt obligations, many of which are underpinned by subprime loans.
CDOs- collateralized debt obligations (CDOs) are a type of asset-backed security and structured credit product. CDOs are constructed from a portfolio of fixed-income assets. These assets are divided into different tranches: senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated). Losses are applied in reverse order of seniority and so junior tranches offer higher coupons (interest rates) to compensate for the added default risk. CDOs serve as an important funding vehicle for fixed-income assets.
Bear Stearns shares fell $5.41, or 3.9 percent, to $134.50 in after-hours trading. The shares had closed down 40 cents at $139.91.
So the issue here is FUD. Fear, uncertainty and doubt. When the banks took some sub-prime loans and combined them with other CDOs and then sold them to everyone, everywhere the buyers now have no know way of knowing if they are holding good loans, bad loans or more likely what is the mix of good to bad in the brown bag of payments they bought. So the uncertainly increases risk and risk is expensive. Others just take their money elsewhere and so the music stops and somebody gets left with out a chair.
Because the holder of the loans doesn’t know whose loan they are holding the assumption is that many US home loans are now ticking time bombs. You can’t call up the homebuyer and ask him if he still has his job and if things are going okay. Therefore when CDOs are priced marked to market they can quickly evaporate due to the mere EXPECTATIONS of default.
Ironically it seems that the sub-prime defaults are bad but the CDOs sold spread the risk well enough that the high interest rates paid by many sub-prime borrowers are more than offsetting the losses.
Ooops. There goes your Domain Name
March 12th, 2008More Bad news
I know you people in the mortgage and real estate industry are near the end of your rope but I must take a moment to impart more bad news. There is pending legislation that would jeopardize your domain name(s) and force you to publish your home address if you work from home or blog. Veiled as Anti-Phishing (hey who wants to be anti-anti-phishing as that would make you pro-phishing right?) it has some concerning sections for ALL domain owners.
On February 25, 2008 U.S. Senator Olympia Snowe introduced S. 2661, the “Anti-Phishing Consumer Protection Act of 2008” (APCPA). The bill was also cosponsored by Senators Bill Nelson (D-FL) and Ted Stevens (R-AK). It has been referred to the Senate Committee on Commerce, Science and Transportation.
This bill is being referred to as a “Snowe Job” by small companies, individuals, bloggers and domain name investors. Mr Stevens is already infamous for his understanding of the internet.
Reverse Domain Hijacking on Steroids?
While using a very friendly title Anti-Phishing Consumer Protection Act of 2008 -some are calling this bill the 2008 Reverse Domain Name Hijacking Act.
Private WHOIS Registration? Jail Time and Bankruptcy.
The bill also makes PRIVATE WHOIS registration of a domain name punishable by prison time and fines up to $6 million per domain name.
Read the bill for yourself and if you wish you can read my analysis below.
Upon reading the bill it is clearly written as three bills in one;
Phishing (section A)
Domain Names (section B)
and private WHOIS registration (section C).
While the reader might assume that sections regarding Domains (B) and private WHOIS (C) are relevant only in the case of suspected or proven Phishing attempts (section A), this is not the case. Each section stands alone and is unrelated to the other sections.
Section B
Section B would expand current legislation regarding trademark owners and create new legislation that could allow businesses, individuals and government organizations to lose their domain names via the confusingly similar language found in section B.
Section B would create a Pandora’s Box as any person, company, church or other entity that owns a domain name can be brought into court by any person, company, church or other entity that feels a domain name infringes on their trademark, brand, personal identity or business.
This would allow potential fines in the millions of dollars and jail terms for any person, business, church or government that owns a domain name considered confusingly similar. As an example the owner of the domain name Workout.net could bring legal action against the owner of the domain name Workout.com or the domain name Workout.biz even though the owner of Workout.net has no trademark or famous brand but the names could be construed as confusingly similar.
Trademark owners already have strong and highly effective remedies for infringement of their marks by domain names, as they can elect to pursue an arbitration action through the Uniform Dispute Resolution Process (UDRP) administered by the Internet Corporation for Assigned Names and Numbers (ICANN) or to sue in Federal Court under the Anti-Cybersquatting Prevention Act (ACPA). S. 2661 would give them a third option that is broader in scope, less balanced, and far more punitive than the ACPA. For example, both the UDRP and the ACPA require that the trademark owner establish that a domain registration was made in bad faith, but S. 2661 contains no such requirement.
While the ACPA provides for statutory damages of up to $100,000 per infringement, S. 2661 would provide damages of up to $6 million for the same offense. Notwithstanding the bill’s labeling as an anti-phishing measure, these lawsuits could be brought without any requirement of supporting evidence that the domain name was in any way associated with criminal phishing activity.
Section C
Private WHOIS is likened to an unlisted phone number for domain owners. Section C criminalizes all private WHOIS registrations.
Many small businesses operate from home offices and would prefer not to give a home address when registering a domain name. Providing a home or business address can lead to unwanted visitors to your home or office and WHOIS registration data is constantly mined by email spammers, phone solicitors, junk fax and junk mail list providers.
Unfortunately the simple ownership of one domain name you can open the door to an endless supply of unsolicited contact from anywhere on the planet. Unlike our Do Not Call lists once your email,phone or address is in cyberspace it cannot ever be removed.
Additionally, ICANN has spent hundreds of hours researching and working on potential solutions to the WHOIS privacy dilemma and this legislation would ignore ICANN’s efforts and work in this area.
Understanding Phishing
Phishing is a problem but this bill will do little to stop the practice.
Consider the following facts:
67% of Phishing attacks are from outside the US and many are run by organized crime rings located outside the US
Phishing attacks usually last 4 hours or less before the site is shut down or removed.
Over 90% of Phishing attacks are related to the financial services industry.
Phishing attacks are now more complicated and many now rely on practices like silently changing DNS servers on compromised user computers rather than hoping they find a misspelled bank domain name.
Many Phishing attacks take place on compromised machines. In this case the domain name is the actual bank or financial service domain name. The bank’s server has been “hacked” and had proper login screens replaced by Phishing login screens.
Phishing attacks use junk domain names and typically place infringing names as subdomains to trick users.
Phishing attacks are commonly done via email and use a fake hyperlink to trick the user. In most cases the visible link may show a legitimate domain name yet the actual link will most likely use famous mark in the subdomain but use a junk domain name.
Below is a real world example of a Phishing attempt that I received via email:
The email shows the link http://wc.wachovia.com/online
but the actual link is http:://wc.wachovia.ibsIDcmopserver.cmserver.access.default.servletDOLOGIN.verify.cfm.fdgd2.com
Note: The domain name used for this attempt is fdgd2.com which is a throw away domain name while the bank name is used early in the URL as a subdomain name to fool the user.
See stats and learn more at http://www.antiphishing.org/
Damage to Small Businesses
The Findings section of S. 2661 states that “78% of small businesses polled stated a less reliable Internet would damage their business”. Since the Internet is certainly critical to small businesses secure domain name ownership is crucial to small businesses. Ironically S. 2661 would likely hurt small businesses due to Section B, than any presumed consumer fear of Phishing scams.
If small business owners and domain investors are afraid to invest in their web sites, due to constant concerns about legal action via Section B, then small businesses will not be able to invest time and money into development and promotion of their domain names. The Internet is important to help sustain and grow small US businesses in a hyper-competitive global economy. S. 2661 would hurt the US small business owner and thus hurt the US economy.
Losing Business to Foreign Competitors
Due to concerns about S. 2661 many US and non-US residents are contemplating or already taking action to move web hosting, domain registration and many other Internet services away from US based providers. Domain registration, hosting and other services are offered by many companies in many countries and these companies will gladly take revenue from small US based businesses offering domain registration, web hosting and related services.
Summary
Phishing is a growing problem but it will not be solved or even slowed down by S. 2661.
The main impact S. 2661 would have is to allow bigger businesses to potentially take away domain names from small businesses, churches, political groups and individuals that rightfully own domain names and have absolutely no connection to Phishing or Phishing attempts.
If you want to voice an opinion
http://www.thepetitionsite.com/1/snowe-bill-threatens-domain-name-registrants-and-internet-commerce
Contact the ICA
http://www.internetcommerce.org/Snowe_Bill_Threatens_Domain_Name_Registrants
Read more
http://www.news.com/8301-13578_3-9879859-38.html?tag=bl
http://domainnamewire.com/2008/03/03/senate-anti-phishing-bill-or-reverse-cybersquatting-in-disguise/
http://www.domainnews.com/general/2008032656/snowe-bill-threatens-domain-name-registrants/
2008 FHA Loan Limits
March 7th, 2008FHA Mortgage Limits
Web Form Interface
https://entp.hud.gov/idapp/html/hicostlook.cfm
Raw Data File Formats
http://www.hud.gov/pub/chums/file_layouts.html
FHA Loan Limits Economic Stimulus Act of 2008
March 7th, 2008March 6, 2008
TO: ALL APPROVED MORTGAGEES
SUBJECT: Temporary Loan Limit Increase for FHA
This Mortgagee Letter provides information on Federal Housing Administration single family mortgage limits as a result of enactment of the Economic Stimulus Act of 2008 (“the Act”). These limits are effective for mortgages endorsed for insurance on or after the date of this mortgagee letter and remain in effect for those mortgages for which the mortgagee has issued credit approval for the borrower on or before December 31, 2008.
FHA Single Family Programs Affected:
The mortgage limits described in this Mortgagee Letter are effective for those mortgages insured under the following Sections of the National Housing Act: Sections 203(b)(FHA’s basic 1-4 family mortgage insurance program), 203(h)(mortgages for disaster victims), 203(k)(rehabilitation mortgage insurance), and 234(c)(condominium units). These limits do not apply to Section 255, Home Equity Conversion Mortgages (HECM).
Revisions to the Lowest Local Limits:
The Act provides that the mortgage limit for any given area shall be set at 125% of the median house price in that area, as determined by the Department of Housing and Urban Development, except that the FHA mortgage limit in any given area cannot exceed 175% of the 2008 Freddie Mac conforming loan limit of $417,000, nor be lower than 65% of the same 2008 Freddie Mac conforming loan limit for a residence of applicable size.
Thus, in areas where 125% of the median house price is less than 65% of the Freddie Mac limit, the FHA limits are set at the 65% limit, i.e., the “floor,” as follows:
One-Unit $271,050
Two-Unit $347,000
Three-Unit $419,400
Four-Unit $521,250“High-Cost” Local Limits:
Any area where the limits exceed the floor is known as a “high cost” area. In areas where 125% of the median house price exceeds the 175% limit of $729,750 for a 1-unit property, the mortgage limits are set at the 175% amount, i.e., the “ceiling,” as follows:
One-Unit $729,750
Two-Unit $934,200
Three-Unit $1,129,250
Four-Unit $1,403,400For all other areas, i.e., those where 125% of the median home price for the area is in between the floor and the ceiling, the limit shall be at 125% of the median home price.
The list of areas where the FHA mortgage limits are at the ceiling is provided in Attachment I. The list of areas where the FHA mortgage limits are in between the ceiling and the floor is provided in Attachment II. For any areas not listed in either Attachment I or II, the FHA mortgage limits are at the floor; this includes the vast majority of those areas (i.e., counties, parishes, boroughs, and independent cities) for which FHA has published loan limits.
Special Exceptions for Alaska, Hawaii, Guam, and Virgin Islands:
In addition, the National Housing Act permits mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150% of the above ceilings, to account for higher costs of construction. Thus, these four areas have a potential higher ceiling of $1,094,625 (1-unit), $1,401,300 (2-unit) $1,693,875 (3-unit); and $2,105,100 (4-unit). None of the limits for these areas has reached the full 150% ceiling, but several are between the temporary FHA statutory ceiling and the higher 150% ceiling provided for in those areas. These areas and limits are also identified in Attachment I.
Home Equity Conversion Mortgages Excluded from the Act:
As a reminder, HECMs were not included in the Economic Stimulus Act. Therefore, FHA’s loan limits for HECMs will retain the existing “floor” of 48% of the conforming limit or $200,160, as well as the “ceiling” of 87%, or $362,790. Those areas in between are limited to 95 percent of the local median. Lenders are also reminded that while 2-, 3-, and 4-unit properties are eligible under the HECM program, the maximum claim amount is based on the 1-unit local limit.
Where to find comprehensive listing of FHA local limits:
A complete schedule of FHA mortgage limits for all areas is available through the internet at https://entp.hud.gov/idapp/html/hicostlook.cfm. In addition, our comprehensive listing will include separate tables for FHA’s HECM as well as the local mortgage limits for loans that may be sold to Fannie Mae and Freddie Mac. The limits are determined by the county in which the property is located, except that for properties located in metropolitan or micropolitan statistical areas, as determined by the Office of Management and Budget, the limit is set at that of the county with the highest limit within the metropolitan or micropolitan area. If you are unsure if a county is within one of the metropolitan or micropolitan areas listed on the attachments you should check the internet site before closing the mortgage at the revised limit. For a complete list of all metropolitan counties in the country by MSA, view the most recent bulletin updating statistical areas of definitions and guidance at http://www.whitehouse.gov/omb/bulletins/index.html.
Requests for Local Increases:
Appeals to local area loan limits determined by HUD for implementing provisions of the Economic Stimulus Act of 2008 must be made within 30 days of this mortgagee letter; this includes appeals for loan limits for HECMs. Due to the limited time the new loan limits are authorized by Congress, and the need to have stability in the mortgage market, the standard procedures for appeals stated in Mortgagee Letter 2007-01 (http://portal.hud.gov/fha/reference/ml2007/07-01ml.doc) are suspended. Each request for appeals must contain sufficient housing sales price data, listing one-family properties sold in an area, to represent home prices across 2007. HUD is using an entire year for the basis of its decisions because of disruptions in the mortgage market that have affected home prices in recent months. All such requests will be handled exclusively by FHA’s Santa Ana Homeownership Center. That address is:
U.S. Department of Housing and Urban Development
Santa Ana Homeownership Center
Santa Ana Federal Building
34 Civic Center Plaza, Room 7015
Santa Ana, CA 92701-4003
Attn: Program Support/Loan LimitsSeller Concessions and Verification of Sales
Given the “softness” in a number of housing markets, FHA believes it imperative to remind lenders and appraisers of FHA’s policy regarding reporting seller concessions and the verification of sales data. This guidance was most recently expressed in mortgagee letter 2005-02. (http://portal.hud.gov/fha/reference/ml2005/05-2ml.doc)
If you have any questions regarding this mortgagee letter, please contact the FHA Resource Center at 1-800-CALL-FHA (1-800-225-5342).
Sincerely,
Brian D. Montgomery
Assistant Secretary for Housing-
Federal Housing Commissioner
Slimy Appraisers blamed for Mortgage Mess?
March 3rd, 2008An a move to “clean up the mortgage mess” Fannie and Freddie will require tougher standards for appraisers – most notably the mortgage broker can no longer hire the appraiser
Fannie and Freddie agreed to a new code that would govern appraisal selection, compensation, conflict of interest and other issues. Under the code, mortgage brokers will be prohibited from selecting appraisers. They will also be prohibited from using “in-house” staff appraisers to conduct initial appraisals and from using appraisal management companies that they own or control.
See the full story here:
Fannie Mae Introduces HomeSaver Advance
March 3rd, 2008Fannie Mae Introduces HomeSaver AdvanceTM;
Mortgage Workout Option Designed to Help Delinquent Borrowers
https://www.efanniemae.com/sf/servicing/pdf/homesaveradvance.pdf
WASHINGTON DC — Fannie Mae (FNM/NYSE) announced today that, as part of its HomeStayTM initiative to support its mortgage servicers as they provide at-risk borrowers with refinancing and loan workout assistance, it is offering a new option — HomeSaver AdvanceTM.
HomeSaver Advance is designed to help qualified borrowers bring delinquent mortgages current and keep their homes. With HomeSaver Advance, servicers can now offer an unsecured, personal loan that will enable a qualified borrower to cure the payment default on a mortgage loan that Fannie Mae owns or has securitized, with fewer up-front costs and generally in less time.
“HomeSaver Advance will help Fannie Mae streamline its loss mitigation efforts and offer loan servicers a new way to cope with a delinquent loan,” said Mike Quinn, Fannie Mae Senior Vice President for Single-Family Credit Risk Management. “Our research shows that most borrowers become delinquent because of a temporary life event or hardship. This loan can offer these borrowers another alternative, and help prevent a temporary setback from becoming a foreclosure.”
HomeSaver Advance will provide Fannie Mae with an enhanced ability to manage credit risk and conserve capital during the housing downturn. Fannie Mae anticipates that HomeSaver Advance will reduce the number of delinquent mortgage loans it purchases from its mortgage-backed securities trusts and the fair value losses it would record in connection with those purchases.
HomeSaver Advance is just one of a variety of workout options that Fannie Mae’s servicers can offer to borrowers. HomeSaver Advance is being rolled out and should be available to all Fannie Mae Servicers by April 15, 2008. Please click here for HomeSaver Advance fact sheet.
A New Loss Mitigation Option for Delinquent Mortgages
HomeSaver Advance™ is an extension of Fannie Mae’s HomeStay™ initiative — a multi-faceted initiative that helps lenders and servicers meet the needs of today’s challenging market. HomeSaver Advance is the latest example of our ongoing commitment to flexible servicing policies and homeownership preservation.
HomeSaver Advance, an unsecured personal loan, is a new loss mitigation alternative available to approved Fannie Mae servicers for eligible borrowers designed to bring a delinquent loan current. It provides funds to cure arrearages of principal, interest, taxes, and insurance (PITI), as well as other advances and fees as listed in the Highlights section below. HomeSaver Advance is documented by a borrower-signed promissory note, payable over 15 years at a fixed rate of 5% with no payments or interest accrual for the first six months.
HomeSaver Advance is designed for qualified borrowers who have fallen behind on their mortgage, but are able to resume timely payments once their loan is brought current by the advance. It helps simplify and streamline the workout process for applicable loans, as it provides an option for earlier resolution of delinquent loans.
HomeSaver Advance Highlights
Loan amount up to the lesser of $15,000 or 15% of the original UPB for delinquent PITI, escrow advances, and advances for attorney fees and costs and up to 6 months of unpaid HOA fees (12 months, where the HOA fee is paid once per year)
Advances may not include late charges or other ancillary fees and costs
The full loan amount is applied directly to arrearage (borrower never receives funds in hand)
Truth in Lending Statement and unsecured promissory note are executed at time of agreement with borrower
Note rate at a fixed rate of 5% with 6-month no-interest/no-payment period
Amortization period of 14.5 years after the conclusion of the 6-month no-interest/no-payment period
Workout fee paid to servicer is $600
Fannie Mae will contract with a third party to service HomeSaver Advance promissory notes
For More Information
HomeSaver Advance will be available to all Fannie Mae-approved servicers in April 2008
Mortgage Rates
February 20th, 2008[rsspara:http://www.bankrate.com/rss/Bankrate_mortgage_rates_rss.xml]
Local Banks Understand Local Market Risks
February 4th, 2008 Perhaps these mortgages will actually be for real property. Maybe the loan officer might even visit the property?
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2008 Fannie Mae Loan Limits
January 28th, 2008We get a lot of questions about these – you may want to bookmark this post
2008 Loan Limits
2008 Conforming Loan Limits News Release
2008 Single-Family Mortgage Loan Limits
Single-Family Mortgage Loan Limits effective January 1, 2008:
First mortgages
One-family loans: $417,000
Two-family loans: $533,850
Three-family loans: $645,300
Four-family loans: $801,950
Note: One- to four- family mortgages in Alaska, Hawaii, Guam, and the U.S. Virgin Islands are 50 percent higher than the limits for the rest of the country.
Second mortgages
$208,500
In Alaska, Hawaii, Guam, and the U.S. Virgin Islands: $312,750
Last Revised: November 27, 2007
http://www.fanniemae.com/aboutfm/loanlimits.jhtml?p=About+Fannie+Mae&s=Loan+Limits
Download Historical Loan Limits in PDF Format
http://www.fanniemae.com/aboutfm/pdf/historicalloanlimits.pdf
Mortgage Rates – Historical Mortgage Rates
January 28th, 20082008 Mortgage Rates
http://www.freddiemac.com/dlink/html/PMMS/display/PMMSOutputYr.jsp?year=2008
See Historical Mortgage Rates from 1971 – 2007
Monthly Average Commitment Rate And Points On 30-Year Fixed-Rate Mortgages
http://www.freddiemac.com/pmms/pmms30.htm
Historical Mortgage Rates in Excel Format
30 yr Mortgage Rates http://www.freddiemac.com/pmms/docs/30yr_pmmsmnth.xls
15 yr Mortgag Rates http://www.freddiemac.com/pmms/docs/15yr_pmmsmnth.xls
5 yr Mortgage Rates http://www.freddiemac.com/pmms/docs/5yr_pmmsmnth.xls
1 yr Mortgage Rates http://www.freddiemac.com/pmms/docs/1yr_pmmsmnth.xls
Everybody back in the Ocean?
January 25th, 2008Like the memorable scene from the film Jaws – borrowers, investors and homebuyers fled the mortgage oceans in 2007. Judging by the past week it seems the water looks safe again. We certainly hope it is. One thing the new year calendar year should bring is better loans in the mortgage market.
It is a somewhat safe assumption that loans originated beginning in calendar year January 2008 should be much more attractive loans for buyers of MBS packages.
Foreign investors may now recognize that the US economy is not roaring along by any means, the underlying foundations are more than just okay. Couple that with the new and improved* mortgage products, mortgage loans originated in 2008 should be a safer bet for those that were literally scared out of the water last year by the mere possibility that were buying MBS package tainted with some sub-prime payment traunches. How justified are/were those fears? We don’t yet know. Will 2008 and beyond be higher quality loans – almost assuredly.
*actually they are not really new, in fact they are quite old school – downpayment required, documented income, good credit
So Realtors dust off your cell phone, gas up the car, stop by the car wash for the executive wash and detail, then grab a handful of cards. Things are about to get busy again.
Federal Reserve Rate Cuts
January 24th, 2008Nice tool for tracking FED activity from CNN and Money
10 Year Treasury is at 2003 levels – Time to Refi?
January 24th, 2008
Source: BaltimoreSun.com
If you can refinance and you can find a flat fee mortgage then you may want to strongly consider the refinance option.
Refinancing needs
With mortgage rates falling, many consumers are considering refinancing their loans. But the requirements are different in this post-credit crunch. Some things you’ll need:
• Good credit, with a minimum score in the mid-600s
• No late payments on credit cards, mortgages or installment plans in the past two to three years
• Home equity
• Proof of income
“Rates for 30-year fixed mortgages hovered around 5.5 percent yesterday, with some dipping into the 5.25 percent range early in the day, according to area brokers. That’s just a hair above the record lows recorded in June 2003, when the housing market was flourishing.
When the Fed cut a key interest rate by three-quarters of a percentage point Tuesday, it had no direct effect on fixed mortgages. But it got consumers’ attention. That, coupled with the lower mortgage rates, which have been driven down by their connection to 10-year Treasury bonds, sent homeowners on the hunt for deals.”
http://www.baltimoresun.com/business/realestate/bal-te.bz.mortgage24jan24,0,1514540.story
Orlando Bankruptcy Increases
January 23rd, 2008 Overzealous investors trying to flip homes face financial ruin when no buyers emerge for their investment properties.
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Flat Fee Mortgage – can it rescue the Mortgage Broker Industry?
January 21st, 2008How to Clean Up the Mortgage Broker Mess:
There are a 2 simple yet powerful changes that need to take place for Mortgage Brokers to stay relevant as Congress seeks to take action against the mortgage broker industry.
Flat Fee Mortgage Compensation Model
Loan Contract
1. Flat Fee Mortgage -removing the agency problem in the mortgage business
I have believed in the concept of the flat fee mortgage since I first learned about it in 2003. This is a simple yet elegant way of doing business.
It removes the agency problem that is at the core of the mortgage broker business. (i.e. The broker’s compensation is maximized when selling the most expensive or less than optimal product to their “client”).
So what is a flat fee mortgage?
A flat fee mortgage is when the mortgage broker is a paid a flat fee for their time and expertise. This method allows the mortgage broker to truly find the best and least expensive mortgage for their client. The mortgage broker is paid a flat fee to research, find and execute a mortgage package. These can be done at wholesale rates with NO yield spread and no backend compensation from lenders. The broker quotes a fee for their time and expertise and is paid that fee and nothing more.
What the flat fee mortgage is NOT.
This is not the marketing gimmick by some of the internet lenders using TV advertisements. This is not the $395 or $500 flat fee mortgage. Those loans still have yield spread premiums and junk fees.
The flat fee mortgage we are recommending is as follows:
Fee paid to Broker
$1,500 to $3,000 fee paid to broker – fee is negotiable and depends on loan difficulty but is agreed upon in writing at the beginning of the process. Fee is not based on percentage of loan amount so low loan amounts are now much more attractive to brokers.
Wholesale rates to borrower – No Yield Spread Premium
Offer wholesale rate to borrower – no yield spread, no points on the front end or back end paid back to broker. All rebates or points are given back to borrower in form of lower fee.
No junk fees
3rd party fees are not marked up, no junk fees. All fees are passed through to borrower.
2. Loan Contract -
This is simply a contract that spells out for the borrower what they are committing to pay for the loan and explains the possible outcomes including worst case scenarios for ARM loans. This is badly needed in the industry and will become a requirement either from the industry or from the US government. The loan contract is written so consumer can read and understand the terms, 1 to 2 pages maximum.
see Mortgage Contract for examples and ideas
These 2 simple ideas are needed immediately to save the mortgage broker industry before it is legislated to extinction.
Mortgage Crisis – Explained
January 18th, 2008Mortgage Contract on the way?
January 18th, 2008In a follow-up to our prediction in February 2007 -
http://mortgageblog.com/mortgage-contract/mortgage-contract-coming-soon/
Mortgage Contract in the works?
With the house democrats voting 100% in favor of HR 3915 Mortgage Reform and Anti-Predatory Lending Act of 2007 – it appears that a national mortgage contract is going to be adopted for consumers that wish to take out a home mortgage.
Recent Reads
Dodd and now the Fed are pushing for the elimination of brokers by taking away how they’re paid while issuing statements that endorse banks as the “new safe haven” for borrowers. According to the Fed this will create confidence in the system. Sounds good, right?
Some of the ideas for the mortgage contract may include:
Attention Borrowers: Know Your Rights!
This may be the largest and most important loan you get during your lifetime. You should be aware
of certain rights before you enter into any loan agreement.
1. You have the RIGHT to shop for the best loan for you and compare the charges of different
mortgage brokers and lenders.
2. You have the RIGHT to be informed about the total cost of your loan including the interest
rate, points and other fees.
3. You have the RIGHT to ask for a Good Faith Estimate of all loan and settlement charges before
you agree to the loan and pay any fees.
4. You have the RIGHT to know what fees are not refundable if you decide to cancel the loan
agreement.
5. You have the RIGHT to ask your mortgage broker to explain exactly what the mortgage broker
will do for you.
6. You have the RIGHT to know how much the mortgage broker is getting paid by you and the
lender for your loan.
7. You have the RIGHT to ask questions about charges and loan terms that you do not understand.
8. You have the RIGHT to a credit decision that is not based on your race, color, religion, national
origin, sex, marital status, age, or whether any income is from public assistance.
9. You have the RIGHT to know the reason if your loan was turned down.
10.You have the RIGHT to ask for the HUD settlement costs booklet ?Buying Your Home.?
If you think this should have been done sooner – well it has and was. 1997 in fact here is a copy of the HUD mortgage contract -
http://www.mortgagecontract.com/mortgage_contract.pdf
Looks like these protections were/are already in place apparently just forgotten, especially #2, #3 and #4.
Other reads:
www.MortgageContract.com
Bank of America Acquires Countrywide
January 11th, 2008
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Jumbo Loan Limits Unchanged
January 4th, 2008Fannie Mae’s 2008 Conforming Loan Limit Remains at $417,000
Fannie Mae (FNM/NYSE) announced that its 2008 conforming loan limits would remain at the limits set in 2006 and 2007, as determined by the Office of Federal Housing Enterprise Oversight (OFHEO). OFHEO’s full announcement can be found at www.OFHEO.gov.
Limits for single-family mortgages purchased by Fannie Mae will remain at the 2006 and 2007 level of $417,000 for one-unit properties for most of the U.S. Limits for multi-unit loans for 2008 will be as follows: two-family loans $533,850, three-family loans $645,300, and four-family loans $801,950. The 2008 loan limit for second mortgages will be $208,500.
The maximum amounts for one-to-four-family mortgages and second mortgages in Alaska, Hawaii, Guam and the U.S. Virgin Islands are 50 percent higher than the limits for the rest of the country.
Source: http://www.fanniemae.com/newsreleases/2007/4186.jhtml?p=Media&s=News+Releases
Sites specializing in Jumbo Loans are a good place to look for jumbo loan financing.
Is the Mortgage Broker DOA?
December 14th, 2007Just a question but I am starting to think that the mortgage broker model may be broken. Forever. That’s a shame too because most of them are good, honest business people. The recent problems in the mortgage business are a case where a few bad apples have ruined the bunch.
Conceptually the mortgage broker, appraiser, real estate agent really have little to no investment in the long run success of a mortgage loan. These 3 main players are paid at closing on a per transaction model – they are paid to find clients, close deals. Lather. Rinse. Repeat. If the mortgage loan goes sour in 3 or 6 or 12 months later they don’t have to refund their commissions. They did their job and have been paid, in full. The mortgage broker is typically paid based on an expected YTM over the life of the loan. Instead of taking their commission each month over the life of the loan, they are paid in present value, meaning the get the “lump sum” payment rather than payments over time (yes sort of like the lotto payouts).
Image source: http://www.realestatejournal.com
Especially in the case of the mortgage broker – the loan is originated then goes who knows where? Traunched and re-traunched and securitized into tiny slivers – the mortgage broker lassos the cow but once sold at the meat market, the butchers render the cows unrecognizable, even to their original owners. The problem in the mortgage broker model is all the risk is shifted to the loan holder. The loan holder buys the loan with an expected yield to maturity and expects to get paid. When they don’t get paid by the homeowner there is little to no recourse back to the mortgage broker. In many cases the mortgage broker may have changed companies or even retired or gotten out of the business. So lately the loan holders have been busy shifting risk to investors that want to buy bonds from Mr and Mrs Joe America using the market of mortgage backed securities. But what if Mr and Mrs Joe America are the equivalent of junk bonds? And what if their payments have been sliced up and sold to thousands of investors who didn’t think they were buying junk bonds?
Perhaps we have gotten too far from the idea of community lending? Is the mortgage backed security the brainchild of Lewis Ranieri ultimately a flawed idea? Or is it a good idea that like everything else on Wall Street has been taken too far by the PHD/MBA/math majors (aka eggheads) ?
Perhaps someone lending the money should drive past the property, get out, walk around and maybe even shake hands with a buyer?
Is that too antiquated for our high-tech low touch world?
The technology vendors push iPhone appraisals and speed of light closing times and all kinds of efficiencies but at what cost?
The golden goose has been cooked perhaps and the real winners may be the big ole boring banks and their downpayment requirements and their rules and regs….. how old school.
The real elephant in the room is how many American homeowners will BECOME junk bonds? Nobody knows and all the fear is built into the market already thanks to our US based corporations that control NBC, CNN, ABC, CBS and the rest. Would you buy Tylenol if you knew that .005 (one half or 1 percent) of all Tylenol on the shelf MIGHT be poisoned? What would the daily news headlines be? Tylenol scare and so on. Would you buy any? Would you give it to your kids? This is what the media has done to our mortgage market.
To sell newspapers, magazines and ratings the mainstream US News Media leads with sub-prime mortgage meltdown stories and continues the constant drumbeat designed to sink the US economy before next year’s election (read more) . The result is spooked US consumers and overseas investors that are scared to invest a dime into US Mortgage backed securities. That stops the liquidity, stops the loans and therefore stops the real estate “ponzi scheme” and everything grinds to a halt rippling into everything from carpet installers to truck dealers. Demand reduces, supply increases, prices drop and the the US consumer’s main and many times only real tangible asset is devalued. Home equity shrinks and people tighten belts. Builders layoff workers and it all trickles down.
The first step to get the liquidity back is to reduce the risk of buyers of mortgage backed securities. We must find a way to remove the risk which has been in many ways encouraged and fueled by the current transaction based commission only models used by mortgage brokers, appraisers, and real estate agents.
Foreclosures VS Fraud
December 6th, 2007Interesting table below – if you remove Nevada* from the top foreclosure list and slide everyone else up a position you would have a direct correlation between the top 3 foreclosure states and the top 3 mortgage fraud states. 7 of the 10 top mortgage fraud states are on the top 10 list of foreclosure states. Maybe we are literally “bailing” out the criminals rather than the poor souls depicted on 60 minutes and the nightly news that lost everything due to a slimy, fast talking mortgage brokers.
*Nevada and South Florida can be attributed to investors/speculators that have walked away from condos and other investment properties they purchased hoping to flip for a quick buck
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FBI report on Mortgage Fraud
December 6th, 2007With soaring foreclosure reports many imagine families on the street, couches on the curb and the other sad images of home foreclosure. Seems that many foreclosed homeowners may not have ever existed.
This FBI Report suggests that many foreclosures are being made on straw buyers – and the foreclosures are on properties that were never truly purchased by homeowners.
Freddie Mac – can you spare $2 billion friend?
November 29th, 2007Freddie Mac is in need of more capital while Countrywide Financial Corp. says it is liquid. And problems at Option One Mortgage Corp., which could soon be shut down, led to yet another executive casualty.
Freddie announced today several actions to help shore up capital in response to a $2 billion third quarter loss. It has retained Goldman Sachs and Lehman Brothers as financial advisors to help with near term capital requirements and may cut its fourth quarter dividend in half.
“If these measures are not sufficient to help the company manage to the 30 percent mandatory target capital surplus, then the company may consider additional measures in the future such as limiting growth or reducing the size of our retained portfolio, slowing purchases into our credit guarantee portfolio, issuing additional preferred or convertible preferred stock and issuing common stock,” Freddie stated.
Reverse Mortgages Explained
November 29th, 2007This is an infomercial for reverse mortgages but does a nice job of explaining the basics of reverse mortgages.
Note/Disclaimer : The ads are added by a third party and we do not endorse any of the advertisers or web sites mentioned in this video. We always recommend you talk to a LOCAL bank or mortgage company first rather than an internet lender (i.e. e-loan) or lead generation company ( i.e. LendingTree).
PR from CountryWide – "Dream Homes" Jumbo Loans are possible
November 29th, 2007Within Reach: Countrywide Home Loans Highlights Tips and Tools to Help Consumers Attain Their Dream Homes
November 28, 2007: 12:34 PM EST
CALABASAS, Calif., Nov. 28 /PRNewswire/ — Nearly one in six new mortgages made last year was more than $417,000 (known as jumbo loans) (1), indicating a strong, ongoing demand for financing options on higher-priced homes. Yet, many Americans in recent months feared their dream home was out of reach amid reports that jumbo loans were no longer readily available. To help these individuals and families restore their aspirations and achieve homeownership, Countrywide Home Loans, Inc., offers tips for securing a dream-home financing solution.
“We are committed to helping our customers attain the loan they need for the home they want. That is why we are working to help ensure that qualified customers aren’t squeezed out of the housing market just because they are purchasing in areas with higher-priced homes,” said Brian Hale, senior managing director, Countrywide Home Loans. “When empowered with expert guidance and responsible financing options, qualified borrowers can bring their dream homes back within reach.”
Today, many potential home buyers have renewed hope for attaining jumbo loans. To take advantage of the improving jumbo loan market, consumers can leverage these tips from Countrywide, America’s #1 home loan lender*:
Know “jumbo loan” lingo and options. A little knowledge can go a long way in securing a jumbo loan. Some key items to become educated about are:
— What types of jumbo loans are offered? In addition to offering 30-year
fixed loans, some lenders like Countrywide offer jumbo fixed-period
adjustable rate mortgages that offer a fixed rate for as long as 10
years, followed by a rate that adjusts annually. If the plan is to
remain in the home for a shorter amount of time, a three- or five-year
fixed-period ARM may be a better choice.
— How large can the loan be? If in the market for a high-end home, find
out where your lender’s jumbo loan limit is set.
Get pre-qualified or pre-approved. It is important to first determine a comfortable and affordable loan amount before setting sights on a particular home. A ballpark estimate can be obtained online through mortgage calculators. Even better, consumers can sit down with an experienced mortgage lender who can run through a variety of mortgage options to best suit their personal and financial circumstances.
For more information about jumbo loans and other mortgage options that can help in attaining a dream home, homeowners can visit their local Countrywide office or reach the closest office at 800-747-1871.
related links : http://www.countrywide.com http://www.jumboloans.com
Housing Data
November 29th, 2007
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