Aimee received a phone call this morning from a real estate agent who told her with a degree of frustration that all her lending contacts and title contacts had left the business. This agent has buyers who need a good lender referral and was eagerly trying to build some new relationships. She was glad to have “found” Aimee. And we’re glad to be in touch with her as well!

This is quite a turn of events for everyone. I know several colleagues in the mortgage and title business who have left, not to mention the real estate agents who are no longer “practicing”. So, this mornings experience was an isolated event. Over the past two months I have been contacted by many real estate agents across the country seeking a quality lender for their borrowers. After being hounded by loan officers and title reps for the greater part of their careers it must be unnerving for a real estate agent to not have several reliable loan officers and title reps as business partners.

So, if you are one of those agents then I want you to know that Aimee and I are still here, while almost 50% of loan originators have left the industry. We’re still closing loans and we’re still helping borrowers make the biggest financial decision of their lives. Just to introduce ourselves to you, here are a few links that might you learn more about us:

• About Aimee and Shailesh (pronounced “sai-lesh”)
• Testimony from past clients
• Our 2007 Customer Satisfaction Rating

We are FHA and VA approved lenders and as a national mortgage broker/banker we have access to all loan programs in the industry. Most importantly we’re here and we’re here to stay!

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Tags: banker, lender, loan officer, mortgage broker
Categories: Banker, Broker
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I saw a news flash on Drudge yesterday afternoon saying banking regulators and the Federal Reserve had issued some loan guidelines. There was no meat in the story. It was a breaking story at the time. This morning I found that various regulatory bodies as well as the Federal Reserve are asking lenders and loan servicers to restructure loans for borrowers facing difficulty. According to the WSJ:

The guidance doesn’t compel lenders and the investors who buy loans to restructure the loans — but it puts an added burden on them to try to do so, while clarifying that they shouldn’t face negative tax or accounting implications from such restructuring. The statement was issued by the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Administration and the Conference of State Banking Supervisors.

The WSJ story also said it’s unclear how many would benefit from restructuring loans. Given the sheer number of ARM’s (in excess of 1 million) which will reset in the next year or so this should have a significant impact.

It is a make sense idea in my opinion. From the lenders perspective taking a smaller loss as opposed to  having to write off the entire loan may make sense. Same goes for investors. However, these companies appear to be concerned about the tax consequences. That should be no problem to  Uncle Sam though, all they have to do is add one more page to the 60,000 + pages in the current tax code.

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Tags: restructuring loans, subprime mortgages
Categories: Banker, Broker, Subprime Mortgages
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I just finished reading “Truth-in-Lending Disclosure Failure Leads to Mortgage becoming “UnSecured”" at The Big Picture. This article sent chills down my spine. The main reason being that if borrowers are successful in detaching the collateral from their mortgages then we are indeed headed for some really bad economic times.

The premise of the post is that many of the Truth in Lending Disclosure for 2/28 ARM Loans (sub-prime) did not adequately document the actual interest rate, payment and cost of the mortgage over the loan term. This is a direct violation of many state and federal lending laws. In the authors own words:

Let me put on my lawyer hat for a moment: The Truth-in-Lending Act requires “clear and conspicuous” disclosure to borrowers of the key provisions of their mortgages. This includes such details as the eventually reset interest rate, specific loan terms, and the total dollar amount the mortgage will cost over time:

And lawyers for borrowers losing their homes are very aware of this noncompliance of existing laws:

This seems to be where many of the subprime 2/28 ARMs ran afoul: They failed to meet the disclosure laws regarding actual interest amounts and payments.

Who has gotten tagged with these cases so far? Subprime lender NovaStar Financial Inc. (NFI) in Kansas City settled a class action suit for $5.1 million. And, consumers in Wisconsin recently won a class-action TILA suit (its under appeal).

Go over to the article and read the whole thing. It makes you wonder what everyone was thinking, especially those buying and selling mortgages. Aren’t they supposed to be reading this stuff?

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Tags: mortgage, subprime, TIL, Truth in Lending Laws
Categories: Banker, Broker, Mortgages
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Between First Magnus (Great Southwest Mortgage) closing shop and Countrywide going through some serious turbulencethings are very unpredictable right now. To calm markets the Federal Reserve just lowered the discount rate by 0.5% to 5.75%. The discount rate is what the Fed charges banks for short term loans.

What is a consumer to do? If you have any loans in process right now it’s a good time to check with your lender to make sure everything is on track. As long as the loan is locked it should be okay. However, moving forward that may not always hold. In fact Brian Brady, a veteran mortgage professional in California is advising mortgage brokers to lock with two lenders - just in case. As a broker we can do this even though it may not be fair to the good lenders, as Brian points out.

Countrywide is the nations number one home mortgage lender. So, anything bad on that ship sends waves that could even rock Fannie and Freddie. The market knows that both Fannie and Freddie will not crash because they have the full faith and commitment of the Federal government behind them.  However, this is not to say that loan guidelines can not change over night and become more restrictive. From what I know they are not thinking of any changes but the way the market changes you never know.

Below are some notable market news from MarketWatch and LA Times:

• Fed cuts discount rate to 5.75%
• Moody’s downgrades 691 mortgage-backed securities
• NovaStar Financial to cut 37% of workforce
• A rush to pull out cash (LA Times)

Stay tuned. I’ll have some more information and analysis on the mortgage market as it becomes available.

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Categories: Banker, Broker, Economics, Mortgage Backed Securities, Subprime Mortgages
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Mortgage brokers are easy targets these days.  Everyone blames us for the mortgage mess. With the political season heating up all the major (and minor) presidential candidates piled on us last week. Below is a sampling (from CNNMoney).

Last week, Sen. Hillary Clinton came out with a plan to address lending abuses. One of its main policy planks was to “crack down on unscrupulous brokers.”

As head of the Senate Banking Committee, Dodd has been more out front of the issue than other candidates, leading several hearings to investigate the subprime mortgage crisis.

Sen. Barack Obama has introduced legislation targeting fraud and predatory lending.

The best response to the attacks is from Brad Inman:

Brad Inman, publisher of Inman News, an on-line chronicler of the real estate industry, said, “I find it odd that mortgage brokers would carry the weight of blame for this entire web of sins.”

According to Inman, the loans originated by brokers wouldn’t have been offered to consumers if Wall Street wasn’t ready to buy them to sell on the secondary markets.

Who are we kidding here? The greed cycle started on Wall Street and it should end there. I may be doing home loans but I’m not the one setting the rates and making credit easy. The Fed made that choice after 9/11. Back then Alan Greenspan himself conceded that he didn’t know what the consequence of easy credit would be.  Well the wreckage is all around isn’t it Mr. Genius?

From a mortgage brokers perspective it was dizzying how many wholesale reps used to come by our offices offering stated income 100% with 560 FICO scores.  I mean girls in tight skirts and lots of makeup with multiple lunch offers. All they wanted was a name, address and social security number. The rest didn’t matter. I’m serious. (Some didn’t even require a social security number.)

Now, who benefited from all this? The mortgage broker had a heck of a few years but that is peanuts compared to the money passed around on Wall Street. I’m sure lots of bonuses were paid and many in management bought boats and luxury apartments. Where are these people? Who are these people? If this is such an injustice then why are they still walking free? What did they know and when did they know it?

Don’t get me wrong, the industry is not innocent, but the people most responsible for the mess are wearing suits in New York and Washington. We the little guy just got caught up in the euphoria.

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Categories: Broker, Congress and Government, Mortgages
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House Bill 2040 is headed to the Governers desk. This bill makes mortgage fraud a felony. According to Inman News:

House Bill 2040 would make deliberate misrepresentations to lenders — such as inflated appraisals or falsified borrower incomes used to obtain loans that exceed a home’s true worth — class four felonies, punishable by up to three years in prison.

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Categories: Arizona, Banker, Broker, Fraud, Mortgages
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Japan’s GDP grew at a 3.3% annualized rate, which is much stronger than expected. As the Financial Times is reporting today there is a high probability that the Japanese Central Bank will raise interest rates in August to cool the hot economy.

Why the panic here in the US? Well, the Japanese are the most enthusiastic buyers of US Mortgage Bonds. There has been a phenomenon lately called the “Yen carry-trade” where investors borrow money in Japan at very low interest rates and buy US Mortgage bonds paying much higher returns. In recent years these investors have made a comfortable return on their money with very little risk.

The first shock in the carry-trade came earlier this year with the continuing weakness of the dollar. A weak dollar ate directly into the spread. If the Japanese central bank raises rates in August, it will further eat into the spread and slow Japanese purchase of bonds. This weakening in demand will translate into higher interest rates.

Not everything happens so neatly, but there is a clear possibility and my hunch is rates will rise a bit more yet before peaking. Here is some more detailed analysis.

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Categories: Banker, Broker, Interest Rate, Mortgage Backed Securities, Mortgages
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Mortgage Backed Securities are taking a beating this morning. As of this writing they were down 78 basis points from when the markets opened. That is a huge fall. Lenders usually raise rates after a 16-19 basis point change for the worse. It’s only mid-day in the East Coast and we have a very steep fall. Any conventional loan tied with Fannie Mae and Freddie Mac is going to see an increase in rates today.

There are many reasons why the market is beating down on bonds and in a global economy, foreign markets are driving much of the action. As CNNMoney is reporting, the US bond market is feeling the jitters because the major economies are all raising interest rates:

From Canada to England to Japan, central banks around the world have been raising rates amid growing concerns about inflation.

How does this affect US bonds? Well, for one thing now global investors can park their money elsewhere and get a decent return, the US is not the only place. We have already been seeing a drop off in demand for US bonds and it’s not getting any better. Less demand for US bonds translates into higher bond yields (interest rates).

I expect the 30 Year fixed rate to take a great leap forward towards 7.00%. What does this mean for consumers? On a $200,000 loan a 0.5% increase in rate results in a
$66 increase in payment. Looking at it another way if a borrower felt comfortable with a $1,200 monthly payment they would have qualified for a $200,000 home. With a 0.5% increase in rate they now can only qualify for a $190,000 home. It can be a pretty big difference in a market like Phoenix. Of course the higher the purchase price the larger the changes to purchase price and monthly payment.

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Categories: Banker, Broker, Economics, Interest Rate, Mortgage Backed Securities
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There is a great post at Mortgage Porter discussing home equity lines. Rhonda has a lot of good information and certainly very good advice. For the financially disciplined and committed a home equity line can be a very useful tool. I know because I’m using it exactly the way she recommends and I know that if a time ever arises I can access all that cash no questions asked!

I know, last week, I advised everyone to lock any loan interest rates they were considering. I still think the sooner you lock the better since the market seems to be hammering away at bond prices. The Mortgage Reports presents a great analysis on the state of home mortgage rate. I suggest you check it out.

Ever since current NY Gov. Eliot Spitzer went after tile companies and their supposed monopoly of title insurance, I’ve paid a little more attention to this line item on the settlement statement. Spitzer filed lawsuits as NY AG. Blown Mortgage has some pretty interesting things to say about the topic.

Finally for mortgage professionals out there, the Mortgage Broker Coaching blog is now up. This is brought to you by the creator of the famous Pacesetter Mortgage Blog (this blog is no longer active).

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Categories: Banker, Bloggers, Blogging, Broker, Mortgages
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If you’re in the market for a home loan and have not locked your rate in – then today is the day to lock. Mortgage bonds have been falling the past few days and this morning’s strong consumer confidence caused bond prices to fall further. When bond prices fall rates increase.

I was just looking over the performance of Mortgage Backed Securities (the bond which determines mortgage rates) and I see a clear downtrend. After peaking at 98.97 on May 8th bond prices have fallen 125 basis points to 97.72 (today).  That is a pretty steep fall with a clear downtrend. So, things are not looking so good for mortgage rates.

This is also a heavy news week with plenty of opportunity for bond prices to fall even further. The Fed Meeting Minutes will come out on Wednesday and we have a Friday double header with both the Jobs Report and the Core Personal Consumption Expenditure (PCE) Index coming out. Remember a good Jobs Report, showing greater job creation has a tendency to push bond prices further down; whereas, stocks tend to rally.

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Categories: Banker, Broker, Interest Rate, Mortgage Backed Securities, Mortgages
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