Market News

Housing Inventory Snapshot		January 29, 2010
	Average List Price	Median List Price	Average Days On Market
Los Angeles County, CA
Single Family under $600K	$332,497	$325,000	101
Single Family over $600K	$1,350,544	$949,000	129
Condo/Townhome under $400K	$234,876	$225,000	104
Condo/Townhome over $400K	$631,584	$525,000	106
Orange County, CA
Single Family under $1M	$570,364	$550,000	97
Single Family over $1M	$3,176,203	$1,995,000	159
Condo/Townhome under $600K	$310,728	$299,000	102
Condo/Townhome over $600K	$1,127,800	$899,000	154
Riverside County, CA
Single Family under $700K	$227,080	$195,000	134
Single Family over $700K	$1,520,789	$1,049,900	181
Condo/Townhome under $500K	$138,190	$114,800	129
Condo/Townhome over $500K	N/A	N/A	N/A
San Bernardino County, CA
Single Family under $700K	$196,927	$160,000	133
Single Family over $700K	$1,269,910	$1,099,995	174
Condo/Townhome under $450K	$177,326	$173,900	97
Condo/Townhome over $450K	N/A	N/A	N/A

FHA WITHDRAWS THREE LENDERS, SUSPENDS A FOURTH

Below is the actual press release from HUD.  If you are doing business with one of these companies you might want to talk with them.    FHA WITHDRAWS THREE LENDERS, SUSPENDS A FOURTH   Mortgagee Review Board underscores FHA’s stepped up lender enforcement efforts WASHINGTON – The Federal Housing Administration’s Mortgagee Review Board (MRB) today announced that it is immediately and permanently withdrawing the FHA approval of three mortgage lenders and is suspending a fourth. The MRB withdrew the FHA approval of Strategic Mortgage Corporation (Strategic), ProMortgage Inc., and Americare Investment Group Inc. (doing business as Premier Capital Lending. Additionally, the MRB has suspended the FHA approval of Home Mortgage, Inc. (HMI) of Burr Ridge, Illinois. “FHA takes its oversight role very seriously and will move swiftly and decisively to protect borrowers from unscrupulous lenders,” said FHA Commissioner David Stevens. “Any lender who refuses to comply with FHA requirements will simply no longer enjoy the privilege of participating in FHA programs.” Today’s withdrawal actions will permanently prevent Strategic, ProMortgage and Americare from participating in FHA programs while the suspension of HMI will apply for a minimum of six months or until a federal court rules in a related matter (see below). The MRB took these actions based upon the following serious violations of FHA requirements: Strategic (based in Oklahoma City, OK) failed to comply with employment requirements, charged borrowers impermissible or excessive fees, failed to disclose all fees on the Good Faith Estimates, and submitted a false certification to HUD in connection with an application for FHA insurance. The MRB also voted to seek civil a monetary penalty from Strategic in the amount of $71,000. ProMortgage (based in Claremore, OK) failed to adopt and maintain a Quality Control Plan, failed to perform Quality Control reviews of loans that went into default within six months after closing, engaged in a prohibited branch arrangement, made false certifications on the HUD/VA Addendum to the Uniform Residential Loan Application (URLA), failed to comply with home office operation requirements, and failed to report employee compensation on the appropriate form. In addition, the Company allowed borrowers to provide verification of employment directly to the lender which creates an opportunity for manipulation or falsification of documents submitted. Verification of employment must be submitted directly to the lender by the employer. The MRB also voted to seek a monetary penalty from ProMortgage in the amount of $124,000. Americare (based in Arlington, TX) breached the terms of a settlement with HUD by failing to make any of the required monthly payments. On October 8, 2009, the Board entered into a settlement with Americare requiring the Company to pay of a monetary penalty of $124,000 and placing it on probation for a period of six months. Since then, Americare failed to make a single monthly payment as required under the terms of the earlier agreement. HMI (based in Burr Ridge, IL) retained its part owner and Chief Executive Officer despite his indictment and subsequent guilty plea for bank fraud. In June 2009, HMI’s part owner and CEO was indicted in the U.S. District Court for the Northern District of Illinois, Eastern Division for his role in a scheme to obtain money for 450 fictitious residential mortgage loans; a guilty plea was entered in this matter on January 15, 2010. HMI failed to notify HUD of this indictment as required. Additionally, HMI failed to comply with FHA’s annual recertification requirements. In addition to these sanctions, the Mortgagee Review Board also took action against the following lenders: Action Mortgage Corporation of Cranston, Rhode Island was placed on probation for a period of six months due to its misleading advertising practices. The Mortgagee Review Board also voted to impose a monetary penalty in the amount of $7,000. Cooper and Shein, LLC (doing business as Great Oak Lending Partners) of Timonium, Maryland was placed on probation for a period of six months due to its misleading advertising practices. The Mortgagee Review Board also voted to impose a monetary penalty in the amount of $11,000. While these lenders may appeal the Board sanctions by submitting a written request for a hearing before an Administrative Law Judge within 30 days, the filing of an appeal does not delay these actions. Complaints seeking these civil money penalties will be served upon Strategic, ProMortgage, Action Mortgage, and Cooper and Shein, in due course and the lenders will have the opportunity to contest the imposition of the penalties before an Administrative Law Judge. ### HUD is the nation’s housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov

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Tonight’s State of The Union is Huge For Obama

  Tonight is Obama’s first shot at the State of the Nation Address.  Many in the Banking industry are watching closely to see what direction Obama is going to go.  Clearly the standoff between Obama vs Wall Street & The Banks is a very serious issue.  This is the current root of the problem in regards to the economy recovering.  Again the issue here is the lost equity and how to address it.  Loan modification is an unrealistic option for the banks as it only weakens the Banks on their balance sheets.  So what is the answer? 

  Loan modifications hurt banks.  If you lent money to someone with an 85% guaranty why would you reduce that?  So if you lent someone $100 and purchased FDIC insurance then your loan would be protected up to 85% of the loan amount or in this case $85 of the $100 is guaranteed.  So only a 15% loss is not bad when you consider that most real estate lost more than 50% on average.  So why modify a loan and lose the FDIC protection?  Would you do it? 

  It is important that everyone understand this issue as main stream media is not reporting on why the Banks are not modifying loans.  Keep in mind that I am a broker that does not like how the Banks tried to blame all brokers for the mortgage meltdown.  Fair is fair and this modify issue is not the Banks issue.  Why it is a one sided political issue today is unbelievable.  The Feds need to own thier side of the problem too!  The problem is that would point the finger at some longtime Congressmen such as Barney Frank.  This is why I continue to call out the media, where are you guys?  Why the double standard?

   The answer was presented back in early 2008 but no one was listening.  The answer was then and still is the HOPE loan.  The HOPE loan would have worked then and will still work today.  The problem is that the Bush Administration came up with the HOPE loan program.  It would be terrible to give Bush any credit since he is the reason we are all here, or is he?  I voted for Obama but I made much more money under Bush.  The Bush plan worked great until the wars broke out and the Washington in fighting began.  Go figure.  After a year of hearing everything is bush’s fault I have heard enough Bush talk.  My TV went out a few days ago, is this Bush’s doing?  Hardly!  If Obama can not begin to take some of the blame then someone in Washington please show him how to mop.  Teach Pelosi too!  I am a California native and I would love to see her ride out of Washington on her mop.      

  We have all watched Obama since he has taken office and clearly he is showing signs of stress.  I am disappointed that he tells us he understands the common man yet takes a very expensive vacation in Hawaii, trips to New York for plays and fly’s all over the world.  Much more than any other president before him, why?  Most average people will never make it to Hawaii or a New York for a play so this is odd statement for me.  With all of the video conferencing available to us today there is no need for all of the travel or the unnecessary carbon foot print of air force one.               

  I am interested in the economic direction Obama wants to take us.  All of the other issues that Obama has on his agenda are unobtainable for the simple reason that they are flawed.  If Heath Care reform does not address Tort Reform then it has no chance.  Until this is addressed then Washington is not serious and it is all an act.  In any case this is a mortgage blog and Banking, Wall Street, Washington, Obama and anyone in the Mortgage Industry are all spinning our wheels.  I hope that Obama does have a solid idea, tonight will tell. 

  Also Obama does have great charisma but he remains unproven without a teleprompter.  Speaking to a sixth grade class with a teleprompter is sad.  It is time to speak from the heart.  Tell us what you think.  Please make it interesting so we do not change the channel.  This is not an infomercial for Heather Care but rather your presidency, make it count.  Your future and ours is riding on it!

Are Home Mortgage Rates Going Up Soon?

  This is the question that no one wants to face.  The answer here is clear, yes rates will go up.  Mortgage rates must continue to remain low in order for the lost equity to return.  The public still remains nervous about entering into the home ownership market.  Investors continue to buy up foreclosed and short sell property at amazing an amazing rate.  This down turn is widening the gap between the haves and have not’s.  This is playing out right in front of all of us and most of us do not see it or allow our emotional responses to foreclosure alter our prospective. 

  This blog is becoming ever more political and that was never my intent but the Fed’s continue to make changes in the Banking and Mortgage industries with little research done.  The biggest Fed changes that have continued to push values lower is the HVCC appraisal process and the refusal for the Fed’s to bend on the HVCC even with their acknowledgement of the problem. 

  The Second and on going problem is the Fed’s continuing little changes in the process of structuring a home mortgage.  It seems that everyone in Congress has an idea and they all want their idea implemented with complete disregards to any other ideas.  Needless to say this is a train wreck that is going to take a longtime to work through.  So we all suffer while the Fed’s continue point fingers and bicker. A perfect example is Obama’s remarks yesterday.  Meanwhile the Fed’s all collect their paycheck and benefits.           

  The third is the Fed’s spending with little regard for how to repay the debt.  Below is a chart that shows the Fed’s ever growing spending.  The tax revenue is way down so where is the money coming from?  The selling of Bonds is where the money is coming from and they will all have to be repaid at some point.    

  The Dollar value has great pressure on it as the value has been reduced to less than 10 cents of the face value in terms of buying power.  Everyone should clearly see that Fed spending is out of control.  The Country’s debt load is not something to take lightly.  I remember a college teacher telling me not to worry about the deficit for which I could not believe he said that.  There are many ways the Country’s deficit hurts us all but let’s look at an easy one. 

  The Countries deficit hurts the value of the dollar which hurts the buying power of the dollar both within the Country and world wide.  So I am assuming that you understand the foreign money exchange rates.  With that said you understand that the dollar loosing value takes more of the same dollars to buy the same item with a price that has remained the same.   I am talking about gasoline prices.  You have to understand that we import most of the gas we use today and the world price sets the price at the pump.  So the world price for oil can remain unchanged and the price can go up.  The reason is because the dollar value or exchange rate goes down so it takes more dollars to buy the same oil.  The price for oil did not change.  The buying power of our money changed which changed the price at the pump for you and I.  This is why a stronger dollar is good for us.

  Most of the Fed’s in office today are hung up on Heath Care and I agree it is an important subject.  The current plan and process of the Health Care bill clearly sucks out loud!  It is moving way to fast to be fair to everyone.  This short sighted vision is the same approach that causes more trouble than good.  How about this, if we got more people working then our Health Care cost would be a much lower cost percentage when compared to the GDP.  This is not rocket science. 

  So for the same reasons gas prices at the pump are rising yet again home mortgage rates will rise to the mid 6% range soon.  The Fed’s have been buying MSB’s, mortgage backed securities, for the past year plus but have said they will stop buying MBS’s soon.  Once the Feds stop buying the MBS’s the rates will be subject to market values which I am estimating in the mid 6% range for a 30 year fixed mortgage.  Time will tell.  Congress can still always vote on extending the MBS’s buying program which would change everything but as said before, time will tell.

Obama vs. Wall Street & The Big Four

  Recently there was a letter sent to the Bernanke from several sitting Senator regarding YSP or Yield Spread Premium.  As per the new 2010 RESPA laws the YSP issue no longer exist yet several sitting Senators felt the need to send the letter.  Is anyone paying attention?  Obama came out this morning and gave a sound bit speaking about Wall Street and the Big Four.  The Big for being BofA, Wells Fargo, Chase and Citibank.  So what did Obama say and is he out of touch? 

  For those of you that have spent anytime in a family law court room you probably felt that you are getting the truth as Obama sees it just as I.  That is not meant to slam Obama but rather to point out frustration showing from Obama.  What Obama is not telling us is how the FDIC protection offered to the Banks has Obama’s hands tied.  So Obama is much like a kid that gets mad, picks up his toys and goes home.  Obama is taking the approach that he will break up the big four if they do not do what he wants.  This is a very dangerous statement and issue that everyone should be watching closely.  We would not have these big banks if they would not have been allowed to take over the so called failed banks.  Where is the Banking Czar and why isn’t this person talking? 

  If you look back at the begining of the mortgage meltdown the first major to go down was Lehman Brothers.  Lehman Brothers was not a traditional bank like the big four.  Lehman Brothers was an investment bank.  Does anyone remember when banks were unable to offer investment opportunities?  The original banking model did not allow for banks to offer investment opportunities as in stocks.  If you wanted to invest into the stock market you had to use a stock broker such as Merrill Lynch, Lehman Brothers, Charles Schwab, ect.  The risk was increased with the relaxing of these regulations.  Or at least this is what Obama would like us to believe. 

  The problem is simple and easy to fix but the Obama Administration and most in Congress can not see it.  The troubled assets problem, aka first stimulus money, was granted 700 billion by congress just as Bush was going out.  If you recall Bush did put 350 billion of this money to work and left the other 350 billion for Obama.  Obama asked for and received an additional 800 billion for a total of 1.150 trillion dollars for which most of us have no idea where the money is as no one can really tell us.  Also Obama changed the rules on the 350 billion that Bush sent out before Obama came into office.  Sucks when the rules change midway in a game doesn’t it? 

  The rule change only clouds the water but the real issue still remains.  The Fed’s offered FDIC insurance coverage on Fannie Mae and Freddie Mac Securities which covers 85% of the securities face value.  So what does that mean?  To keep it simple, a bank funds a loan for Joe Homeowner for $400,000.  The FDIC is on the hook for 85% or $340,000 of the principal amount.  That means that the bank is taking a chance on only $60,000 dollars of the principle $400,000.

  Now that you have the concept of the FDIC problem think about the real estate market.  Home values have fallen more than 15%.  In some cases they have fallen as much as 70%.  So this becomes a mater of business sense which is unpopular for politicians’.  If a bank had to give up the FDIC coverage and modify home mortgages then their balance sheets would drop and their “liquidity”, remember this word as Obama is going to drive it into the ground, would be a dangerous levels as per the FDIC.  This could allow the FDIC to come in and take over a banking institution just like IndyMac, Countrywide, Washington Mutual and so on. 

  So again it becomes a business decision made by the Banks.  The Fed’s are the ones now caught with butts in the ringer here.  The Bank’s are private business and the Fed’s can not and do not have the right to force the Bank’s to make loans to anyone.  So what can a Politian do in this case?  There are only three options here, first do nothing, second continue to find a workable resolve that is equal for everyone and third dig in and fight.  This third option is the course of action that Obama has chosen.  Obama is now taking on a fight that he can not win.  Wall Street is way to big even for our own Government to take on. 

  Wall Street is nearly all of us.  Social Security must have Wall Street.  MUST HAVE IT!  I can not make that any clearer.  The baby boomers are approaching retirement age and Social Security can not support them without Wall Street.  Still do not understand.  How much money do you think is invested in Wall Street through 401K’s?  This is where the short fall of funds is going to come from.  Taxes imposed upon 401K discernments.  This tax is enormous and for most of us unrealized.  The tax savings and money earned for the life of your 401K is unlikely to match the Tax that will be imposed.  I would estimate 99% of everyone 401K out there will loose money even if they show earnings of 18% over its lifetime.  Remember 401K’s are tax deferred not tax exempt.  Taxes in the future are only going to be higher than they are today. 

  So can Obama win his fight against Wall Street or the Banks?  No, he has no chance of winning.  It will make him popular with some people.  Those of us that pay taxes will begin to hate him regardless of party lines.  So what is the answer?  The answer is the same as it was back in 2007.  We have to address the negative equity issue and until then everything else is academic.  I have made several suggestions on how to get the people working.  This will begin the money changing hands process.  To get the banks loaning again is simple but the Fed’s have to own their part in the mortgage meltdown too.  I am happy to see that the “Bad Brokers” have gotten some vindication in all of this. 

  If the Obama Administration should ever need some help with this matter my entire office staff is available and at a much considerable cost savings from your current staff.  I know I can get the system working again and with reduced risk as this is our life.  We understand the Banks and what the People want.  Isn’t that what the role is in this situation?  Stop the in fighting and let’s get to work.  Contact me.

How does YSP work today?

Among the confusion in complying with HUD’s new RESPA Rules, it is likely no issue has raised quite as much concern as the treatment of Yield Spread Premiums (YSP). As an industry leader, Calyx feels a responsibility to help do part to clear up some of the confusion. We are proud to be the first major LOS to bring the new Good Faith Estimate (GFE) to market (August 2009 with Point 7.1) and through of our close collaboration with HUD, we’re also very confident our implementation is accurate and compliant.

Throughout the design and execution of our 7.2 release this past November, we had the opportunity to analyze and consider many facets of the RESPA Rules and the required implementation changes. We also had a chance to speak with many interested industry participants and through this “in the trenches” experience have discovered several issues we feel the industry needs help understanding.

As of January 1, 2010, YSP will ONLY be considered a credit to the borrower. The concept of “front-end” and “back-end” compensation disappears, and all compensation the Originator expects to receive must be clearly indicated upfront, and may not change. This means Originators are required to enter any and all amounts they desire to be compensated in Block 1, “Our Origination Charge” of the GFE.

Since originators must include the exact amount they will be compensated in Block 1, YSP does not affect the originator’s compensation directly; it simply reduces the borrower’s closing costs, which may be used to pay the originator’s compensation.

So what about YSP? Well, it would be helpful to erase the phrase YSP from our vocabulary. Moving forward, we need to gain an understanding that the specific interest rate chosen by the borrower may provide an indirect payment that is credited to them for the acceptance of an above par interest rate. Or, the specific interest rate chosen may require the borrower’s payment of a charge (Discount) in order to receive the interest rate they desire. This concept reinforces HUD’s repeated mantra that “a credit and a charge [for the specific interest rate chosen] cannot occur together in the same transaction.”

Because this is all new and a little confusing, using some real life scenarios may make this easier to understand.

1. Let’s assume a loan amount of $100,000 and that the originator wants to make 2percent on the deal. There are processing fees of $300 and underwriting fees of $450. Block 1, “Our Origination Charge” would display $2,750 (2,000 + 300 + 450 = 2750). The borrower says they want an interest rate of 5.5percent. Checking today’s rate sheet shows that 5.5percent is exactly PAR (no payment or charge for the specific interest rate chosen).

a. If the originator is a Lender, they may check the first checkbox in Section 2,”Your credit or charge for the specific interest rate chosen” which indicates any credits or charges for the interest rate are included in “Our Origination Charge.”

b. If they are a mortgage broker, they may check either the second or third checkboxes, and $0 would be displayed in the amount column. Block A, “Your Adjusted Origination Charges” would display $2750.

2. Using the same scenario, let’s say the borrower decides they want an interest rate at 4.875percent. Based on the rate sheet pricing, 4.875percent has a charge (discount) of 1.5percent. The interest rate selected by the borrower has no impact on the compensation the originator receives. Block 1 still shows $2,750. However this time, regardless if the originator is a Lender or a mortgage broker, the third checkbox in Section 2 must be checked, indicating the borrower is paying a charge for the specific interest rate chosen. $1500 would be included in the Amount column and Block A would display $4,250 (2750 + 1500 = 4250).

3. Finally, again using the same scenario, the borrower decides they can afford a higher monthly mortgage payment and would prefer not to pay as much at the closing table. The originator looks at the rate sheet and determines that an interest rate of 6.5percent provides an indirect payment to the borrower of 2percent. This point is so important it’s worth repeating one more time. The interest rate selected by the borrower has no impact on the compensation the originator receives. Block 1 still shows $2,750.

a. In this scenario, if the originator is a mortgage broker, they must check the second checkbox in Section 2, indicating the credit to the borrower reduces their settlement charges. In the amount column -$2,000 would be displayed. Block A would display $750 (2750 – 2000 = 750) and indicate the borrower’s adjusted origination charges are reduced to $750 because they are indirectly paying $2,000 by accepting the above par interest rate.

b. If the originator were a Lender, they have the option of checking the first checkbox in Section 2, indicating the charge for the interest rate is included in the amount in Block 1; however it is likely the originator would be paid internally from the lender and their 2percent origination charge would be subtracted from Block 1. If that were the case, Block 1 would display only $750. Section 2 would display $0 and Block A would display $750.

Working through these examples highlights a very significant component of the RESPA Rules. Originators will no longer be compensated based on the pricing related to the interest rate. HUD believes borrowers were taken advantage of and that interest rates were used as a sales tool; an opaque method of increasing originator’s compensation.

“HUD’s intention of the revised Rules is to increase transparency of the costs for obtaining a mortgage and to increase shopping, which they estimate will reduce the cost of financing by $668 per loan”, according to Ivy Jackson, Director, Office of RESPA and Interstate Land Sales US Department of Housing and Urban Development in written testimony on 5/22/08.

While the treatment of YSP has generated much debate, the creation of a bright line separation between originator’s compensation and the borrower’s selection of the interest rate is probably a good thing. Again, the amount listed in Block 1, “Our Origination Charge” cannot change at all from the time the disclosure is issued. However, the credit or charge for the specific interest rate chosen may change before the interest rate is locked. As a result, if Block 2 changes, it will affect the calculation in Block A, “Your Adjusted Origination Charges.” After the interest rate is locked there is a zero tolerance for change, unless the requirements of a “Changed Circumstance” exist.

If the line between originator compensation and the credit or charge for the interest rate chosen were blurred, it is likely the figure in Block A would also be held to a $0 tolerance, leaving originators subject to market conditions while the interest rate was not locked.

So, while the mystery of how to document YSP on the GFE beginning in January has hopefully been solved, the saga of originator compensation continues. The Federal Reserve Board’s proposed amendments to the Truth in Lending Act (TILA) contain restrictions on how loan originators may legally be compensated and how that figure is determined. For instance, the proposed rule changes state that originator’s compensation may not be based on the “Terms and Conditions” of the loan, leaving many industry participants wondering what the charge would then be based on.

The current pace of regulatory and compliance change is frenetic and odds are things will continue like this for at least the next year and probably longer. Turn to the sources you know and trust for assistance in guiding through these complex issues and tumultuous times. We at Calyx will continue to be an advocate for the mortgage industry and are committed to doing our part to bring clarity and stability when it’s needed most.

This aticle was not writen my me but I found it to be well done.  The aticle was writen by Joshua Weinberg.  Those of you that understand YSP and how it was used should find this simplifies the YSP misunderstandings.

Credit Card Rate News

  This is a little off topic for me but I get asked often about credit card rates.  Below is the Fed’s release on Credit Card rates and it should answer most of your questions in regards to credit card rate. 

 

The Federal Reserve Board on Tuesday approved a final rule amending Regulation Z (Truth in Lending) to protect consumers who use credit cards from a number of costly practices. Credit card issuers must comply with most aspects of the rule beginning on February 22.

“This rule marks an important milestone in the Federal Reserve’s efforts to ensure that consumers who rely on credit cards are treated fairly,” said Federal Reserve Governor Elizabeth A. Duke.  “The rule bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts.”

Among other things, the rule will:

• Protect consumers from unexpected increases in credit card interest rates by generally prohibiting increases in a rate during the first year after an account is opened and increases in a rate that applies to an existing credit card balance.
• Prohibit creditors from issuing a credit card to a consumer who is younger than the age of 21 unless the consumer has the ability to make the required payments or obtains the signature of a parent or other cosigner with the ability to do so.
• Require creditors to obtain a consumer’s consent before charging fees for transactions that exceed the credit limit.
• Limit the high fees associated with subprime credit cards.
• Ban creditors from using the “two-cycle” billing method to impose interest charges.
• Prohibit creditors from allocating payments in ways that maximize interest charges.

In December 2008, the Federal Reserve adopted final regulations prohibiting unfair credit card practices and improving the disclosures consumers receive in connection with credit card accounts. This rule amends aspects of those regulations to implement provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit Card Act), which was enacted in May 2009.

The final rule represents the second stage of the Federal Reserve’s implementation of the Credit Card Act. On July 15, 2009, the Board issued an interim rule implementing the provisions of the Credit Card Act that went into effect on August 20, 2009. In addition to finalizing that interim rule, this rule implements the provisions of the Credit Card Act that go into effect on February 22, 2010. The remaining provisions of the Credit Card Act go into effect on August 22, 2010 and will be implemented by the Federal Reserve at a later date.

Consumers can learn more about changes to their credit card accounts by accessing a new online publication. “What You Need to Know: New Credit Card Rules.” It explains key changes consumers can expect from their credit card companies as a result of the new rules. The Board plans to release additional “What You Need to Know” publications in conjunction with other major rulemakings.

The notices that will be published in the Federal Register are attached.

Federal Register notice–Regulation Z, Final Rule (4.3 MB PDF)

Federal Register notice–Regulation Z, Final Rule 2 (11 KB PDF)

Federal Register notice–Regulation AA, Final Rule (11 KB PDF)

Technical Specifications Document (43 KB PDF)

2010 Banking and Consumer Regulatory Policy

2010 Government & The Mortgage Industry

   Well here we are and 2110 has the Feds making major changes to the Mortgage Industry and the entire industry has stopped.  You can bet the farm on January loan submissions being way down.  The new GFE or Good Faith Estimate has caused complete chaos.  So I spent several days reading and rereading the 2010 guidelines and I have found multiple ambiguous explanations leaving me to lean on the Lenders for further explanation since they make the loan products available.  I have spoken to many different Lenders both big and small and have not heard the same understanding of the new 2010 guidelines and disclosures yet.  How can this be?  I thought this was to make things easier for everyone involved. 

   The new Good Faith Estimate does not even show the borrower how much money is needed to close their loan.  I can only feel for any new home buyer when it comes to the close of escrow on their new home.  I am not sure freaked out would cover it.  The plan here is to hand cup Loan Officers that will take advantage of people.  As usual a few bad people have hurt us all and most of all Banks & Feds have hurt us the most.  I will list a few examples below for you.

•  Bank AE’s, Account Executives, would come into our office and tell us to bring them loans and they will pay us up to 3 points back to the L/O, Loan Officer.  These were Bank Employee’s going to multiple Broker’s Offices I am sure telling them all the same thing.  Why didn’t this get into the Media?
• Politics demand that someone is to blame whenever there is a problem and the Bank’s have shifted the blame perfectly to the Brokers.  I will debate any Banker that would like to about this issue as they all know it is not true!
• The Media took the story that the bank’s told them and printed it and reprinted it until people began to believe that Brokers are what caused the Mortgage Meltdown.  What about the Real Estate Agents, Bank L/O’s, the Bank’s themselves and borrower’s that used their homes like an ATM machine? 
• Brokers still to this day, Brokers can only offer loan programs that Bank’s make available to Brokers.  So with that said, how is it possible that Broker’s caused the melt down?  If you do not know about the Bank’s “Disco System” then you are not informed enough to answer. 
• Andrew Cuomo single handily hurt the first chance of Real Estate Market recovery with the introduction of the HVCC.  Cuomo himself has acknowledged the problems with the HVCC process that he setup but is unwilling to fix it if Brokers speak directly to the appraisers.  The answer here is simple, Let the borrower’s order the appraisals and use the uniform 1004 form that already exist.  Cuomo does not like this idea, why?  Why would anyone want to pay an additional fee to an appraisal management company?  So why will Cuomo not budge?  Someone should investigate Cuomo to see if somehow he is invested in appraisal management.   
• Barney Frank can not seem to keep his trap shut!  This man clearly has no working knowledge of the Mortgage Industry as his comments back up my statement.  Enough said. 
• This is the difficult issue; Obama himself keeps talking about loan programs that will help thousands of people.  Well the problem here is that none of the banks will do any of the Obama loan programs.  How can this be, the answer is simple, the banks can not sell these loans once they are done.  Banks to not portfolio or hold the loans in house like you would think.  401K fund managers, Hedge Funds, Equity Funds, Bond Funds, HUD, Fannie Mae, Freddie Mac and now the Fed’s actual are the holders of the actual Mortgage Bonds.  Most people do not realize this.     

  I can go on and on but I think you get the picture.   Big Government is hurting the Mortgage Industry and everyone that has spent a lifetime working to payoff their home only to have their nest egg destroyed.  It makes the idea of the American dream of home ownership difficult to get behind.

Happy New Year

  The HBMO wishes everyone a Happy New Year