There’s always something to howl about.

Month: December 2009 (page 5 of 5)

I can’t tell you how disgusted this makes me….

It’s another example of people in the mortgage and real estate world who took advantage of someone who didn’t understand the system.   And they aren’t the ones who paid the price, the borrower is…..

We’ll be better off when all of those types who are motivated soley by profit have been run out of the business.

Tom Vanderwell

Calculated Risk: WaPo: A Liar Loan Example

From Donna St. George at the WaPo: The $698,000 mistake

[A]ll of this began in the heady days of the mortgage boom … [Ms. White] only knew that there seemed to be possibilities, even to those with little means such as herself, which is how a woman who had never paid more than $700 a month in rent and who had relied in recent years on Section 8 housing vouchers suddenly owned a house.

A four-bedroom house.

With 3 1/2 bathrooms. And walk-in closets, black granite countertops and a fireplace.

You can already tell how this story will end.

On settlement day, reality bore down.

Papers were read and presented, most of which White did not try to decipher. … White’s papers cited income of $163,320 a year, even though she says her 2005 income-tax earnings were less than $15,000 and she relied at times on food stamps.

White signed papers while waiting for the one she cared most about: her monthly payment. … “Please let this be something I can afford,” she said to herself. She was pretty sure she could afford $2,000. She told herself that if her day-care business did well, perhaps she could afford $2,500. If it was $2,800, she would struggle. Here, now, came reality: $5,635 a month.

To get White to sign, the sellers – who were real estate agents – agreed to make the first two mortgage payments for Ms. White. According to the article, White received $40,000 in cash out at closing – and the seller made over $200,000 on the house. Naturally it went into foreclosure Read more

It’s going to get harder to get an FHA loan……

We’ll get more details later today, but it looks like it’s going to get harder and be more expensive to get an FHA loan.   A couple of main points to consider:

  • FHA is currently losing money by the truckloads, so something has to change.
  • The increased FICO scores, larger downpayments and reduced seller concessions will probably weed out a few people, but not that many.
  • It will make it more expensive to buy a house FHA.
  • At first glance, the part about scrutiny of the lenders seems like it really wouldn’t affect borrowers, right?   Wrong, here’s why.   If FHA becomes more demanding in terms of their buy back provisions with lenders, guess what, lenders are going to be looking at absolutely every little detail on the loans to make sure that they comply with the guidelines.    Your borrower needs to have 12 months on the same job and he’s only at 11.5 months?  Sorry, wait two weeks.    The paystubs are dated 31 days before application and we need 30 – sorry, got to get another one.    The bank statement, well, you get the picture.

I’m working on a post outlining the details of what Fannie is doing next week Saturday with their new guidelines.   Fun times…..

Tom Vanderwell

FHA to Toughen Mortgage Rules in Lenders Crackdown – Real Estate * US * News * Story – CNBC.com

Amid rising foreclosures and falling home prices, the Federal Housing Administration is proposing new rules to crack down on lenders and asking Congress for the authority to raise certain borrower requirements, all in an effort to reduce risk to its $685 billion mortgage portfolio.

While FHA Commissioner David Stevens said in an interview on CNBC following that release that the FHA would not need additional federal funding to meet its loan losses, he added that FHA will be looking for new ways to reduce risk.

Those steps will include raising minimum borrower FICO scores, requiring larger down payments, and reducing the maximum permissible seller concession from six percent currently to three percent.

It could also include raising up-front and/or annual insurance premiums, which would require Congressional authority. This is according to the testimony HUD Read more

HAFA, HAMP and other assorted worthless acronyms….

Okay, I’ve got to admit, it’s been one of those days, but I can’t stand by and not say what I’m thinking about this new “short sale” program.    I’m already hearing a lot of Realtors and others saying, “This is great news!”    Well, hold on a minute…..

I’m going to go through some of the main points of the HAMP Update that was issued yesterday and that our President spoke about today.    You can find the entire thing at Hamp Update if you want to read it for yourself.  If you want to read the entire directive, you can find that at Directive.   The bold and italicized portions are quotes from the official documents.   The regular print is my thoughts…….

Supplemental Directive 09-09 provides guidance to servicers
There’s the first clue that something’s not going to go well.   It provides guidance. 

The definition of guidance according to Wikipedia is: Advice (opinion), an opinion or recommendation offered as a guide to action, conduct. 

See where the problem is?   It’s guidance, it’s not mandatory.   So, Uncle Sam can say, “Now, Mr. Banker, you really should do this……”    And the Banker can say, “(Well, we really shouldn’t print that.)”

provides servicers with the option to determine the extent to which short sales or deeds-in-lieu will be offered under this program.  (This is actually from the Directive).    

It provides options.   It allows the servicer to determine the extent to which they offer them under this program.

So, once again, what do we have?   We have Uncle Sam saying, “Now, Mr. Banker, it would be really nice if you did this……”   And the Banker can say, “____________________.”

The effective date of this Supplemental Directive is April 5, 2010.
Excuse me, but what the heck is the rush for?   I mean, they rolled out the HASP refi program to lenders the day that they made it public to consumers so we were getting calls on it before we even knew what was what.    Now they are giving the banks four months to decide whether they want to participate?    Why not next Monday?

With either the HAFA short sale or DIL, the servicer may not Read more

The Next Step….

I’ve had a lot of people ask me lately, “Tom, what do you see is coming next?   What’s the next step in this mess?”

A couple of thoughts at this point:

  • Anyone short of Nouriel Roubini, Paul Krugman, Meredith Whitney and maybe a few others who tell you that they KNOW how this is all going to end is lying.   (Did you notice how I didn’t include Treasury Secretary Geithner or anyone in Washington in that list?)
  • But there are some people who have the ability to peer a little farther out into the fog than most do.
  • Anyone who tells you this isn’t a confusing and potentially scary time is lying to you as well.   Never in our life times have we seen the kind of financial devastation and economic pain that is currently happening.   

The things that are going on are causing lots of people to question a lot of things that they weren’t questioning before.   Things like: 

  1. Will I be able to retire?  
  2. Can I ever trust a mortgage lender again?  
  3. Will real estate still be a good investment?  
  4. What’s happening in the stock market?  
  5. Is my financial advisor telling me the whole story?  
  6. What are mortgage rates going to do? 
  7. How does the actions of the Federal Reserve impact the financial markets? 
  8. What are the long and the short term ramifications of the deficits that the government is currently running?
  9. How does the value of the dollar impact real estate and mortgages?

Those are just a smattering of the types of questions that I’ve been hearing from people lately.   Okay, some of them aren’t quite in the format that I spelled them out but they have basically been asking that.  Frankly, I think the consumer’s desire to ask more questions is a good thing and a healthy thing in the long run.

So where am I going with this?   I’m getting to it…….

I’ve been fortunate to “hook up” with two of the experts in other areas of the financial spectrum (one of whom is our own Jeff Brown) and we’re setting up a new source for financial and real estate market insight and understanding.   As Read more