Builders In House Mortgage Relationships Soon To Be Changed

Builders have been a big problem over the years with dangling incentives for potential buyers to use their affiliated mortgage company. Nothing was more aggervating than to lose a loan after I have been working with a buyer for months, because some builder claims to be giving some sort of incentive to use thier affilated mortgage company. We all know what was going on behind the scenes within the mortgage industry. I have been saying for years that builders need more regulation. Looks like it finally happened.


Ken Harney made note of some changes to come, and said the following.

One of the less-discussed provisions of the Department of Housing and Urban Development's controversial rule on mortgage fees and disclosures is expected to profoundly change lenders' relationships with builders next year.
The rule, which HUD finalized last month after years of revisions, stops, and starts, will overhaul how the Real Estate Settlement Procedures Act is enforced.
Most of the debate about the 86-page rule has focused on the standardized good-faith estimate lenders will have to start providing mortgage applicants in 2010. The industry is expected to spend millions next year preparing for that part of the rule.
Several other provisions will take effect Jan. 16. What many observers called the most significant one would bar builders from offering homebuyers discounts that require them to use an affiliated mortgage, title, or settlement company. The ban will remove a competitive advantage for the joint ventures many builders have with lenders like Wells Fargo & Co., JPMorgan Chase & Co., and Countrywide Financial Corp., now a unit of Bank of America Corp. Some observers said the rule could spell the end of such partnerships.
Also on Jan. 16, lenders will be allowed to charge borrowers the average fee for certain types of settlement services purchased on their behalf, rather than the actual fee the lender paid the service provider. Some consumer advocates said this provision could help lenders skirt other consumer protection laws.
One thing that is clear: a good deal of compliance work lies ahead. "The industry has been digesting this huge, complicated, massive rule, and we're only now coming to the stage of implementation," said Sue Johnson, the president of the Real Estate Services Providers Council Inc.
Mitchel Kider, a managing member at Weiner Brodsky Sidman Kider PC, said builder-affiliated mortgage entities "worked off the synergy that exists" because discounts and incentives are available. "What this rule does is make it difficult from a business perspective to run your operation. It changes the business model of affiliations."
Brian Levy, a senior vice president and general counsel at the $1.5 billion-asset Guaranty Bank in Milwaukee, whose Shelter Mortgage Co. LLC has partnerships with builders, said, "We're going to see less production from that source and lower revenue."
It will be hard to gauge how much of the drop will come from the rule and how much will come from the recession and housing slump, Mr. Levy said. (In October, the most recent month for which data is available, sales of new homes dropped 5.3% from September and 40% from a year earlier, to an annual rate of 433,000, according to the Census Bureau.)
After mid-January, Mr. Levy said, lenders will monitor capture rates - how much of a builder's business their joint ventures get - to measure the rule's effect.
Gina Harris, the president of Builder's Affiliated Mortgage Services, a Tampa correspondent lender, said she expects to gain more business after being shut out from competing for the business of home builders that had ventures with mortgage companies.
"The joint ventures with builders may not be as profitable anymore, and they may decide that they don't want to have them," she said. "And that's probably going to be a decision that the large mortgage companies doing the joint ventures are going to have to make."
Lenders that have mortgage officers working at builders' offices may continue to work with the builders but probably will bring their loan officers in-house as part of their retail staff, Ms. Harris said.
David Stevens, a former executive at Wells and Freddie Mac and now the president and chief operating officer of the Chantilly, Va., real estate brokerage Long & Foster Cos., said the real estate law does not prohibit companies from offering "a bona fide discount," but it must be one that any competitor could match. The problem is when "the only way you get the discount to the home is to use the affiliated business."
At the peak of the housing market, builders typically told customers that they could get $10,000 of upgrades or a bigger lot if they used a mortgage or title company affiliated with the builder, he said. "They basically cross-subsidized it" with revenue from the affiliate.
William Renner, the director of single-family finance at the National Association of Home Builders, said some builder-affiliated mortgage companies may still maintain "fairly high capture rates" next year, because not all builders offered incentives in exchange for using a certain service. But he conceded that the builders with affiliated mortgage companies "would in many cases have to change their marketing agreements."
Debora Blume, a spokeswoman for Wells' home mortgage unit, said many of the builders that have ventures with the lender "do not offer financing incentives, which have actually been a recent phenomenon."
Builders form such ventures because they "want to feel confident their customers are connected with a strong, stable mortgage provider able to make sure deals close on time and meet customers' expectations," Ms. Blume said. "And customers want the convenience of one-stop shopping with mortgage, title, and insurance services under one roof."
The right to charge an average fee at closing for things like credit reports, appraisals, and recordings is meant to make it easier for lenders to adhere to the three-page good-faith estimate they will have to provide beginning in 2010. Under the rule, actual charges at the closing table will not be allowed to exceed 10% of the estimate.
(Lenders currently must provide some sort of good-faith estimate to applicants, but there is no standard form for doing so. Many lenders use a one-page document. Charges at closing can vary widely from the estimate, creating the potential for unpleasant surprises for consumers and making it harder for them to compare loan offers.)
Rebecca Borne, a policy counsel at the Center for Responsible Lending, said settlement fees "are used to calculate the finance charge under the Truth-in-Lending Act and to determine if a loan has 'high-cost' loan status, which often subjects it to more protective standards under federal and many state laws."
Allowing lenders to charge average fees creates the danger that the triggers under those laws will be hit less frequently, Ms. Borne said.
The rule forbids the use of average charges for fees that are based on the loan amount or property value, such as transfer taxes, daily interest, reserves, escrow, and insurance.
Though full Respa reform implementation is more than a year off, some lenders are anticipating the impact of the expanded good-faith estimate, which will include details about whether the interest rate can change, the existence of prepayment penalties, and total closing costs.
The new disclosures "are all going to require extensive systems work, and you have to completely reprogram your settlement systems and up-front disclosure systems, which will affect lenders, third-party service providers, and settlement companies," Mr. Stevens said. "There are definitely costs involved."
Mr. Levy said wholesale lenders are concerned about shouldering the liability of a binding good-faith estimate submitted by mortgage brokers.
Often a borrower will change the details of a loan "as they're headed towards closing" - switching from a fixed rate to an adjustable one, for example, he said.
Whether lenders will be held to their original estimate in such cases is unclear, Mr. Levy said. "Almost every loan on average has a change where it needs to be locked in a second time, and that's normal for a loan to be changed, so would you run the risk that your original GFE is wrong? Will regulators be looking at GFEs and hold ... [lenders] accountable on a compliance issue?"

Romo May Need to Buy a New Home Outside of Dallas Soon

NOT REALLY! I like Romo. It is unfortunate that he has done so well so soon. He has really been a little raw the whole time but he's been able to glisten with a couple signature throws that make him look really well, like the seam route to Jason Whiten. That throw is decieving easy to throw because it's always when Jason is matched up on a slower linebacker who has had to turn their back and run to keep up with Jason and he can't see the ball coming to knock it down even when he has good coverage on Jason. Romo has a LOT of rough edges and I think that they are starting to come out right now. Don't get me wrong, Romo is a Pro and good at what he does...he just has a lot to clean up in his game.
Romo has never thrown the ball away when under pressure and is very Favre like in throwing an interception because he can't settle for throwing it away or taking a sack. If he can keep his head on straight for another year or two and make progress in controling his competitive spirit to make better decisions under pressure, he could be a stud. Otherwise, as he continues to struggle under pressure, his confidence will chip away and he'll become a Curt Warner type. Warner won the Super Bowl and returned with some poor games that changed the face of his expected SUPER career. Warner had to go find a mortgage in a new city for that.
This IS the point that makes or breaks Romo's future, and all elite QB's have this point.
I think there is a VERY good chance that Brad Johnson gets in there and provides that older veteran leadership in the huddle that some of those big lineman need, and we do well under Johnson. We'll either spread out our offense and hit quick hitting plays to recievers to hold blitzers accountable, or we'll spread out and release our backs for swing passes that also force teams to limit blitzing or zone blitz where now they have a defensive end trying to cover or keep an edge on the back out of the back field...that is a match up to take advantage of. The other option to help Brad Johnson is to have Jason Whiten and a back in the back field to pick up blitzes and which ever one doesn't have a blitz responsibility will release from the back field for a 3-5 yard dump in the middle...that forces safeties and linebackers not blitzing to stay in the middle of the field to keep that dump in front of them and opens up quick slants where linebackers can't drift into hook zones and flats...it also leaves the flag routes for Eldorado Owens to get away from double coverage with the safety overlap. While that safety watches that back out of the backfield to make sure he doesn't release deep on the linebacker (linebacker is never expected to "run with" a back on a vertical by himself) and feels some comfort because in his perifial vision where the wide out is coming at him and therefore that safety's feet go into cement and when it's just too late, that wide out turns it back to the sidelines and the safety is behind on the read and makes it over there too late on the overlap. That's my vision of the best game plan...we'll see if they do either. Note: The Cowboys have been very reluctant to use the back as a reciever from the back field much this year, and it hurts them.

Can You Approve at First Blush To Buy a Home In Frisco Texas

First a disclaimer. This is a simple and easy way to know. Yes, there are other options and this and that, but this is a quick "how to tell" if you are talking to a good buyer.

If you have 700 or better credit scores and have 5% down payment and money for closing costs, your a stud buyer. Yes, loans still allow for seller contribution for closing, but lets work that out when we have to.

If you have under 700 and even more specifically, under 680, you'll need FHA financing if you are looking for low down payment financing...you are going to need 10% down payment with those scores probably outside of FHA, and VA. Yes, there are a couple places you can find conventional financing with 5% down if you have under 680, but it's time for "THAT" buyer to save for 10% down payment and have a better loan availability to choose from.

If you have 610 or higher and only have 3.5% down payment, it's likely you can get FHA financing, but you need to submit all your income and assets to the lender up front and give up your whole story so they can run it through their system or get an underwriter to look at it first.
I don't know if any of you readers have seen the cartoon movie, Cars, but this is where it stops. "Welp, G'NITE" as all the Cars drive off and leave Towmator in the night alone...he's afraid of the ghost light. Yeah, that's it. It's easy and simple these days isn't it?

Presley's Promise: Calling On Frisco, Plano, and McKinney Mortgage and Real Estate Professionals

We need help to make it possible for needy families to continue to get World Class help for their Children at Scottish Rite Hospital. One of my dear friends in the Title Business in McKinney TX had a daughter born a couple years ago that has had operations and other services by Scottish Rite and he wants to help raise money for the next needy families. He has had some last minute players that can't make it, and sponsors that fell through. Any help you can provide would be great. Don't hesitate to call me or email me if contacting him directly from the flyer picture below doesn't work. My number is 469-450-2723 and my email is bl@fmillc.com

My friend Brian Hazlewood and his wife Brandi need help for their daughter Presley who was born with Arthrogryposis (a muscle, joint and tendon disorder) that also caused her to have severe bilateral clubfoot, curvature of her left wrist and bilateral hip dysplasia. She has attended Texas Scottish Rite Hospital (TSRH) for Children since she was two weeks old. From the age of two weeks to twelve weeks she went to a clinic weekly for manipulation of her feet and to change her casts that went from toe to upper thigh and at one point she had a heel lengthening procedure done as well. At the age of twelve weeks, it was determined that the casting was not working as well as we would have hoped, and we switched to the Ponseti Method, which is manipulation through therapy, taping and splinting of the feet. They first attended appointments everyday and then they started to spread out to further appointments. During this process, in February of 2006 she had her first surgery at TSRH to try and fix her hips. For three months following the surgery she was in a half body cast from her chest to her toes, also known as a spica cast. After the cast was removed, she went back to therapy in the "baby room" for her feet. Then in October of 2007 she had her second surgery with TSRH which was her foot surgery. Following this surgery she wore full leg casts with pins in place through her heels for six weeks, then had a cast change to smaller casts in which she wore for four weeks, and then moved to orthotic splints that she continues to wear today to keep her feet in place. She started walking with the help of a reverse walker at the age of 18 months, and continued to use this until she took her first steps in January of 2008. She now walks on her own and is also in a gymnastics class for special needs kids.

Presley's Promise: Is a charity golf tournament that Brandi and Brian are putting together for their daughter to give back to Texas Scottish Rite Hospital in Dallas. She has been going regularly since birth and will continue going most all of her life as a child. Scottish Rite is a great organization and we feel we would not be where we are today without their help. It's truly a gift for us to be a part of such a great place. **************************************************************** Update***** We are looking for 72 golfers and as of today I have 56. We are also wanting to get 18 hole sponsorships and I'm sitting at 14 right now. All the other sponsorships are now full thanks to our boy Scotty Hoyes on the Beverage Cart! That a boy Hoyes! PRIZES***** 1. Best Dressed Golfer............I'm going with Tony A. on this one. 2. First Place 3. Last Place................Probably me. 4. Hole In One/Closes To Pin 5. Longest Drive 6. $5 Raffle tickets to be sold before and after golf for the drawing after lunch. We have some very nice donations to be given away. The more tickets you buy, the better chance you'll have to win AND it's more money for Texas Scottish Rite Hospital!

Checks payable & mailed to: Presley Hazelwood @ 802 Cedar Street. McKinney TX 75069. OR Call Brian

at 214-402-2281.

Frisco Home Buyers Dependant On Election: Vote? McCain or Obama

Politics has never kept much of my attention until this year, and mainly because of the terrible fix I see the Frisco Texas families in on a day to day basis as I work within the mortgage industry here. When I ask my dad, because that's just what I do in such situations, "dad, who are you voting for?", he replied "I'm just not going to vote". Of course, I needed to to know why, and when I asked he told me that he has seen all the U Tube videos, and the forwarded emails of Barrack not putting his hand over his chest in front of the flag, and heard the chopped up speeches that contradict the Christian religion, but on the other hand does not really agree with the resolutions of McCain. Inside as he was explaining this, I had a little being inside me screaming, "me too man, me too". "Since I can't decide to vote FOR Barrack, because I'm not 100% sure yet of his stance on my religious values, and I completely do not see the leadership and facts w/in McCain's plan, I just don't have the facts to commit to a vote myself. Although I will make a decision and vote.




Being in the mortgage business during such a time of economic turmoil, I have been pulled into the media and politics a lot more than the past, and I've enjoyed it...it makes me feel more responsible as a citizen of the good ole U. S. of A. I have a hard core interest in what is going on now. Even after my attention has elevated and I'm hearing both sides and all, I am just as "in the dark" now as I was in my college days when I only knew what I saw on a billboard or as I tripped over the front page Headlines of the newspaper as I thumbed quickly to the sports page. Politics is a frustrating thing. Palin talked about the $5,000 credit McCain has planned for Americans if he becomes President, and Biden replied about the "bridge that goes nowhere". That hits home to me more than any other thing, as far as intentions that McCain has. Is that just an effort to "buy" votes? Giving America a $5,000 tax credit appears to me as just a "feel good", or a band aid, but it has no real long term resolution. I REALLY liked Joe Biden's point last night following that comment and many others about Barracks approach, I like Barrack's leadership, I like his facts also. On the other hand, what means more to me than anything else, I am not sure of where he stands with his maker, Jesus Christ.

Why doesn't Palin and McCain's "camp" bring up in their ads and commercials about Barrack not putting his hand over his heart during the National Anthem? Why don't they bring up the religious controversy we see in email and U Tube all the time?
I have to pray about this, and pray, and pray, and then I have to make a decision. Right now, I'm only voting Against Obama for spiritual reasons, and not necessarily FOR McCain, and I'd like my vote to be FOR someone rather than a settlement vote.

Am I the only person hoping that all the trash we see on Barrack is falsified information meant to mislead me, so that I can comfortably vote for the person who has the facts straight?
As a disclaimer, I'm NOT a political preacher of sort. I am an open mind trying to figure out what is best for me, my family, the families I represent in the Real Estate and lending world here in Frisco, and my country. This message is not meant to influence anyone's vote in anyway. Understanding how to best commit to my own vote is what I'm looking for.

Government Makes Ends (profit) AND Helps Banks With Toxic Mortgage Assets - Title Inspired by CNN Money

Ok, for the Layman's terms...that's how I "roll". I put it in terms YOU can understand.

Govie (Government, Washington, Uncle Sam, etc...) has got a plan. Treasury Secretary Henry Paulson (money organizer of Government) has suggested that Govie buys the "toxic" mortgage assets from American banks at a discount. This means that the banks can unload their risky mortgage assets to the government for less than what they are worth, but expectantly better than what those assets are worth after the next wave of defaults comes through...the bank can stand to loose a calculated amount, but possibly not an unforeseen/unexpected amount that might occur in foreclosure costs. This way, banks stand to have a higher probability to make it through this U-G-L-Y situation. Now, I like the idea of the plan for a simple reason. First, I'm not an economist and therefore it's my opinion. I like it because our government has taken on some major liabilities in the very recent past with the Fannie/Freddie help, bailing out big player lenders, war, etc... It's obvious that our government has the strength and money to help everyone when times call for it. A good example of a sign that might show that, is this; Me and you are not economists, so we have to look to signs of those people in our world that are, to see what confidence they have in our Govie for help. Well, when Henry suggested this option to help, stocks blew up like 400 points. If stocks are going up, that means the people who are economist and ARE in the "know", are momentarily confident. Back to why I like this. Since the government is buying these mortgage assets for "cents on the dollar", they stand to make a profit when the market turns around. You catch that? I'm ok with Govie making "ends" (ends=money or profit) on such a scenario so that they can reimburse themselves for the spending they have done to get our economy back to par, so that the next time our economy is against the ropes, they'll have the money power to dig America out again.

Oh by the way, rates terrible today because of all this. Remember, whats good for the economy isn't usually good for our mortgage interest rates. If you wonder why, search my archived blogs that explain that.

Brad

Aurora and Lehman Brothers Negative Media Gets You the Best Rate On Your Mortgage

Just in case you are new to the search and learning mortgage, the basics are as follows. Mortgage rates are directly related to bonds. When bonds do good, your mortgage rates drop. Today the bond market opened very positive again like yesterday...that's good for your interest rate and helps you get the best interest rate possible. Oppositely as yesterday where the bond market did SUPER and the Stock Market plunged, as the bonds did well today, the Stock Market opened with modest gains as well. Yesterday we saw a large swing in rates, but today we may only see a little swing. If we see a couple more days like yesterday and today, rates will be as low as they have been in 3 years.
WHY ARE RATES SUDDENLY DROPPING?
Lehman Brothers, a large player in the lending world, filed bankruptcy. This makes the more risky stock investments even more risky, so the stock investors take their money out of stock and put it in bonds...supply and demand. So yesterday, the Dow Jones Industrial blundered a 500 point drop. Aurora is a subsidiary to Lehman and more involved in the day to day mortgage lending and servicing, so expectations of Aurora's success are no good either...they are giant in this mortgage lending world.
Paul Jackson said it in a way that makes it very easy to understand, "In lending terms, Aurora is a shell of its former self: the company, once an Alt-A powerhouse for Lehman, laid off 1,300 employees starting in January of this year as it cut both wholesale and correspondent origination channels. As recently as the first half of 2007, however, Aurora was regularly seen producing more than $3 billion a month of Alt-A mortgages." He also mentioned that they are a giant when it comes to servicing companies - ranked 15Th largest service by Inside Mortgage Finance for 2007. We don't want Aurora to tank, but if it does and you see it hit large Mortgage Media, you might expect another drop in rates.

More Major Players in Banking World Troubled Still

The Mortgage Lender, Implode - O - Meter talked about Washington Mutuals troubles today in their blog and also mentioned the Lehman Brother's filing for bankruptcy. Those are two more very large financial establishments. Since May of 2006, 1 year and 4 months, there has been reported 283 failed mortgage lenders "close their doors".
Last week, a CBS news anchor said, "...is there hope for the housing market? Interest rates are down...etc". This is some of the first hope I've seen on national media in some time. Cross your fingers and say your prayers. We all hope for the best.

Housing Fall! "Will the Real Slim Shady Please Stand Up"

W A R N I N G, opinion release!
I read an article in the Dallas Morning News of a realtor who got out of the business because of the housing fall of 30% from the peak in 2006. They didn't have their business set up and efficient like they should. Let me ask this, "where IS the REAL Slim Shady". When I read this article, it brought my simmer to a little boil...I'm exaggerating a little for your blog reading enjoyment. It also reminded me of the Eminem song that blasted the charts years ago where there was and always has been a lot of "wanna bees" in the rap world just like the "wanna bees" we all see on American Idle, and he was calling them out. This market is culling the people in this industry that were faking it and getting by on the "ride" of the market. These times call for only the "real Slim Shadys". Honestly, the previously established Realtors and Lenders in this industry didn't see this 30% reduction in housing and tuck their tail and start licking their wounds. When I was young, I frequented a local water park that had a diving board and most water parks didn't have them because of the liability reasons. I was a dare devil and still enjoy the more risky jumps from cliffs and flips on wakeboards that some might think is not perfectly safe.
Well, they also had an air system from the bottom of the pool that released high volumes of air so that as you jumped off the diving board and hit the water, you couldn't sink and would easily make it back to the surface or if you hit your head and got knocked out, the bubbles would bring you to the top...call them liability bubbles. It's a stretch for another metaphor, but Realtors and lenders couldn't hardly drown in the housing market leading into 2006, because the market was so lush the "liability bubbles" would keep you a float. OK, so Texas has lost 3,000 real estate agents just since last summer. As far as loan officers, we have lost a large population as well. Now, real estate and lender offices are downsized running lean and mean and even if the majority of the Realtors and Loan Officers that still have a heart beat in this market don't have the best knowledge and experience walking into client appointments, I can promise you the most of them at this point have the work ethic at minimum to make up for it...better for the clients too. If you have the work ethic, you'll find the right answer if you don't have it. From an industry partner to another, we are "The Real Slim Shadys".

Looking in the mirror, DO YOU SEE "THE REAL SLIM SHADY"?

Free Bees for Delinquent Borrowers Thanks to the FDIC

In a blog report by Dan Caplinger he brought attention to more help that the FDIC/Federal Deposit Insurance Corporation would be bringing to current mortgage delinquent borrowers all over the nation. It appears in Dan's report that "thousands of IndyMac borrowers who are delinquent or in default on their mortgage loans could expect to see their loan terms modified in the near future." It appears that the target purpose of this mortgage modification is to make the mortgage payments affordable to these borrowers to help make these loans what are called "performing loans".
The cap rate on these modification loans will be 6.5%, and for those borrowers that can't afford the payments at even the 6.5% rate, there will be additional opportunities for them where the rate will start off even lower, but over the short future rise back to that 6.5%.
We'll see how this turns out. It always seems like the relief opportunities that come out come with strict guidelines that cut the majority of the needing population out on qualification points.

FHA Loan and President Bush's Economic Growth Package for the Best Rate

President Bush is responsible for the Economic Growth Package enforced through the Economic Stimulus Act of 2008. This will temporarily increase the FHA loan maximums in U.S. cities. In the end, nearly a quarter million families may benefit from this recent change. "A whole is made up of it's smaller parts", and as we know that this WILL create liquidity in a struggling housing market, the hope is that this is one of the major "small parts" that will eventually add up to the whole in strengthening our U.S. economy. With the demise of zero down payment financing, or 100% financing, and the demise of subprime lending, this may show to be a larger tool than many believe. Many lenders including myself have saw that we can offer our buyers/borrowers a lower FHA interest rate than we could conventional rates. Also important, FHA will allow twice the amount or more closing costs to be paid by the seller than conventional. Ultimately, the buyer/borrower will be able to get a lower rate, lower payment, and lower out of pocket costs at closing w/ an FHA loan than a Conventional. If you are interested in seeing what the FHA increased limit is in your area, just go to the newly updated FHA Loan Limit page in the HUD website. If you were interested in browsing the News Room in HUD for other important tid bits, they have plenty of reading there for you.
In the past, many true mortgage brokers denied the option of keeping their FHA license because of the vast array of other loan programs that worked side by side with a typical FHA loan. Also, the up keep and maintenance of an FHA license was more labor intensive and costly than they cared to participate in. Today, FHA is a necessity in a Loan Officers arsenal of loans w/ the aforementioned demise of sub prime lending and loss of 100% financing. So, make sure you ask your Mortgage Pro/Loan officer if he is FHA licensed and if he is not, don't take the chance on being fooled in believing their "other option". Talk to another FHA licensed Loan Officer/Lender and get his view so you can do your own comparing to what your original lender offered you.
Best of luck in you dream home hunt, and "DON'T KEEP ME A SECRET"!!!! (: If you are looking for a Professional in the finance genre of needs in Frisco, TX, you should contact one of the experienced professionals w/ Frisco Financial Service who appear on the first page of Best In Frisco.