Monthly Archives: April 2011

To Birth Certificate or Not To Birth Certificate???

  With all of the ongoing changes in the system today I find it odd on how many people want to speak about a birth certificate and not the real facts about what is really happening.  Personally I was disappointed that the president said he was amused at times because he refused to release his birth certificate.  Clearly he did not handle that well but so be it.  The bigger issue here is how the new Federal guideline changes and Loan Officer Compensation changes is setting up to be the largest money grab by our Government ever in our country’s history and people see it as a great thing.  Is there some kind of new math at work here?  Let’s break this down;

HVCC – the “Home Value Code of Conduct” is a huge change to the process of a residential appraisal.  The idea is principle is a good idea but the method at with the HVCC process has been implemented allows for no accountability for appraisers.  For example I personally had to charge a borrower additional fees for lock extensions because the appraiser went on personal leave and we had to wait for the appraiser to return so get a simple correction done which was the appraiser mistake to begin with.  How can this be since we now have to use a middle man or HVCC management company?  Well it be!  Best of all this management company has to be paid for their services to which on average has raised the cost on an appraisal $150.  Isn’t that great?  And it was all done to benefit the consumer or at least the Fed’s would like you to think so. 

Mortgage rates will soon rise to near double digits most likely by the end of year.  QE2 is set to expire in June which in some ways is a good thing as it will stabilize gasoline prices.  Yes gas prices at the pump for the consumer or you and I.  Putting people on a wild goose chase to find out why gas prices are so high is unbelievable.  High school economics showed us how devaluing the dollar will cause the cost of all imported products to go up.  Anyone that has been to Mexico knows that the Dollar has great buying power when compared to the Pesos.  Well that buying power has been diminished a bit over the past few years and continues to be reduced.  So how can this be?  Well simple so I will break this down for my good friend Vic.  “World Market Prices” are what we are dealing with so let’s think past your locate favorite store. 

International Trade is far past my friend Vic’s understanding I am sure so let’s break it down.   For example Oil – the cost of Oil has remained fairly stable over the past few years from the “International Trade Prices.”  What has changed is the value of the dollar.  So it takes more Dollars to buy the same Oil.  The more money that the Fed’s print, create or however the Fed’s chose to create additional money hurts us all.  Soon there will be huge inflation bank on it!  The question is when will it come.  Currently the devaluing of the Dollar is hurting everything from Gas Prices to Home Values, imagine that!   

You have all heard me refer to Vic and I use his comments from time to time to point out the misinformed opinions that some people seem to share.   Vic’s latest comment is on Oil Companies recent profits.   OK let’s break this down, all long term profitable companies have a solid business plan and for the most part it works well.  All businesses have highs and lows when they are connected to variable multipliers such as the Stock Market, a local professional team getting to the playoffs or even tourism.  If any of these multipliers are up then their businesses will enjoy additional profits.  So why is this?  It is because they have a fixed profit margin.  So your business bulk buys its raw materials and then sells them to their clients at fair market price.  The fair market price is just that “what the market will bear.”  Just like we all shop at Costco, Wal-Mart or wherever these stores have shown huge growth due to fixed margins and strong sells.  This is good business. 

In the case of the Oil Companies the speculators pushed up the cost of oil a few years ago and that caused a huge run up at the pump.  Many of these speculators lost huge amounts of money when the prices came down.  Today is much different as the cost of oil remains steady yet our dollar continues to lose its international value.  Many American have fought hard to make the Dollar strong but yet is continues to lose value.  We can all continue to say it is not my fault and blame others but the Dollar is America’s money.  It does not see color, race, religion or sex.  It only knows that when it is not used correctly it loses value.  There are those that want to blame Bush for everything and yes he deserves his share of blame.  With that said the situation is much worse today than when Bush left so who has to wear the blame today?  Just like the quarterback of a team Obama is our President like it or not it is Obama’s to wear and so what?  It is time to move on. 

Soon we will begin to hear how Firemen, Policemen and Teachers will have to take pay cuts and they will be on strike.  Protesting is fine but when we are all having to tighten up is it fair to the rest of us?  We have to seriously look at pension funds as they are not possible to fund in the current structure.  Yes people worked thinking they would get their pension funds I get it.  It is time to get serious and understand that even pension funds have to be given a break as those who draw from them today draw far more out than they put in and simple math tells us that does not work.  Even Vic should agree with that.  Today we spend more money on Teacher Pension Funds than we do on students.  Are we serious about education?  It just seems like we are focused on a birth certificate issue and missing the big picture.  You decide.

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Business Impact in the Event of a Government Shutdown

News reports continue to develop regarding a potential government shutdown if budget agreements are not reached by Friday, April 8. Should this occur, there are several areas where our business could be impacted:

  • Tax transcript: If the IRS is on furlough, we will not be able to obtain tax transcripts. If you have a registered/locked loan with us and have not already delivered it to the branch, please upload your completed and signed 4506T into eMagic TRIO now. Even though the TRIO folder will not contain a complete file, please upload your registration or lock confirmation and select “deliver to Underwriting.” You will need to check the audit trail in TRIO to confirm receipt by SunTrust Mortgage. We will order the transcripts prior to the shutdown to minimize a potential delay when you deliver your loan file.
  • Flood insurance: Borrowers may have difficulty obtaining flood insurance through FEMA during this period.
  • FHA: We understand that HUD may not support FHA Connection during their hiatus, and therefore we will not be able to order case numbers or perform other functions in FHA Connection while they are on furlough.
  • Rural Housing: We are not sure of the impact to GUS since that system was created since the last shutdown in 1995. However, we should anticipate the system will not be available. In addition we will not be able to get conditional commitments during the shutdown.
  • VA: We should anticipate that the system by which VA appraisals are ordered will not be available.

SunTrust Mortgage, Inc. is working to minimize the impact of this potential shutdown and its effects on your business. We will keep you informed as more information becomes available. Please contact your account executive should you have any questions.

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Home Financing Changed Yesterday

   Late yesterday the Federal Court of Appeals lifted the stay on the way a borrower is charged fees.  So is this a good thing for the average consumer?  You all remember HVCC the appraisal change that was implemented and how it was to protect the consumer and home values.  Never mind about the 100% increase in cost.  The additional cost was necessary to protect the consumer.  Now no one can even speak to an appraiser to show additional items that might set your home apart.  So let’s break this new Fed action down. 

Pros

  •  As of the new Fed action a Lender is supposed to send you information on all of their loan placement options and show the actual fees associated with a particular loan placement option. 
    • Brokers have loan placement options as they work with multiple banks on many levels.  Banks only offer their program so they only have a single product to some degree. 

 

Cons  

  • As of the new Fed action it is no longer possible for a Loan Officer to cover any last minute miscellaneous fees at time of closing. 
    • Real Estate transactions are fluid in nature and therefore impossible to calculate the exact total fees.  Anyone that has every purchased a home has been what is called an “Escrow Pad.”  These funds are used to cover additional last minute fees or cost and the balance left is refunded back to the consumer at closing.  

 

  • If you any reason your loan does not close on time a Loan Officer in the past has been able to pay for what is called a rate lock extension. 
    • Well now that option is now gone.  The new Fed action does not allow for this cost to be paid for by the Loan Officer so that means the consumer will get this cost added to their closing cost.

 

  • The new Fed action no longer makes it possible for the Lender to pay some of the consumer’s fees.  The Fed action requires the loan Officer to structure the loan so all fees are covered or no fees are covered. 
    • So what this means is you will get two rate options which will break down something like this;
    • A fair rate with the consumer paying all of the loan fees or a no fee loan with a much higher rate.  The higher rate will allow the Lender to sell the loan on the secondary market which will allow them to recover their cost of paying the consumers fees.    

 

  • The new Fed action will push out many low level Mortgage Brokers and lead to high loan cost over all due to lack of competition. 
    • We are a fee market society and the cost of a loan is dictated by the market.  The new Fed action says that the average person does not understand the loan process and with that I have to agree.  But the bottom line is what the consumer is paying and they understand that.  Would you go to AMPM and buy a 32 ounce drink for $2.50 when you can go to 7/11 and get a big gulp for $1.50?  The point here is you should have the choice. 

 

  So I am sure my reader Vic should even get this but if not then a Vic type consumer will never get it.  Mortgage Brokers keep the loan cost down much as Costco keeps grocery store prices down and so on.  It is our system and for the most part is work pretty good.  If you disagree then maybe you should look at it this way.  There are those of us that we work harder than the next person to obtain more stuff whatever that stuff is.  There are also people that say they are not married to their work and refuse to work as hard as others.  So shouldn’t the person that works harder and longer be rewarded? 

   Let’s look at this another way in the beginning of the meltdown the Media had multiple stories stating that Brokers are bad.  As people looked into this that proofed to be untrue and the focus was shifted to the “Wall Street Fat Cats.”  Well yes they play a role just as the Fed Commission that was asleep at the wheel.  So bring thing current to today and who is the biggest problem now.  Many people are making business decision short sales or just letting their homes go because they do not want the home today because of its value.  Isn’t this the same greed?  It is money and not wanting to pay for an investment that went bad of an individual with complete disregard for how it impacts anyone else.  Please Vic or anyone else explain how this type of greed is any different than the Fat Cats. 

   Putting the Fed in control of mortgage fees is a huge mistake as clearly the law makes do not understand how a Loan Officer gets pad either.  Look if gas is $3.00 and one station and $4.00 at another which station are you going to go to?

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