Mortgage Blog

May 16, 2011

Sw Chapter Of Florida Association Of Mortgae Professionals Tue, May 17 SW CHAPTER OF FAMP TRADESHOW, Naples, FL, US Keywords: none THE SW CHAPTER OF THE FLORIDA ASSOCIATION OF MORTGAGE PROFESSIONALS WILL HOLD IT’S ANNUAL TRADESHOW ON TUESDAY, MAY 17, 2011 AT THE HILTON HOTEL, US 41, NAPLES, FL. DOORS OPEN AT 4:30 PM. SW CHAPTER WILL OFFER CONTINUING EDUCATION AT 1:00 PM – 4:00 PM. THIS COURSE IS NMLS APPROVED. CONTAC…

 

Here is some news of interest to start the week: there is a push to simplify the disclosure paperwork given to borrowers when obtaining a mortgage. Huh? What? The CFPB might actually combine mortgage forms, or make them simpler? SimplerPaperwork?

 

But things have become more complicated in Montana, where the state adopted revisions to the "Montana Broker, Mortgage Lender, and Mortgage Loan Originator Licensing Act" which is now known as the Montana Mortgage Act. Will it be indicative of what is in store for other states? The revisions include provisions for the licensing and regulation of mortgage servicers, updated application and licensing requirements for brokers, lenders and originators, a reduction in the number of hours required for continuing education, changes to recordkeeping, reporting, bonding and disclosure requirements, and prohibitions against certain acts by mortgage lenders and mortgage servicers. Here is a copy of the adopted 2011 Montana House Bill Number90.

 

Kinecta Federal Credit Union, with $3.5 billion in assets, continues to make the news. It recently has expanded into the Northwest, Midwest and Southwest territories, and is still looking for wholesale AE’s in Sacramento, Southern California, Washington, Idaho, Utah, Arizona, Colorado, Wisconsin, Illinois and the Northeastern US. The credit union has over 220,000 member-owners across the country, and obviously likes the wholesale channel. "Account Executives will develop and maintain relationships with wholesale and correspondent mortgage loan brokers to gain loan business." If you, or someone you know, are interested please send a resume to Erika Schlarmann at eschlarmann@kinecta.org.

 

Any time you see SunTrust, AIG United Guaranty, and "lawsuit" in the same story, it is probably worth checking out. The lawsuit was brought by SunTrust Mortgage, which alleged that UG refused improperly to provide coverage for insured mortgage loans that had gone into default. The Virginia court awarded attorney’s fees and expenses in connection with the defendant’s motion for sanctions, but denied motions to dismiss the action, to sanction outside counsel, and to provide an adverse inference instruction to the jury. The firm of BuckleySandler printed the opinion: SunTrustAIG

 

 

Also in the legal arena, and involving non-agency loans, lawyer Talcott Franklin representing mortgage- securities investors said they will send letters to American Home Mortgage Servicing and four bond trustees asking them to seek repurchases of loans made by H&R Block’s Option One Mortgage. Should Option One be forced to buy back mortgages that failed to meet its contractual quality promises? It is not a minor question: H&R Block may face a maximum liability of $12.8 billion from mortgage repurchases.

 

NAR has issued its opinion of the potential implications of QRM. The public opinion period ends on June 10, and NAR’s opinion, which includes, "…strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk, and not high down payments…" carries some weight. NAR

 

Who’s buying dem mortgages? The National Information Center released consolidated financial statements for bank holding companies for the 1st quarter, providing additional information to the FDIC data to be released soon. Banks continued to add agency mortgage-backed securities from January through March to the tune of about $30 billion. This is a strong number, although not as notable as $38 billion and $48 billion in the 4th and 3rd quarters, respectively. For those interested in the non-agency MBS market, non-agency holdings declined $8.6 billion over the same period. Once again, looking at the move in non-agency amounts one wonders what would happen if Freddie & Fannie ceased to exist. The latest H.8 report from the Fed shows that domestic bank holdings of agency MBS have increased by $15 billion over the week ending on May 4. This latest spike brings the year-to-date spike in agency MBS holdings of domestic banks to $58 billion, mostly attributed to the purchases of large banks instead of small banks.

 

Last week the commentary had this quote from a reader: ""With regard to the comment of bank sellers of REO requiring cross qualification with a preferred lender, there are reasons beyond building origination business that it may be required. Whether dealing with a foreclosure or a short sale, the bank needs to be assured the buyer is legitimate and will be able to complete the purchase in a timely manner.  Some lenders pre-approving a borrower on an REO may not be able to meet a tight closing deadline. A ruse some of the foreclosure rescue companies use is to provide purchase and sale agreement signed by a fake buyer with a fake approval letter as a strategy to get a foreclosure delayed."

I received an earful. "What I’m constantly running in to as a LO is my buyers not even having any chance at their offers being considered by a seller due to the speed, ability, and "policies we have that require I talk to the buyer" that these required cross-qualification loan officers possess.  If the performance of my buyer was really the only concern, these cross-qualifying LO’s wouldn’t be trying to snake my buyers by putting loan quotes together.  Also, one "unintended consequence" of this process is potentially resulting in lower sales prices of these homes and the deterioration of our national equity due to the fact that the true highest & best offer was not even considered due to the delays surrounding cross-qualification. Sellers should review all offers, send out multiple counters, accept an offer, then and only then complete their cross-qualification before opening escrow.  This will ensure that these REO banks and short sale banks are truly netting the highest and best sale, which will in turn result in the proper direction of home values in a truly free market.  When a home sells under market, it de-values every Note on homes that is affected by this latest sale that becomes the latest sales comparable, and it’s a real problem."

 

Also, from another lender, "I have not seen an article about LO’s saying they need a subprime product again or Alt-A product in order to continue doing business.  Everyone in the business is hurting, but we’re playing by the new rules. It is the Realtors who are asking for the riskiest products to make their money.  These are the same people who demand 6% commission yet throw the loan officer in front of a bus if they charge 1.25 points (or 1.25% commission).  In short, their true colors are shining once again.  They seem unable to adapt to a lower commission when everyone else (appraisers, mortgage companies, etc.) are changing to the time.  I cannot believe their 6% commission has not come under attack yet."

 

"I have to call BS on the comment of one of your readers. Myself, having been an originator for 16 years and having spent a lot of time dropping off doughnuts, attending Realtor luncheons, home shows, presenting homebuyer seminars, and just plain scrounging for business, I’ve noticed Realtors are quick to point out the legality of referring/sending a borrower to a specific loan officer when they don’t want to send anything your way.  I’ve also noticed they have no hesitation in pushing borrowers toward their spouse, nephew, aunt, etc. Additionally, it’s not uncommon for builders to own their own brokerage, mortgage, or title companies. They write their contracts to incentivize and steer borrowers into using all of their services. The entire point of becoming a preferred lender is to build origination and try to capture a captive market.  Why would lenders knock themselves out trying to become someone’s preferred lender if it wasn’t?"

And lastly, "It’s really funny you mentioned this. Take a look at this and let me know: www.Mylastoption.com and www.thelastoption.com and www.prolongmysale.com. I’ve had to start doing RE again and started to see that my full-price offers from fully qualified buyers weren’t even being presented, or I don’t even get a call or email back from the listing agent. I’ve started turning in these brokers with the Board of Realtors. Conversely, REO’s have the opposite problem: turn in an offer, wait for the listing agent to get a highest and best offer, and then I see it’s ‘double ended’ or at least from a very close realtor. It must be nice to have the listing and always be able to come in at highest and best offer. These REO listing agents should have to publish all offers publically so everyone can see what is happening. But the banks won’t care as long as the property is sold, which means no one will care and this will continue."

 

Focusing on more temporal things, we had a nice little rally on Friday. Traders attributed this to the opinion that the inflation numbers were not worse than they actually were, another Treasury auction was out of the way, weak commodity prices help the Fed keep short term rates stable, and so forth. By the end of the day 10-yr notes closed at 3.19%, practically unchanged for the week. MBS prices were roughly unchanged for the week.

 

Many agree that the "wildcard" remains the situation in Europe, which includes Greek debt and the arrest of IMF’s Strauss-Kahn, and this might be the focus this week. But the U.S. is set to hit its $14.3 trillion debt limit today. Over the weekend, Republicans spelled out in greater detail what they want in return for supporting an increase to the debt ceiling. Democrats warned of the likely consequences of allowing the nation to default. Economic news this week is on the light side. Today we have the Empire Manufacturing number, about half of last month’s. Tomorrow is Housing Starts and Building Permits for April, along with Industrial Production and Capacity Utilization. Wednesday is the MBA’s app data, and the 4/27 FOMC minutes. Thursday is Jobless Claims, and Existing Home Sales. Then on Friday are Leading Economic Indicators and the Philly Fed. The current 10-yr is sitting around 3.18% and MBS prices are better by a shade. Rob Chrisman

 

Markets Closed Today. Auctions This Week.
This week is filled with another round of important economic data, fed-speak, and treasury auctions. Tuesday morning brings consumer confidence and Case Shiller home prices. 1pm marks the release of 2yr note auction results as well as fed-speak from Kockerlakota. In addition to more Fed-Speak than usual later in the week, we’ll also get existing home sales, durable goods, new home sales, GDP, and Consumer Sentiment to name a few, as well as 5 and 7 year note auctions. The bond market will get to decide whether or not 10yr yields want to be a 3.6x sort of thing or if they’re ready to dabble in the 3.5’s yet. We remain exceedingly defensive until something more significant is seen.

Southwest Florida’s new home glut shrinks

Friday February 18, 2011

Lee County’s subdivisions have fewer vacant new homes than they have had since 1993, according to a new study by housing market data company Metrostudy.

That’s likely to lead to increased sales soon as supplies dwindle, say builders and industry analysts.
In the fourth quarter of 2010 there were 553 new homes for sale in the county’s larger subdivisions, the report says.
That number has been decreasing as buyers slowly grind away at the glut of new homes built during the residential real estate boom that ended in early 2006, when prices started a sharp four-year decline.
Move-ins throughout 2010 stayed steady at about the level of the 269 recorded in the fourth quarter.
"An encouraging sign is the number of finished vacant units at 2.7 months of supply" in Lee County, said Brad Hunter, director of Metrostudy’s South Florida division.
Although that number was even lower during the second and third quarters of 2008, it’s down from a peak of 5.1 months in the fourth quarter of 2009, he said.
The falling inventory is a sign that new-home construction is getting close to a point at which a modest recovery will occur in the battered industry, said Michael Timmerman, a Naples senior associate with Fishkind & Associates, an Orlando-based economic consulting firm.
"The opportunity to build more units is on the horizon," he said. "It’s not going to be a big number, but it’s something."
Michael Reitmann, executive vice president of the Lee County Building Industry Association, said developers are already ramping up to meet the anticipated demand.
At the association’s annual Parade of Homes, which ends this weekend, there are 32 dwellings on display compared to 12 last year, he said.
A lot of the people touring the homes are serious buyers, Reitmann said. "We’re very optimistic about the clientele."
Paul Erhardt, vice president of community operations for Bonita Springs-based WCI Communities, said he’s seeing the trend in the company’s Pelican Bay development in Fort Myers.
"The resale selection has declined, and I think a lot of what’s left is difficult to buy," he said. "A foreclosed home or a short sale, it’s a difficult purchase."
Projects such as Pelican Preserve benefit from that now because they face relatively little competition from pre-owned houses, Erhardt said.
Also, he said, "Through the downturn, buyers always had the desire for this lifestyle" but were unable to afford it, Erhardt said. "We worried about it, that maybe people no longer wanted to live in a country club community or one with a lot of amenities."
Now economic conditions are easing, he said, and since WCI re-started construction at Pelican Preserve in July, 28 homes have been sold – most of them in recent months.
WCI recently started building another project, Manchester Square in Naples – putting in roads and utilities on raw land where 117 homes will be built, Erhardt said.
Timmerman said the first projects to benefit in a major way will be those close by existing population centers where jobs are available.
That will become more important as gasoline prices increase and commuting becomes more expensive, Timmerman said. "It makes sense for people to be a little bit closer."
Erhardt said WCI is even building homes at Pelican and other developments "on spec" without a buyer already lined up – a practice that was common during the boom but largely vanished from the industry after falling prices left Southwest Florida with a glut of housing.
That helps overcome some buyers’ concerns about the possibility that construction in a subdivision may come to a screeching halt as happened in many projects after the boom, he said.
Nowadays, Erhardt said, "People are a little more skeptical. Seeing is believing: You can’t sell it off the rendering anymore."
Allan Poeschl and his wife, Sandy, retired to Pelican Preserve from Milwaukee in 2008 and bought a 1,357-square-foot villa that had already been constructed.
But in a few weeks they’ll be moving into a new 1,743-square-foot single-family home in the community that they were able to design more to their specific tastes, he said.
"Construction prices are good," said Poeschl, 65, who worked in Milwaukee as a consulting engineer. "Why would I buy a used one when for a few dollars more I could I could get a new one?"
Projects such as Pelican Preserve benefit from that now because they face relatively little competition from pre-owned houses, Erhardt said.
Also, he said, "Through the downturn, buyers always had the desire for this lifestyle" but were unable to afford it, Erhardt said. "We worried about it, that maybe people no longer wanted to live in a country club community or one with a lot of amenities."
Now economic conditions are easing, he said, and since WCI re-started construction at Pelican Preserve in July, 28 homes have been sold – most of them in recent months.
WCI recently started building another project, Manchester Square in Naples – putting in roads and utilities on raw land where 117 homes will be built, Erhardt said.
Timmerman said the first projects to benefit in a major way will be those close by existing population centers where jobs are available.
That will become more important as gasoline prices increase and commuting becomes more expensive, Timmerman said. "It makes sense for people to be a little bit closer."
Erhardt said WCI is even building homes at Pelican and other developments "on spec" without a buyer already lined up – a practice that was common during the boom but largely vanished from the industry after falling prices left Southwest Florida with a glut of housing.
That helps overcome some buyers’ concerns about the possibility that construction in a subdivision may come to a screeching halt as happened in many projects after the boom, he said.
Nowadays, Erhardt said, "People are a little more skeptical. Seeing is believing: You can’t sell it off the rendering anymore."
Allan Poeschl and his wife, Sandy, retired to Pelican Preserve from Milwaukee in 2008 and bought a 1,357-square-foot villa that had already been constructed.
But in a few weeks they’ll be moving into a new 1,743-square-foot single-family home in the community that they were able to design more to their specific tastes, he said.
"Construction prices are good," said Poeschl, 65, who worked in Milwaukee as a consulting engineer. "Why would I buy a used one when for a few dollars more I could I could get a new one?"

Thursday Mortgage Rates Go On A Tear !!!
Thursday February 17, 2011

Get you Lock Forms ready !!!!!  Rates open pretty good today and I would Lock in and get moving.  We still have the Lowest Rates In the Country with the Best Service. 

Mortgage Rates Little Better Today

Wednesday February 16, 2011

Rates got about .125 better today but everything I’m reading is saying that they will still go up. I just can’t see that it can go to high but you never know in a market like this. 

Mortgage Rates Did Better on Friday

Saturday, February 12, 2011, 9:30 AM | Premier Mortgage Consultants

The 10yr Treasurey Ended Friday at -.006 Leaving the yield at 3.65%. If it opens up better Monday morning we should see better Mortgage Rates.

 
Saturday, February 12, 2011, 9:05 AM | Premeir Mortgage ConsultantsGo to full article

USDA Home Loan for Florida Properties

The USDA home loan or (aka – 502 Direct Loans) for Florida residential buyers are designed to help the low-income or “very low income” home buyers.  All applicants can finance 100% of the purchase price of their new home and the mortgage payments are adjusted according to the household’s income.

The purpose of the USDA Florida home loan is to help low-income borrowers purchase homes in rural areas.  The mortgage can be used to build, repair, renovate or relocate a home, or to purchase and prepare site, including providing water and sewage facilities.

How can you qualify?  Borrowers/applicants for direct loans must have very low or low incomes.  This is defined as below 50% of the are median income; low income is between 50% and 80% of AMI-moderate income is 80-100% of AMI.  Families must be without adequate housing, but able to afford the mortgage payments, including taxes and insurance, which typically are within 22% to 26% to enhance repayment ability.  Applicants must be unable to obtain credit elsewhere, yet have reasonable credit.

USDA mortgage loan terms are for up to 33 years (360 months) and 38 years (456  months) for those with incomes below 60% of AMI and who cannot afford the 33 year-term.  The mortgage rate is based on the Government’s cost of money.  However, the interest rate is modified by payment assistance subsidy.

What are the requirements of the home?  The housing must be modest is size, design, and cost.  Modest housing is property that is considered modest for the area, does not have market value in excess of the applicable are loan limit, and does not have certain prohibited features.  Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards.  Manufactured housing must be permanently installe3d and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards.

  • No mortgage insurance
  • No Cash Reserve Requirements
  • 102% of Appraised Value to cover closing costs
  • No Cap on mortgage amount other than the Appraisal (plus 2% USDA-RD Fee)
  • 6% Seller Concessions allowed to cover closing costs
  • Gifts allowed and DO NOT NEED to come from a relative
  • Try USDA before FHA because it requires not down payment
  • minimum 620 credit score on all borrowers for NO MONEY DOWN
  • No Declining Markets (open to all counties)

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