Calling All Mortgage Brokers and Correspondent Lenders

January 20, 2008 by Leave a Comment

Join WAMB at Legislative Day in Olympia on Tuesday, January 29, 2008.  It’s more important than ever to be active in your career and make your voice and opinions heard.   This is a full day event beginning at 9:30 a.m. and running until 7:00 p.m.  Advance registration is required as WAMB will schedule appointments with elected officials from your districts to meet with you and hear your voice…or as Tony Gallegos says "meet belly to belly".

WAMB’s Legislative Day 2008 will focus on:

  • DFI Draft Legislation "Preventing Mortgage Fraud"
  • Protecting the housing industry from further loss of valuable mortgage products. 
  • Make your voice heard during this crucial legislative session.

If you don’t like what is happening to our industry and you do nothing about it, how can you expect change?

I’m going.  Are you?

Want to go a step further…how about attending NAMB’s Legislative & Regulatory Conference in "the other Washington" on February 4-8, 2008. 

Filed Under: Legislation

Is Your Loan Officer Legal?

January 3, 2008 by 1 Comment

According to DFI, a majority of Loan Originators have not renewed their license…it’s quite possible that your Loan Originator (aka Loan Officer, Mortgage Consultant, Mortgage Planner…we go by many titles) may not be licensed to complete a loan application if they did not renew their license prior to December 31, 2007.

[Read more…]

Filed Under: Legislation

Private Mortgage Insurance deduction extended through 2010

December 27, 2007 by Leave a Comment

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Included in the Mortgage Forgiveness Debt Relief Act that President Bush signed just before Christmas is the continuance of being able to deduct private and FHA mortgage insurance if you meet certain criteria through 2010. 

  • The mortgage must be used for "acquisition indebtedness" which means for purchasing your home or a refinance doing substantial improvements.  This also includes refinancing the mortgage you used to purchase your home, however the amount is based on what the original loan amount was when you purchased your home.
  • The deduction applies to "qualified residences" which is your primary residence and a second home that is not a rental.
  • Adjusted gross incomes up to $109,000 qualify for the deduction.  Adjusted gross incomes of $100,000 or less are allowed to deduct 100% of the allowed pmi.  AGI’s of 100,000.01 – $109,000 are on a sliding schedule (the higher the income, the lower the deduction).
  • You must itemize your taxes in order to obtain the deduction (you need to do this in order to claim your mortgage interest deduction as well).

Consumers should meet with their Mortgage Professional to help them consider all options before selecting a mortgage. 

Filed Under: FHA, Legislation, Mortgage Insurance

What will 2008 bring to the local mortgage industry?

December 26, 2007 by Leave a Comment

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To start with, there will be a significant reduction in those who can legally take  a loan application in Washington.    Effective January 1, 2008, if a loan originator works for a company that is registered with the State of Washington Department of Financial Institutions (DFI), the loan originator must have:

  • Passed their competency exam.  (Most who take it do pass…many are simply opting to not take the test).
  • Attended two DFI approved 3-clock hour courses (one must be on ethics).
  • Renewed their license if it expires by 12/31/2007.

The last stats I’ve heard is that out of the over 15,000 Loan Originators who registered with DFI, fewer than 2,000 have taken and passed the exam.  That’s reduction of just over 85% of Loan Originators working for mortgage brokers in Washington State. 

Originally I assumed that LOs who do not want to take the steps required to work for a mortgage broker, would decide to work for a mortgage bank where they are not held to these standards by the state of Washington.   This is not going to be the case.   After talking with a few of my mortgage banking brothers & sisters, I’ve learned that many banks are "googling" Loan Originators names before hiring and if they were rejected from DFI, the bank sales manager is able to see the nitty gritty details of their disqualification of being a Licensed Loan Originator.   Bank Mortgage Sales Managers also visit DFI’s site and run an LO’s last name to see if they were rejected, withdrawn or licensed.     Add to this equation that there are going to be fewer jobs for Loan Originators with some local banks, such as Washington Mutual, laying off employees and closing some of their retail loan centers.

A majority of the 13,000 or so Washington Loan Originators who have elected not to take the three simple steps I’ve referenced really don’t have a lot of options in the mortgage industry.  Yes, a bank will hire a good producer who has not been rejected from DFI…but there’s only so many of those and no reason for a bank to hire someone who’s a marginal producer.

Let’s also not forget that it’s been an amazing ride for the mortgage industry since August.   Some LOs will decide this job just ain’t worth it.  You really need to know your guidelines and various programs these days and be prepared to forget what you just learned because the guidelines just changed (again) or the program is discontinued.

So after the New Year celebrations pass, if your Loan Originator is still around to help you as your preferred Mortgage Professional, give ’em a pat on the back.  There will be fewer of us left standing when it’s all said and done.   

I personally cannot wait for this year to end and to start new in 2008!

Happy New Years!

Filed Under: Legislation, Mortgage

My Take on the Fed’s Proposal to Amend Reg Z

December 19, 2007 by Leave a Comment

You can read the official press release here.   This following is from the highlights.  I’ve added my opinions (if any) in italic.

The proposal would establish a new category of “higher-priced mortgages” that should include virtually all subprime loans. The proposal would, for these loans:

  • Prohibit a lender from engaging in a pattern or practice of lending without considering borrowers’ ability to repay the loans from sources other than the home’s value.  Fine.
  • Prohibit a lender from making a loan by relying on income or assets that it does not verify.   Fine. I have never been a fan of "over" stated income when the income is not there.  I have done just a few stated income loans in my mortgage career where the income was there, but hard to document.  This will impact those borrowers.
  • Restrict prepayment penalties only to loans that meet certain conditions, including the condition that the penalty expire at least sixty days before any possible payment increase.   Fine.  I’ve never liked prepayment penalties.  Life happens and sometimes people don’t stay in a home or mortgage as long as they originally intended.
  • Require that the lender establish an escrow account for the payment of property taxes and homeowners’ insurance.  Fine.  The lender may only offer the borrower the opportunity to opt out of the escrow account after one year. All subprime (or non-prime, same thing–just sounds better these days) should have reserve accounts. 

The proposal would, for these and most other mortgages (prime aka a-paper):

  • Prohibit lenders from paying mortgage brokers “yield spread premiums” that exceed the amount the consumer had agreed in advance the broker would receive.    A yield spread premium is the fee paid by a lender to a broker for higher-rate loans.    Fine…IF…the borrower accepts and understands that the broker is going to be compensated a total of x% which includes YSP plus the origination if any.  For example, the broker would disclose upfront to the borrower that he/she is going to make 1.25% (just for example sake) to the borrower.  If the borrower is paying 1% if origination points and the lender is paying 0.30% in YSP; the loan originator will credit the borrower 0.05% of the YSP to the consumer.   However, if the reverse happens, and the YSP winds up being 0.20%, shouldn’t the Loan Originator be allowed to increase their origination by 0.05% to meet the 1.25% agreed compensation?  It needs to work both ways. 
  • Prohibit certain servicing practices, such as failing to credit a payment to a consumer’s account when the servicer receives it, failing to provide a payoff statement within a reasonable period of time, and “pyramiding” late fees.  This must be on the servicing side (and it’s fine with me).
  • Prohibit a creditor or broker from coercing or encouraging an appraiser to misrepresent the value of a home.  Fine…absolutely fine!
  • Prohibit seven misleading or deceptive advertising practices for closed-end loans; for example, using the term “fixed” to describe a rate that is not truly fixed.  It would also require that all applicable rates or payments be disclosed in advertisements with equal prominence as advertised introductory or “teaser” rates.   Fine.  I have called 5 year ARMs, ARMs that are fixed for five years and adjust annually afterward.  I don’t see that as misleading.  Consumers should know what the "worse case" payment may be on their ARM or any mortgage.
  • Require truth-in-lending disclosures to borrowers early enough to use while shopping for a mortgage. Lenders could not charge fees until after the consumer receives the disclosures, except a fee to obtain a credit report.  Fine.  I do not provide rate quotes (except for those I post on Fridays with all of my disclaimers) without sending a Good Faith Estimate with the Federal Truth in Lending. 

I am not seeing a huge issue with the Fed’s proposal.  In fact, as you can see, for the most part, I agree with it…it’s fine! 

NOTE:  If you bought a home using over-stated income and have an ARM adjusting, you may need to find a co-signer to help you obtain your next mortgage.  There will not be many (if any) stated or no-income verified products available for you.  This is your government in action.

Filed Under: Current Affairs, Legislation, Mortgage, Subprime Lending

My email from Congressman Dave Reichert on HR 3915

December 18, 2007 by Leave a Comment

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Dear Mrs. Porter,

Thank you for contacting me to share your views on legislation to address predatory mortgage lending. I appreciate your thoughts on this matter and welcome the opportunity to respond.

As you know, Representative Brad Miller (D-NC) introduced the Mortgage Refomr and Anti-Predatory Lending Act (H.R. 3915) on October 22, 2007, to create a nationwide licensing system for mortgage brokers similar to our existing system of federal banking regulation. I supported this legislation when it came to the House floor for a vote because I am concerned that if predatory lending continues to lead to foreclosures and decimate the market, it might reduce the value of homes across the 8th District and our nation. It is estimated that families not facing foreclosure could see the value of their homes decline by $265 billion because of the ripple effect 2.2 million foreclosures would have in diminishing process of surrounding homes. The measure passed the House by an overwhelming bipartisan vote of 291-127, and has been sent to the Senate for review.

When H.R. 3915 was originally presented to the House, it contained some flawed provisions. That’s why I supported amendments to clarify and narrow its scope to ensure that it targets predatory lenders and does not have unintended consequences for mortgage brokers who responsibly extend credit to homebuyers. I also sought to exempt prime loans from the bill and reduce the potential for frivolous lawsuits and borrowers alike.

Rest assured that I will continue to closely monitor the crisis in our mortgage markets and its impact on our economy. The crisis will require public and private sector effects to help those affected, and I will support measures that provide necessary assistance without sacrificing free market principles.

Once again, thank you for taking the time to get in touch with me. Your interest and input are valued and I hope to hear from you in the future regarding other matters of importance. I encourage you to visit my website and sign up for my monthly e-newsletter at http://www.house.gov/reichert/ to learn more about other issues impacting the 8th Congressional District and our nation.

Sincerely,

David G. Reichert
Member of Congress

Filed Under: Legislation

My letter from Congressman Jim McDermott

December 11, 2007 by Leave a Comment

Dear Rhonda:

Thank you for contacting me about mortgage reform and the subprime lending crisis. I appreciate hearing from you on this important matter.

As you know, across the country, hundreds of thousands of borrowers, many of whom were irresponsibly issued subprime, adjustable-rate loans, are facing possible home foreclosure and millions more are struggling to make their home mortgage payments.  This foreclosure crisis, and the failure of various state regulations to prevent the problem, indicates the need for greater federal oversight of the mortgage industry and its practices.

Accordingly, the U.S. House of Representatives recently passed HR 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007.  I voted for this legislation, which institutes a number of important steps to stop lending abuse, including creating a nationwide licensing registry for mortgage brokers and establishing minimum standards of credit worthiness for home loans.  I believe this bill makes significant progress in protecting consumers, stabilizing mortgage volatility, and preventing predatory home lending. 

I appreciate you sharing with me your thoughts on Title III of HR 3915 , and the need to preserve mortgage financing options for borrowers. As you probably know by now, the anticipat ed amendments by Rep. Gary Miller that you mention ed were not offered. I understand that the National Association of Mortgage Brokers (NAMB) still has concerns with Title III as passed by the House. NAMB endorsed HR 3915 and supports the overall legislation, and has vowed to continue to work with Congress as the bill heads to the Senate and to a possible conference committee. As this process unfolds, I will keep your thoughtful remarks in mind.

As this issue is debated in the U.S. Senate and heads to a possible conference committee, I will keep your comments in mind.  Thank you for writing me. 

Sincerely,

Jim McDermott

Member of Congress

P . S . – I have an e-mail newsletter available to anyone interested in updates on issues and events from the U.S. Congress or the Seattle area.  To subscribe, visit my website at www.house.gov/mcdermott and click on "Newsletter Signup."

Filed Under: Legislation

A (Very Middle of the Road) Message from Senator Cantwell on HR 3915

November 27, 2007 by 1 Comment

Dear Mrs. Porter

Thank you for contacting me regarding the Mortgage Reform and Anti-Predatory Lending Act of 2007. I appreciate hearing from you on this important issue.

The Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R. 3915) was introduced on October 22, 2007 by Congressman Brad Miller. If enacted, this legislation would amend the Truth in Lending Act, setting forth standards and requirements to monitor the residential mortgage industry. These changes range from requiring counseling for loan applicants, to laying out requirements that mortgage originators be licensed and registered. The bill was reported from the House Financial Services Committee on November 9, 2007 and is currently awaiting action on the House floor.

While no companion bill has been introduced in the Senate at this time, please be assured that I will continue to work with my colleagues in Congress to respond to the state of our economy in a fair, responsible, and effective manner. Should legislation similar to H.R. 3915 come to a vote in the Senate, I will keep your thoughts in mind.

Thank you again for contacting me to share your thoughts on this matter.  Finally, you may be interested in signing up for my weekly update for Washington state residents. Every Monday, I provide a brief outline about my work in the Senate and issues of importance to Washington State; If you are interested in subscribing to this update, please visit my website at http://cantwell.senate.gov .  Please do not hesitate to contact me in the future if I can be of further assistance.

Sincerely,
Maria Cantwell
United States Senator

For future correspondence with my office, please visit my website at
http://cantwell.senate.gov/contact/index.html

Filed Under: Legislation, People
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