Rain City Guide

Predatory Upfront Loan Modification Fees

Does the proposed rule prevent attorneys from collecting up front as well?

And what constitutes acceptance? Temporary mods (of which there are many), or permanent mods (of which there are very few.

I’ve stayed out of this field, so far. To much uncertainty, too little benefit for all parties.

Yes, there will be tears.

Major Bank No Longer Allowing Mortgages with Zero Points/Zero Costs

Whenever discussing compensation, you have to account for the “no compensation factor”.

Here’s an article from today’s Seattle Times showing what we already know, that more purchase transactions failed in 2009 than ever before.

http://seattletimes.nwsource.com/html/businesstechnology/2010896889_homes27.html

Every one of those failures had multiple hours of work, multiplied by a number of people in the business: REs, LOs, title, escrow, and banks, most of whom did not get any compensation for their labor, expertise and risk.

Wasted labor is not good for any economy.

Seattle Condo Market - Lender says "more insurance mandatory"

And to reiterate, the issue I am dealing with is not a purchase, or even a refi.

Just another condo/homeowner dealing with a cranky bank. The homeowner is asking for assistance from the loan originator (me), since there aren’t any specialists in fixing messed up escrow accounts!

Major Bank No Longer Allowing Mortgages with Zero Points/Zero Costs

Rhonda:

This is just a continuation of the trend of banks putting the squeeze on borrowers to increase their profits. Sure, they’ll position it as “corralling rogue LO’s” or something like that, but the reality is that they are harming borrowers.

As you pointed out, the YSP gets credited to the borrower, NOT the broker.

Let’s hope that there are few followers of this trend. And hope against hope that the government can see this for what it truly is, rather than piling on an already suffering population of borrowers.

Seattle Condo Market - Lender says "more insurance mandatory"

It is $400/mo, but that is an escrow catch up.

The actual policy imposed was $900/yr. I don’t know the details of that policy yet.

And in this case, it is for someone that has owned for 4 yrs, with their payment staying the same all that time, and suddenly jumping $400/mo. She has provided proof that there IS both a Master Policy (which I haven’t seen yet) and an individual policy.

Only other time I run into sudden escrow jumps is when someone buys new construction and the escrow gets set up at unimproved (raw land) value. I can see that one coming, and of course tell my client to expect that increase. Lenders have got better at anticipating improved value, so I haven’t seen that lately.

I wonder what the precentage of condo owners with both Master and Individual. I do not run into it that all that much.

There has been a change in lending requirements for “walls in” coverage from Fannie and Freddie. I’m told this is because many units in the FL market were looted for their fixtures, and anything that could be removed of any value, as well as damage from neglect to interior walls and doors, so the lender wants to make sure the insurance covers fixing those deficiencies.

It's Official: FHA Upfront Mortgage Insurance to Increase in April

Rhonda:

Looks like Ardell took part of the tangential issue of condo insurance and ran with it. I’ll pick up the thread over there.

Side note… I’m not getting email notification of most responses to comments, is something broken?

HVCC...I'm not making this stuff up.

Ahh, what a treasure trove of comments!

AJ, good to see you back! Yes, everything you predicted did come true.

Jaspar and AI, thanks for your comments. My heart breaks for you and the local guys that I worked with that sound just like Jaspar.

At my end (LO, broker and correspondent) it hasn’t been QUITE as disastrous. Our company made a wise choice and created an in-house AMC, priced appraisals fairly, and paid appraisers fairly.

The biggest problem has been the portability of appraisals…while one lender may release an appraisal for a loan that has died at the hands of the lender (UW, guidelines, implosion, etc.) the next lender refuses to take it, even though the appriasal is certified as being in HVCC compliance.

A travesty for the consumer, a windfall for AMCs and banks, all engineered by a corrupt and ambitious politician, and his wealthy patrons.

It's Official: FHA Upfront Mortgage Insurance to Increase in April

I think we dodged a bullet.

The floated ideas were much more stringent.

Tim, I have not been able to find a lender that would go below 620 FICO for over a year. I quit looking some time ago. That change was window dressing by the FHA. Zero effect.

The FHA loans that will go under are going to be mostly from folks losing their jobs (17% real unemployment), and being underwater in equity, or both. You can probably throw in divorce in there too.

Of course, there will be other more glamorous reasons that will be widely reported (fraud, reckless lending, rich bankers, rogue brokers etc). It is always popular to fix blame on “the other” in culture: most often it’s poor folks, and minorities.

The late Tanta of Calculated Risk coined the phrase, “We are all sub-prime now”, meaning that we, as taxpayers, own most of the bad debts accumulated during the bubble. Most of us (the whole USA), whether we choose to acknowledge it or not, benefitted at least temporarily from the bubble, so there is probably a rough (unpleasant and unwelcome) justice in there somewhere.

Funny, but some folks in Congress are trying to resurrect the DPA’s (100% financing)…over the FHA’s dead body!

To go further off subject (at the moderator’s presumed consent):

I am helping a client that saw her lender’s escrow account jump by $400/mo. Apparently a hazard insurance policy has been imposed upon her by the lender, without her consent. She is in a condo, and the HOA pays for hazard insurance, so I am assuming it is related to the newer “walls in” policy implemented by Fannie Mae:

http://www.berginsurance.com/DisplayPage.aspx?pageid=40

I recently completed a condo refi, and proved to the lender’s satisfaction that the HOA policy covered the “walls-in” requirement.

I do know that the borrower signs papers stating that the lender can place a hazard insurance policy on the property if the existing policy lapses or is cancelled, but this is the first time I have seen it enforced in this manner.

Are any of you professionals or readers encountering the issue of a lender imposing an individual insurance policy upon a condo unit owner (at the condo owner’s expense)?

Thanks in advance for your advice.

If there is an interest, I will be happy to report back what I find out.

HUD Passes RESPA Reform, New GFE Coming in 2010

Jillayne:

Imagine you are teaching a class on mortgage lending. You are well qualified to do so, and experienced.

You inadvertently omit a section dealing with grapefruit, that is required by the federal government, for reasons that are unclear, but at any rate have no effect on the subject matter.

An alert, if overly conscientous student, reviews her notes, and reports the omission to whomever regulates what you do. As a consequence you are required to rebate all of the fees generated from that class to the Grapefruit Association. Your offer to personally contact every attendee, and review the grapefruit section, is denied.

How do you feel when that day’s revenue disappears, along with all your expenses that you were required to spend to generate that revenue, and sent to an unaffected party?

Notlikingit is right. It is unfair. However, I do remember this issue from training, just haven’t had the chance to put it into practice.

Notlikiing it, isn’t it the lender’s (not the broker’s or the LO’s) responsibility to ensure that the new GFE is correct? That is what I have been experiencing with my first GFE of the year.

This was so simple to fix. And they botched it. They ignored the comments and suggestions. And they harmed the very people they intended to help.

It was so badly done, one is left to wonder if it was intentionally misdesigned.

Steve, I liked your comments. Let us know what you find out about the Excise tax.

Update: lender conditions just get nuttier

Tim,

Care to name the lender? There’s lots of them in CA.

Yes, there are nutty conditions, more now than ever.

Fannie Mae Announces Deed for Lease Program

Matt:

I suspect you are right.

However, if Fannie becomes the owner, and the former owner becomes the tenant, doesn’t the write down hit the books? What creative accounting prevents it from hitting the books?

It will probably only save a few families from having to move, and there will be great press fanfare about it.

I’m still of the opinion that it beats doing nothing. Even in the best of times, with the best governance, actions are taken that have little economic effect, but create the impression of hopefulness.

Hopefulness beats despair, every day of the week.

Rhonda Porter Receives the Jim Fitzgerald Service Award from WAMP

Atta girl Rhonda…well deserved, and I am SOOO sorry to hav emissed the event!

Thanks for all you do, I marvel that are able to keep it all going so capably!