Five Questions You Must Ask Your Loan Originator

December 1, 2008 by 4 Comments

If you've been a Mortgage Porter subscriber or have seen my posts at Rain City Guide, you know how I feel about chosing your mortgage by who's quoting the lowest rate.   However, if you feel you must…here are a few quick questions to ask the loan originator to make sure they qualify to care for your largest debt which is tied to your biggest asset. 

What are mortgage rates based on?

What is the next economic report or event that can trigger interest rate movement?

When the Fed changes rates, how does this impact mortgage rates?

Should rates improve after we lock, what are my options?

Will you gurantee your closing cost shown on your good faith estimate?

Nothing is more expensive than chasing rates and winding up with the wrong mortgage.  The best plan is to have the correct mortgage from the start so you can hopefully avoid refinancing (unless rates dip low enough to justify based on your financial plan).

Filed Under: Interest Rates

Who’s Who with the Local Title Companies

November 28, 2008 by 13 Comments

With the recent developments, including Chapter 11 bankruptcy, surrounding LandAmerica; I thought it would be important to share with you "who's who" locally.   Due to the bankruptcy, some lenders are not accepting title policies backed by LandAmerica.  If you are buying or selling a home right now, please check with your lender or real estate agent to make sure your title company is acceptable.

Our market has many different "brand names" of title insurance companies and actually just a few actual title underwriters.   Here's a quick run down of how the local companies currently stand (note: this will be changing as Fidelity National Financial is in the process of buying LandAmerica if the transaction is successful):

The LandAmerica Title Insurance (currently going through bankruptcy and being acquired by Fidelity National Financial).  Note: percentage of ownership is based on this report effective December 31, 2007.  Hat tip to Matt Carter.

Commonwealth of Puget Sound = LandAmerica's underwriter named Commonwealth with 50% stake in Commonwealth of Puget Sound.  Windermere, along with independent broker/owners have financial interests.

Rainier Title, LLC = LandAmerica's underwriter named Lawyers with a 25% stake in Rainier Title LLC.  John L. Scott and Coldwell Banker Bain have financial interests. (See Update 12/9/2008 below for changes).

Northpoint Title and Escrow = LandAmerica is the underwriter through Lawyers and reported a 40% stake in Northpoint.

Fidelity National Financial (in the process of merging LandAmerica's title division).

Fidelity Title and Escrow = Fidelity.

Chicago Title and Escrow = Fidelity.

Ticor Title and Escrow = Fidelity.

First American Title Insurance Company

First American Title and Escrow = First American.

The Talon Group Title and Escrow = First American.

Pacific Northwest Title = First American.

Stewart Title and Escrow = Stewart Title

Old Republic Title and Escrow = Old Republic

As I mentioned, this list is scheduled to change.  Fidelity National Title hopes to have the LandAmerica merger complete by the end of this year…Fidelity called the merger off in the ninth hour in a previous attempt.  Currently some major lenders, including Countrywide, Bank of America, Flagstar US Bank and Chase, have LandAmerica companies on their "non-approved vendors" list which may cause a hiccup with transactions that are in process.

I will keep you posted a this story develops.

Update 12/3/2008: Countrywide will accept LandAm policies stating that Fidelity Reinsurance Treaties are acceptable when your title commitment shows Commonwealth or Lawyers as the insurer.

Update 12/5/2008:  Provident Funding issues memo stating they "will not accept title policies underwritten or escrow services provided by a LandAmerica subsidiary…"

Update 12/8/2008: Flagstar Bank has issued a memo stating they will "require all title commitments, title policies and closing protections to be in the name of the new entities" for loans registered after December 1, 2008.   Flagstar's memo also states that Land America affiliated settlement agents (escrow) "who have not been associated with a closing disbursement with Flagstar since September 8, 2008 will "expired" from their closing agent database.

Update 12/9/2008:  Rainier Title, LLC has announced "we have become an authorized policy issueing agent for Stewart Guaranty Company".   (No mention in the email of Fidelity or their proposed merger).

 

 

Filed Under: Title Insurance

Happy 2nd Birthday Mortgage Porter!

November 28, 2008 by 2 Comments

I'm often asked what caused me to start blogging…well two years ago today I was watching the late night news about a local case of mortgage fraud and the reporter closed the story with wrong information about loan originator licensing.  I just had to get the truth out.  I wasn't sure if anyone would ever read Mortgage Porter.  Two years later, I have over 750 articles written with my clients in mind and I hope to continue writing for you.

To celebrate my 2nd blog birthday of Mortgage Porter, I have a special treat for my readers and commenter's.  Now when you leave a comment, you have the option of creating a free typepad profile which will appear when you leave a comment.  Your profile may also include a photo.  Of course, you can still comment anonymously, if you prefer.  Comments will also be in a thread format instead of a "line" format, which may promote conversation with each other.  You can also be notified of future comments.   This is a new feature that I'm literally installing as I type…so hopefully it won't throw a fit like a typical 2 year old!

Again, many many thanks for reading Mortgage Porter.

Filed Under: Weblogs

Happy Thanksgiving

November 27, 2008 by 2 Comments

There are so many things to be thankful for in this world.  For starters, I have a wonderful family.  At this time, I would also like to thank my many clients, friends and those of you who are reading this blog.  I truly appreciate all of you.  I hope you are surrounded with loved ones this holiday.

Mortgage Master is closed today and tomorrow in observance of Thanksgiving.  We will reopen for business as usual on Monday, December 1, 2008.  Soon I'll be working on the appetizers that we're bringing over to my sister's home…today I'll be enjoying the company of family.  Although my office is closed tomorrow, I will be working on Good Faith Estimates for clients who are interested in our current low rates.

Happy Thanksgiving!  By the way, if you're still trying to figure out how you're going to cook your bird, here's my recipe for smoked Turkey Breast on a Big Green Egg.

Filed Under: Current Affairs, Recipes

Client Question: Where is your YSP?

November 24, 2008 by Leave a Comment

I've been asked this a couple times this week…I'm wondering if it's possibly caused by Aubrey Cohen's recent article in the PI about mortgage brokers, subprime mortgages and outrageous yield spread premiumsor if consumers are more savvy and aware of YSP.

Loan originators who work for mortgage brokers may receive a yield spread premium from the lender they are brokering the loan to.  This YSP is required to be disclosed on the Good Faith Estimate and the Loan Application Disclosure Form (if you're providing a mortgage for property in Washington State) and as well as the HUD-1 Settlement Statement.  YSP has not only been used for loan originator compensation, it has also helped pay for closing costs or provide mortgages with "no points". 

Loan originators who work for banks, credit unions or correspondent lenders are not paid YSP (unless they are brokering the loan).  However they may still be receiving compensation on "the back side" of the transaction.  It's just not required to be disclosed.  Part of the reason for this, with correspondent lenders, is the inherent difference between them and mortgage brokers.  Correspondent lenders underwrite, prepare loan documents and fund the transaction from their credit lines.  The mortgage is sold to the lender after closing.  A mortgage broker merely originates the transaction and may do some processing/coordinating with the lender.  They do not underwrite or fund the transaction.  A correspondent lender assumes greater responsibility for the transaction and may be compensated after the loan is closed.  Often times, correspondent lenders may receive favored pricing over a traditional mortgage broker as they assume more risk and are performing more of the work (underwriting, drawing docs and funding) than the broker. 

With the media focused on YSP, many consumers have become misdirected on how to select the person who will be advising them on one of the largest transactions they may face in their lifetime.  Focusing on how much they believe a loan originator is compensated will not provide them with the lowest rate, best service or most qualifed Mortgage Professional.  For example, if:

  • Lender A is a mortgage broker who quotes 6.00% priced with zero points and a YSP of 1% of the loan amount.
  • Lender B is a bank who quotes 6.00% priced with zero points (nothing is reported on the back end).
  • Lender C is a correspondent lender who quotes 5.875% with zero points (nothing is reported on the back end).

All loan originators are being compensated in the scenario above…I would bet pretty close to the same.   If the going rate is 5.875-6.000% (as based on this example) why would anyone care how much someone is compensated?  I could totally understand if they received a rate of 6.500% (assuming all loans are locked at the same time/date as rates are currently changing on average three times a day and a 0.25% swing is not uncommon).   When you're shopping for a big ticket item, such as a TV, do you care what the salesperson is making or do you care how much YOU are paying?

If you're a long time Mortgage Porter subscriber, you know that I believe that selecting your mortgage by rate is not the best route to go.  Especially considering that you're making this decision based on a rate that is moot unless you are ready to lock at that moment.  Rates are a moving target.  For this reason, the YSP the mortgage brokers are forced to quote are only a best guestimate because they do not know what they will be paid until the loan is locked.

I don't have a problem letting clients who want to know what the compensation may be "on the backend"…just ask.  I question why a consumer would care if the rate is the going market or better.

Related post:

How Am I Paid?

Picking Your Next Mortgage by Rate Shopping?  You Might as well be playing Liars Poker.

Now is the time to work with a Correspondent Lender

Filed Under: Mortgage

Do You Enjoy Cooking? Check out Culinary Communion

November 23, 2008 by Leave a Comment

Last weekend I went back to school–to learn how to make pizza.  I specifically had PB160030 major issues with making pizza dough that didn't turn into a leathery brick.  Mixing amazing toppings together and baking them in a real brick oven in the front yard was quite the foodie experience.  The best part was sharing all our creations as they were completed!

I'm making home made pizza tonight and the dough is looking very promising!   Culinary Communion is located on Beacon Hill in Seattle. 

They have many classes to chose from–I've done the Wines of the World series PB160040 last   year.  My next course is how to make pasta (my sister will be joining me)! 

Culinary Communion is available for private events as well.  I highly encourage you to check out this fun local experience.

More photos from my Culinary Communion class: click here.

Related post about my first pizza cooking experience (post Culinary Communion course): click here.

Filed Under: Food and Drink

Fannie and Freddie Suspend Foreclosures

November 20, 2008 by Leave a Comment

Statement from FHFA James B. Lockhart:

“The foreclosure suspension announced today by Fannie Mae and Freddie Mac will help homeowners and servicers utilize the new streamlined loan modification program (SMP) announced by FHFA, Fannie Mae, Freddie Mac and HOPE Now. With this suspension, seriously delinquent borrowers may have an opportunity to avoid foreclosure and work out terms to stay in their homes.”

According to Fannie Mae’s press release, this suspension will take place from November 26, 2008 – January 9, 2008 for owner occupied, single family dwellings for home owners who have not filed for bankruptcy and who has missed three or more payments.

Related Post: Fannie and Freddie’s New Deal

Filed Under: Fannie, Freddie and FHFA

Are You a Mortgage Originator in Washington State?

November 19, 2008 by 2 Comments

I'm wondering if you have successfully registered with the Nationwide Mortgage Licensing System?  Please comment below and let me know.

I registered at 9:00 pm on October 1, 2008 and DFI is telling me that they're classifying my registration effective October 2, 2008 (one day past the deadline)…I don't recall seeing any information about effective hours for registration–just the date.

I'm betting that we have many local LO's who have not yet taken the steps necessary to originate mortgages in Washington State in 2009–just over a month away.

HoldingbreathThe NMLS site is…well I can't think of any pleasant ways to describe it–it seems very unorganized and unclear.  Plus the buttons/links are not easy to find.  My advice to you is to not delay any further.  If you think you've registered, you may want to visit the site to verify and to be sure that you have "renewed"  your license for 2009.  I know some are hoping that there will be an extension granted for loan originators…but I certainly wouldn't hold my breath.

Good luck!  I'd love to hear from you via commenting below.

Check out my related post at Rain City Guide where I interview Jillayne Schlicke about The SAFE Act.

Filed Under: Legislation
« Previous Page
Next Page »