BARNEY FRANK JUST DOESN'T GET IT

"A mechanism for putting non-bank financial institutions out of everyones misery. There will be a DEATH PANEL enfored by legislation eventually adopted." - Barney Frank 09/23/09 Speaking out against Mortgage Bankers and Broker yesterday. So much for consumer choice and free markets.

MARKET UPDATE - OCTOBER 2009

TIMES A TICKING - 1ST TIME HOME BUYER TAX CREDIT

Reminder: The $8,000 first time home buyer tax credit ends December 1st, 2009.

UPSIDE DOWN – NEW OPTIONS NOW AVAILABLE

Fannie Mae and Freddie Mac’s 125% refinance option is now available. If you owe up to 125% of the value of the home, you my now be a candidate for the new programs designed to help homeowners that are under water. Under the new 125% program, those that qualify would be able to refinance into a low 30 year fixed mortgage term. Borrowers must have decent credit, be current on their mortgage, and be able to qualify with documented income verification. The programs were initially rolled out up to 105%, which is now extended to 125%. Not sure of your home’s value or whether or not you would qualify; contact us today.

HR 1366 – FED PROPOSAL TO DRIVE UP COSTS TO BORROWERS

“Proposed amendments that would revise Closed-end mortgage disclosures to highlight potentially risky features such as adjustable rates, prepayment penalties, and negative amortization and prevent mortgage loan originators from "steering" consumers to more expensive loans.” - FED

The days of "steering" borrowers toward exotic mortgages because of high yield spread premiums paid by the lender are over. It was an abused and unjust practice committed by many in the industry that lacked professionalism and integrity. These loan programs that allowed for this, that were created and pushed by "Big Banks" and Wall Street have been eliminated from the loan options now available to the industry. Free markets have already regulated the mortgage industry. "Toxic" mortgages and the originators and banks that pushed those products with sophisticated terms and prepayment penalties have been forced out of the industry.

Yield spread premiums have always been used by good professionals in this industry as a means of offering the consumer options. I think that everyone can agree that a loan originator should be paid a fee for services rendered. Real estate agents have set an industry standard of 3%-6% per transaction, whereas loan officers now try to squeak out 1%-2% commission per transaction. YSP allows us to earn that fee from the lender, not the consumer. Through elimination of YSP, the loan officer will have to charge those fees to the borrower, vs. having the option of offering low or no closing costs loans. Also, it is imperative that if such a proposal goes into effect, as unfortunate as that will be, that it affects brokers, bankers, and banks. We all have a roll. As a broker, we have the ability to shop for the best product and rate for the consumer. Even today, I (as a broker / banker) am able to offer much lower rates and fees than the "Big Banks" and most bankers because of OPTIONS.

The FED propels is up for public comment. Please tell the FED to reconsider its current stance on YSP. What the FED is trying to accomplish has already been done by the industry. Remember what “free market” means. Over regulation will not only cost the industry, but most importantly, the consumer by reducing competition and options.

Voice your opinion by clicking the link below:

http://www.federalreserve.gov/generalinfo/foia/ElectronicCommentForm.cfm?doc_id=R-1366&doc_ver=1&name=Regulation%20Z%20-%20Truth%20in%20Lending%20-%20Closed-end%20Mortgages&date=20090723a

HOUSING IS RECOVERING

New home building in August reports positive. This is yet another sign that the housing market is improving as new home builders increase production of new homes.

“The Census Bureau reported Thursday that builders broke ground for 598,000 new homes during August, up 1.5% from a revised 589,000 in July. That was considerably higher than industry experts were predicting.” – cnnfn.com

GREAT NEWS FOR MORTGAGE BANKING

“A provision in a House resolution passed Tuesday directs Obama Administration officials to provide support and facilitate increased warehouse credit capacity for qualified warehouse lenders. The House resolution will now go to the Senate for consideration. The bill notes while warehouse lenders account for as much as 40% of all residential mortgage loans in the US and nearly 55% of FHA loans, warehouse lending capacity available to the mortgage lending industry has declined by nearly 90% to the current level of approximately $20 billion to $25 billion.”

SAY IT ISN’T SO – FHA & HVCC

HUD announced Friday, September 18th that starting January 1st, 2010, loan originators and mortgage brokers / bankers will no longer be able to order appraisals directly from the appraiser. Lenders will now be required to order the appraisal through a third party clearing house. Although HUD did not state that FHA had to go through the HVCC (Home Valuation Code of Conduct) which currently regulates conventional appraisals, it is likely that many lenders will implement the HVCC on all FHA appraisals.

Since the implementation of the HVCC, the National Association of Mortgage Banks and the National Association of Realtors have been outspoken against the HVCC; citing significantly increased appraisal fees charged to the borrower, low balled appraised values, slow turn times, and lack of experienced appraisers.

H.R. 3044 was introduced in June to call for an 18 month moratorium on the HVCC to determine just how much damage has been inflicted on the housing industry, consumers, and the appraisal industry. This bill is still pending approval.

CONDO APPROVAL PROCESS GETS REVAMPED

"In accordance with the passage of the Housing and Economic Recovery Act (HERA) of 2008, the Federal Housing Administration (FHA) is implementing a new approval process for Condominium Projects to insure mortgages on individual units under Section 203(b) of the National Housing Act. FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD’s regulations. HUD will continue to maintain a list of Approved Condominium Projects. The requirements of this Mortgagee Letter are effective for all case numbers assigned on or after October 1, 2009" – HUD

The new condo approval process puts the burden on the lenders and gives them two options for processing the approvals:

1. HUD Review and Approval Process (HRAP).
2. Direct Endorsement Lender Review and Approval Process (DELRAP), outlined in this Mortgagee Letter. This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects."

Once the condo complex has been added to the FHA approved condo list, other lenders will not have to complete the process.

The other significant change is that HUD is eliminating spot approvals. No longer will individual units be able to be approved. Industry insiders speculate that this will be a slow cumbersome process at first.

Some of the requirements apply to all Condominium Project approvals:
•Projects consist of two units or more.
•Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
•No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes.
•No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units.
•No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
•At least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit.
•At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.
•Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
•Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.

INTEREST RATE UPDATE

Mortgage Type-Interest Rate-APR

30 Year Fixed-4.750%-4.882%
15 Year Fixed-4.250%-4.476%
5/1 ARM-4.000%-3.807%

Call today for your individual scenario rate quote.

*Interest rates as of 09/22/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. ARM Margin: 2.25% ARM Caps: 5/2/5 ARM Index: 1 Year LIBOR. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time.

Sincerely,

Aaron VanTrojen

PRESIDENT
Geneva Financial, LLC
Mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.

PARTNER
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA.

EMPLOYMENT OPPORTUNITIES

MORTAGE CONSULTANTS
Geneva Financial, LLC now hiring mortgage consultants in the following states: AZ, CA, NV, OR, WA

REAL ESTATE AGENTS & BROKERS
Geneva Real Estate & Investments, LLC is now hiring real estate agents in the following states: AZ, CA, WA. Hiring real estate brokers in all states.

480-368-2000
aaron@genevaFi.com