Mortgage Chaos

• Super Jumbo Seconds - Gone With the Wind
  

  Most of my lenders are pulling second mortgages for super jumbos off the market by Tuesday, November 20. LTVS for stated income, verified assets will be at 65% max for most lenders on anything super jumbo or larger.  Some of my lenders will go to 70%, but on a $4 mil purchase, that makes the downpayment $1.2 million.  Gives one pause, doesn't it?

  MARKET COMMENTARY from Vertice:
  "Two-year Treasury notes headed for a fifth weekly gain, their longest rally in eight months, as falling stocks and the prospect of an interest-rate cut next month prompted investors to seek the safety of government debt. Yields held near the lowest in 2 1/2 years as Goldman Sachs Group Inc. said the slump in credit markets may reduce bank lending by as much as $2 trillion".

  [Count the zeros: $2,000,000,000,000 - that's the estimated cost of the war in Iraq . . . give you any ideas? Say, End the war and spend whatever is left in this country??? It would take care of two serious problems for us, wouldn't it?]

  "U.S. debt also rose before a Treasury Department report that economists surveyed by Bloomberg News expect to show foreigners purchased $71.5 billion more U.S. assets than they sold in September, from net sales of a record $69.3 billion in August."

• Bush effectively against HR 3519
  

  I hope that I have written my last diatribe re: HR 3519. 

  
  EXECUTIVE OFFICE OF THE PRESIDENT, OFFICE OF MANAGEMENT AND BUDGET, has issued a STATEMENT OF ADMINISTRATION POLICY  that is against most of the Bill HR 3519. 

   

  Notable are references to work already being done by the Department of Housing and Urban Development in revising its Real Estate Settlement Procedures Act (RESPA) to enhance mortgage disclosures, and the Federal Reserve’s intentions to improve disclosure requirements and develop new national standards for unfair and deceptive practices.

  The best news is that it pointedly states "The Administration does not support the provisions of H.R. 3915 that could overly constrict the primary and secondary markets for mortgage finance, such as the bill’s specific underwriting standards, assignee liability provisions, and the subjective obligations for mortgage originators. The Administration is concerned with these and other provisions that could lead to greater uncertainty and increased litigation, which could cause an undesirable reduction in mortgage credit and a drop in future homeownership."

  Who would have thought it?  Well, I admit I have been told he wouldn't let it go into law, but I didn't expect an announcement this early in the game.

  Read the full text here

  Pax et bonum

• Contact Your Congressional Representative TODAY Regarding H.R. 3915
  

  From the National Association of Mortgage Brokers:  
  
  Following the mark-up of the bill by the HFSC, NAMB's Government Affairs team continued to work tirelessly with members of Congress and their staffs to clarify the anti-steering provision to ensure that consumers continue to have the ability to finance origination fees and costs and to clarify our ability to receive compensation for our work. Thanks to your patience and timely response when called to action, I am pleased to report that clarifications to the anti-steering language have been made and our concerns have been addressed.

  Our work is not finished. Specifically, Title III, which proposes changes to HOEPA that will adversely affect consumers' ability to obtain mortgage financing, must be amended or removed entirely. We anticipate that there will be a number of amendments offered to Title III when H.R. 3915 reaches the House floor.

  TODAY, we are asking you to CONTACT YOUR CONGRESSIONAL REPRESENTATIVE and urge him or her to support any amendment(s) that may be offered by Rep. Gary Miller (R-CA) to modify Title III, or any other amendment offered to eliminate Title III in its entirety, to help ensure credit will remain available for consumers who need it most. The mortgage reform effort in Congress should move forward and H.R. 3915 is the first step, of many, in this deliberate process.

   

  With H.R. 3915 set to go to the House floor for a vote this Thursday, November 15, 2007, THE TIME TO ACT IS NOW.

  
   find your elected officials here

• HR 3915 On to a new vote
  

  FHA Secure

  The FHA Secure program is available to borrowers who have late mortgage payments due to their arm adjusting upwards and making their house payments too high to handle.  FHA will refinance, with no penalty for the lates, and allow you to keep a second mortgage, even if the value of your house has fallen and the loan to value is now over 100%.

  If the loan limits are changed to $417,000, thousands of people will qualify to refinance with an FHA loan - their interest rate will go down (way down) and they can get a fixed rate loan for 30 years.  What a boon!

  And the amazing thing is that the FHA is making it easier for Brokers to do FHA loans, while HR 3915 appears to be trying to wipe out mortgage brokers across the country and redesign the lending system so that only about 20% of the American population will qualify for a conventional loan.

  H.R. 3915 highlights

  • the removal of yield spread premium to brokers in most instances.  Yield spread is paid to brokers as an indirect income from lenders they sell loans to.  Apparently Capital Hill thinks every broker in the country is making a mint off yield spread and "steering" borrowers to loans that aren't good for them for the profit from yield spread payments.

  There is something else to do with that money -Spend it on the borrower to help them get a loan.

  I got a call Friday from a lady who was going to buy a house that needed work and she wanted the purchase money and the rehab money in one loan.  Countrywide had offered her the same loan at 6.875 and she wasn't getting enough love from her Countrywide loan officer.  She asked if I could do the loan, and I said sure, and so we did her application, priced her loan and sent her the docs.

  This loan has a pricing adjustment (a charge of 1%) to rate because of the rehabilitation money.  (Anything that varies from an 80%, full doc, 30 year loan for someone with perfect credit has some sort of adjustment to rate - that's why what you see in the newspapers and on the internet is NOT what you're offered when you ask for rate, unless of course, you're that borrower)  Because of that fee, her closing costs were going up $1,150 (1%) and she hardly had 3% to put down.

  With my yield spread premium, I was able to pay her 1% for her, and get her a rate of 6.5% and had a fannie mae approval within an hour or two of talking to her.  I emailed the list of documents I needed, and she has a loan.

  I did a better job for her than Countrywide (much bigger player than me) and empowered her to buy her house, and with a better loan.  HR 3915 wouldn't have allowed it, even though it was to her benefit.

  Thousands of Brokers do the same thing - there is no other way to get a no closing cost loan, but to put the cost into rate, and pay the costs from the yield.

  • Additionally, HR 3915 will not allow the financing of closing costs and prepaids.  On refinance transactions, this is normally a given - you roll your costs in, lower the interest rate, lower