Happy Holidays
THANKFULLY I HAVE AN ARM
Adjustable rate mortgages have gotten a bad rap over the last few years. Unfortunately for the mortgage industry, there were a handful of bad apples that sold certain types of adjustable rate mortgages to unsuspecting borrowers who trusted the loan officer enough not to read or question the loan documents that they were signing. There were also those that knowingly purchased “exotic” adjustable rate mortgage products that offered teaser rates which allowed them to purchase properties well outside their price range. Those to name a few are in trouble; loan officer and borrower.
For some reason the media has deemed all adjustable rate mortgages as bad, and of course the public as a whole believes that to be true. Prime adjustable rate mortgages are typically fixed for a term of 3 to 10 years at a rate 1% to 1.5% lower than a 30 year fixed rate mortgage. Prime refers to non subprime A paper mortgages. Today a 5 year ARM can go for as low as 3.5% (APR 3.545%). The first 5 years, the rate will be 3.5%. For individuals who will likely sell or refinance within 5 years, this loan product still makes the best financial sense. That being said, these loan products are rarely being originated due to fear; created by lack of understanding, media hype and misinformation.
For those that purchased an ARM during the boom and now find themselves upside down and unable to sell or refinance should now be thankful they have an ARM. Many “prime” ARM mortgages will adjust down once the fixed term is over; that is as long as short term rates stay low. Prime ARM mortgages will typically adjust to the current short term rate index (LIBOR, Treasury, etc.) plus a margin of 2.25% (can vary with lender). Most short term rates are trading from 1% to 1.5%. Add that to the margin and you have a low interest rate. For those that have an Option Arm mortgage, and have not been paying the negative amortization payment; your rate may currently be under 3%. To verify what your adjustable rate mortgage will do after the fixed term, review your adjustable rate rider in your loan documents, or contact your mortgage professional.
Short term rates will eventually rise. In the meantime, be thankful that you purchased an adjustable rate mortgage to help ride out the depressed housing market and economy. With any luck you will be able to refinance into another ARM or fixed rate mortgage once the market stabilizes.
EXTENDED TAX CREDIT
The first time homebuyer tax credit of $8,000 set to expire on November 30th, 2009 has officially been extended by President Obama. The extension allows homebuyers that qualify for the tax credit to be under contact by April 30th, 2010, and close before June 30th, 2010. The income levels have also been lifted to $125,000 for single buyers and $225,000 for married buyers.
The tax credit has also been expanded to homeowners that currently own a home or have owned a home as their primary residence five out of the last eight years. Those homebuyers may qualify for a $6,500 tax credit.
The extension and expansion of the tax credit will likely help the housing recovery by promoting new sales and stabilizing home prices; at least through June 2010. Eventually the Government will have to stop subsidizing the housing market through tax credits.
1ST TIME HOME BUYER CRAZE
A press release from the Nation Association of Realtors stated that first time homebuyers, or homebuyers that have not owned a home in the last three years, purchased 47% of all homes sold this year.
The $8,000 tax incentive and falling home prices has been credited with the first time home buyer craze.
"The credit is working better than first projected -- it now looks like we'll have 2.3 to 2.4 million first-time buyers this year," said Lawrence Yun, chief economist for NAR. "With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3% and 5% in 2010." NAR forecasts that existing-home sales will total slightly over 5 million in 2009, a 2% increase compared with 2008. Next year, they predict a gain of 13.6% to 5.69 million units. – cnnfn.coM
INTEREST RATE SPIKE IMMINENT
Mortgage interest rates are now nearly at a historic all time low. This is no accident and largely to do with the meddling of the Federal Reserve. Over the last year, the Federal Reserve, in an attempt to stabilize the housing crisis, has purchased or committed to purchase $1.25 trillion ($1,250,000,000,000) of mortgage backed securities.
To date, this has proved successful, artificially forcing down rates, and promoting home sales. Although the housing market continues to suffer, it would have likely been much worse had the Federal Reserve not been there to purchase mortgage back securities and drive rates down to historic lows.
The Federal Reserve has given notice that it intends to wind down its purchasing of mortgage back securities in late 2010. If another investor(s) does not step in to take the Federal Reserves place, interest rates will rise; potentially fast.
For the time being money is cheap. If you are one of the few that can refinance, now may be a great time. For homebuyers there likely no better time to take advantage of low prices, tax incentives, and cheap money. Our kids can pay for it later.
BEHIND ON YOUR MORTGAGE – YOU ARE NOT THE ONLY ONE
The Mortgage Bankers Association reported on 11/19 that in the third quarter of 2010, nearly 10% of all mortgages were delinquent. That is rapidly approaching five million borrowers, and is a 10% increase over the last two months.
“The delinquency rate includes all mortgage loans that are at least one payment past due but does not include loans in some stage of foreclosure.” – cnnfn.com
Arizona, California, Florida, and Nevada continue to have the highest level of delinquencies.
INTEREST RATE UPDATE
Mortgage Type Interest Rate APR
30 Year Fixed 4.375% 4.505%
15 Year Fixed 4.000% 4.226%
5/1 ARM 3.500% 3.464%
Call today for your individual scenario rate quote.
*Interest rates as of 12/01/09. 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. Rates and payments on 5/1 ARM will adjust up or down after 60 months based on current index at that time. 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: BK-0910215, CA: 603G564, CO: LMB100021691, ID: MBL6976, MN: 40095265, NM: 3693, NV: 3195, OR: ML4799, WA: 510-MB-49323, WI: 700475
Geneva Financial,LLC NMLS License: 42056
Loan Officer NMLS License: 15420
PARTNER
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA.
http://www.greiusa.com/
Office: 480-368-2000
Email: aaron@genevafi.com
About Me
- Aaron VanTrojen
- Aaron VanTrojen is a licensed mortgage banker. Geneva Financial, LLC is a mortgage banker / broker licensed in AZ, CA, CO, ID, NV, OR, and WA. LO NMLS: 15420 Company NMLS: 42056 NMLS Consumer Access: www.nmlsconsumeraccess.org
Tuesday, December 1, 2009
Thursday, October 22, 2009
MARKET UPDATE - NOVEMBER 2009
LOST IN TRANSPARENCY
There are big changes coming to the mortgage industry starting January 1st, 2010; most at the cost of the borrower.
In an attempt to add “transparency” and increased disclosure to the borrower in a mortgage transaction, HUD has officially implemented the new 2010 Good Faith Estimate. Please hold the applause. And what goodies will the borrower get with the new 2010 Good Faith Estimate:
1. A new and improved 3 page Good Faith Estimate adding two more documents to read. The old 1 page document that clearly listed fees, rate, payment, and cash to close was just too confusing for those that didn’t complete grade school.
2. Have your pencils ready. The new Good Faith Estimate has a scratch pad were you can compare rates and fees from different lenders; or just doodle. Simply putting different Good Faith Estimates from different lenders side by side was too complicated.
3. Your monthly mortgage payment is in bold print. The payment will include principle, interest, and any mortgage insurance. However, the payment will no longer disclose property taxes, homeowners insurance, or HOA dues. TOO much information. The disclosed monthly payments in bold will now leave the borrowers feeling warm and fuzzy because it appears so low. Surprise; it is.
4. And finally, HUD didn’t want to burden the borrower with knowing how much money they would need at closing. Keep your pencils out; you will have to do the math yourselves.
The new HUD approved 2010 Good Faith Estimate will be disclosed by a mortgage company near you starting January 1st, 2010. Also, changes in yield spread premiums are likely to be implemented come January 1st, 2010 which will ultimately lead to higher fees to the borrower. The anticipation must be killing you.
1ST TIME HOME BUYER TAX CREDIT ENDS NOVEMBER 30TH
Reminder: The $8,000 first time home buyer tax credit ends November 30th, 2009. Although there are talks of extending the deadline, at this point in time, if you are not under contract by months end, you will not likely make the deadline.
SO SORRY – “DENIED”
“This is ridiculous; I could pay for the house in cash. Banks send me credit offers everyday; there must be a mistake. I have bought many homes in the past without any problem. But I have an 800 credit score. Who cares what my tax returns show my income is; it just appears low because of business deductions and write offs. How does anyone think the housing problem is going to get any better if I can’t even get approved?”
Today, lenders are approving some borrowers with questionable credit scores and low down payments, and declining others with large down payments and high credit scores. The reason for this is government intervention and the elimination of “make sense” underwriting. Although many would argue that “make sense” underwriting has been gone for some time; thus the lending mess we are currently in.
The fact is that one third of all home mortgage applicants were denied in the last year. The rate of mortgage application denials was up 29% from 2006 when approvals peaked at their highest levels. Denial rates were double for African Americans and Hispanics as they were for Whites. – The Associated Press
In December, Fannie Mae will be tightening its automated underwriting system (Desktop Underwriter) once again, further tightening debt to income allowable limits. Currently Desktop Underwriter will issue approvals with debt to income as high as 55% with compensating factors. It is rumored that this will be lowered to 45%. Some industry insides believe that is will increase denials as much as 20%.
OFFICE VACANCIES SKYROCKET
“U.S. office vacancies rose to a five- year high in the third quarter, as job losses deepened and employers abandoned space in the recession, property research firm Reis Inc. said. Vacancies climbed to 16.5 percent from 13.7 percent in the year since Lehman Brothers Holdings Inc. filed for bankruptcy, New York-based Reis said in a report. Effective rents, the amount actually paid by tenants, fell 8.5 percent, the biggest year-over-year drop since 1995.” - Bloomberg
In Arizona, office vacancies reached 25%. In Phoenix, office vacancies are at nearly 40%.
FHA NEEDS A BAILOUT
The Federal Housing Administration, the U.S. agency that insures mortgages with low down payments, faces $54 billion more in losses than it can withstand, a former Fannie Mae executive said. “It appears destined for a taxpayer bailout in the next 24 to 36 months,” said Edward Pinto, a consultant who was chief credit officer from 1987 to 1989 for Fannie Mae. The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, a trend Pinto said has left it backing risky loans and exposed to fraud in a “market where prices have yet to stabilize.” – Bloomberg
FORECLOSURES HIT A RECORD HIGH
Reports in the third quarter show foreclosure filings at an all time high with Nevada once again leading the charge.
"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes. During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008. – CNNmoney.com
“A study of the trend by the Chicago Booth School of Business and the Kellogg School of Management determined that when home price declines drop home values 10% below the mortgage balances, people start to give up their homes. When "negative equity" approaches 50%, 17% of households default, even when they can still afford their mortgage payments.” – CNNmoney.com
INTEREST RATE UPDATE
30 Year Fixed: 4.750% APR: 4.882%
15 Year Fixed: 4.250% APR: 4.476%
5/1 ARM: 3.625% APR: 3.671%
Call today for your individual scenario rate quote.
*Interest rates as of 10/21/09. 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. Rates and payments on 5/1 ARM will adjust up or down after 60 months based on current index at that time. 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: BK-0910215, CA: 603G564, CO: LMB100021691, ID: MBL6976, MN: 40095265, NM: 3693, NV: 3195, OR: ML4799, WA: 510-MB-49323, WI: 700475
Geneva Financial,LLC NMLS License: 42056
Loan Officer NMLS License: 15420
PARTNER
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA
http://www.greiusa.com/
Office: 480-368-2000
Email: aaron@genevafi.com
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.
There are big changes coming to the mortgage industry starting January 1st, 2010; most at the cost of the borrower.
In an attempt to add “transparency” and increased disclosure to the borrower in a mortgage transaction, HUD has officially implemented the new 2010 Good Faith Estimate. Please hold the applause. And what goodies will the borrower get with the new 2010 Good Faith Estimate:
1. A new and improved 3 page Good Faith Estimate adding two more documents to read. The old 1 page document that clearly listed fees, rate, payment, and cash to close was just too confusing for those that didn’t complete grade school.
2. Have your pencils ready. The new Good Faith Estimate has a scratch pad were you can compare rates and fees from different lenders; or just doodle. Simply putting different Good Faith Estimates from different lenders side by side was too complicated.
3. Your monthly mortgage payment is in bold print. The payment will include principle, interest, and any mortgage insurance. However, the payment will no longer disclose property taxes, homeowners insurance, or HOA dues. TOO much information. The disclosed monthly payments in bold will now leave the borrowers feeling warm and fuzzy because it appears so low. Surprise; it is.
4. And finally, HUD didn’t want to burden the borrower with knowing how much money they would need at closing. Keep your pencils out; you will have to do the math yourselves.
The new HUD approved 2010 Good Faith Estimate will be disclosed by a mortgage company near you starting January 1st, 2010. Also, changes in yield spread premiums are likely to be implemented come January 1st, 2010 which will ultimately lead to higher fees to the borrower. The anticipation must be killing you.
1ST TIME HOME BUYER TAX CREDIT ENDS NOVEMBER 30TH
Reminder: The $8,000 first time home buyer tax credit ends November 30th, 2009. Although there are talks of extending the deadline, at this point in time, if you are not under contract by months end, you will not likely make the deadline.
SO SORRY – “DENIED”
“This is ridiculous; I could pay for the house in cash. Banks send me credit offers everyday; there must be a mistake. I have bought many homes in the past without any problem. But I have an 800 credit score. Who cares what my tax returns show my income is; it just appears low because of business deductions and write offs. How does anyone think the housing problem is going to get any better if I can’t even get approved?”
Today, lenders are approving some borrowers with questionable credit scores and low down payments, and declining others with large down payments and high credit scores. The reason for this is government intervention and the elimination of “make sense” underwriting. Although many would argue that “make sense” underwriting has been gone for some time; thus the lending mess we are currently in.
The fact is that one third of all home mortgage applicants were denied in the last year. The rate of mortgage application denials was up 29% from 2006 when approvals peaked at their highest levels. Denial rates were double for African Americans and Hispanics as they were for Whites. – The Associated Press
In December, Fannie Mae will be tightening its automated underwriting system (Desktop Underwriter) once again, further tightening debt to income allowable limits. Currently Desktop Underwriter will issue approvals with debt to income as high as 55% with compensating factors. It is rumored that this will be lowered to 45%. Some industry insides believe that is will increase denials as much as 20%.
OFFICE VACANCIES SKYROCKET
“U.S. office vacancies rose to a five- year high in the third quarter, as job losses deepened and employers abandoned space in the recession, property research firm Reis Inc. said. Vacancies climbed to 16.5 percent from 13.7 percent in the year since Lehman Brothers Holdings Inc. filed for bankruptcy, New York-based Reis said in a report. Effective rents, the amount actually paid by tenants, fell 8.5 percent, the biggest year-over-year drop since 1995.” - Bloomberg
In Arizona, office vacancies reached 25%. In Phoenix, office vacancies are at nearly 40%.
FHA NEEDS A BAILOUT
The Federal Housing Administration, the U.S. agency that insures mortgages with low down payments, faces $54 billion more in losses than it can withstand, a former Fannie Mae executive said. “It appears destined for a taxpayer bailout in the next 24 to 36 months,” said Edward Pinto, a consultant who was chief credit officer from 1987 to 1989 for Fannie Mae. The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, a trend Pinto said has left it backing risky loans and exposed to fraud in a “market where prices have yet to stabilize.” – Bloomberg
FORECLOSURES HIT A RECORD HIGH
Reports in the third quarter show foreclosure filings at an all time high with Nevada once again leading the charge.
"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes. During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008. – CNNmoney.com
“A study of the trend by the Chicago Booth School of Business and the Kellogg School of Management determined that when home price declines drop home values 10% below the mortgage balances, people start to give up their homes. When "negative equity" approaches 50%, 17% of households default, even when they can still afford their mortgage payments.” – CNNmoney.com
INTEREST RATE UPDATE
30 Year Fixed: 4.750% APR: 4.882%
15 Year Fixed: 4.250% APR: 4.476%
5/1 ARM: 3.625% APR: 3.671%
Call today for your individual scenario rate quote.
*Interest rates as of 10/21/09. 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. Rates and payments on 5/1 ARM will adjust up or down after 60 months based on current index at that time. 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: BK-0910215, CA: 603G564, CO: LMB100021691, ID: MBL6976, MN: 40095265, NM: 3693, NV: 3195, OR: ML4799, WA: 510-MB-49323, WI: 700475
Geneva Financial,LLC NMLS License: 42056
Loan Officer NMLS License: 15420
PARTNER
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA
http://www.greiusa.com/
Office: 480-368-2000
Email: aaron@genevafi.com
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.
Thursday, September 24, 2009
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.
Tuesday, September 22, 2009
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
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
Tuesday, August 25, 2009
MARKET UPDATE - SEPTEMBER 2009
1ST TIME HOME BUYER TAX CREDIT
Reminder: The $8,000 first time home buyer tax credit ends December 1st, 2009.
DON’T SHOOT THE MESSENGER… OR LOAN OFFICER
Despite what you may be reading or watching on the news these days, banks ARE lending money. Lending guidelines have gotten tighter and you will now be required to put more money down and verify income to qualify for a home mortgage (not yet requiring a blood sample or rights to your first born), but if you qualify money is readily available. So what is the problem?
1. Government
The banking and lending industry has already self regulated itself over the past few years by requiring borrowers to verify income, put more money down, etc. The government, slow to react is now implementing new regulations that seem to only create delays and increased costs that inevitably roll down to the borrower. The Home Valuation Code of Conduct (HVCC) is viewed by most in the industry as a total disaster. Mortgage Disclosure Improvement Act (MDIA) which allows the borrower three extra days to review a document they will not likely understand regardless of timeline has the potential to add to closing turn times.
2. Fannie Mae & Freddie Mac
The two now controlled government mortgage giants are increasingly critical of the mortgages that they will purchase. Banks and lenders that sell to Fannie and Freddie in turn have to scrutinize the loan files in underwriting so they do not get stuck with unsellable loans. This stringent underwriting is also being applied to government FHA and VA mortgages. What does that mean to the customer; slower underwriting turn times and you will be conditioned to death. Be prepared to document and disclose everything.
3. Bank Failures
On August 14th, Colonial Bank collapsed. On August 22nd Guaranty Bank was seized by the FDIC. Both of these institutions were major players in warehouse lending; which means they provided lines of credit to mortgage banks to fund loans with. This will inevitably slow turn times for many lenders as they lose lines once provided by Colonial Bank and Guaranty Bank.
Earlier in the month, Taylor Bean and Whitaker, one of the nation’s largest mortgage banks, failed. When the bank announced it’s closing, it orphaned tens of thousands of loans. If you were unfortunate enough to have a loan placed there when it failed, you got to start all over again with the process. All those orphaned loans needed new homes, which inundated an already overwhelmed system with new loans; that needed to fund yesterday. Banks are just not prepared to handle the volume.
81 FDIC insured banks have failed so far in 2009.
Conclusion
When your loan officer asks for condition after ridiculous condition, and you seem to hit every speed bump in the road, please do not shoot the messenger. Loan officers are not trying to make your life miserable with ridiculous demands and conditions. Loan officers do not write laws that slow an already inefficient industry. Loan officers can not predict bank failures. And loan officers only get compensated for their efforts when your loan funds. If you are working with a competent and experienced loan officer, these issues are not their fault. The process is as equally painful for us, and we choose to do this everyday. Have patience. Provide requested documentation in a timely manner. Do not schedule the movers until you fund. Remember, everyone wants your loan to fund; and it will.
THE HOUSING MARKET TURNS
“More Americans signed sales contracts to buy homes in June than in May, the fifth consecutive month of increases. The National Association of Realtors said its Pending Home Sales Index rose 3.6% during the month. That was 6.7% higher than June 2008. It was the fifth straight month of increases, the first time that has happened since July 2003.” – cnnmoney.com
Sales of existing homes rose in July for the fourth consecutive month. According to the National Association or Realtors home sales were up 7.2% from June, which was the largest monthly increase on record.
The consumer needs to keep in mind that these are National figures. Hardest hit areas such as California, Arizona, and Nevada will likely see the fastest turn around as long as unemployment does not put continued pressure on the housing market. Phoenix is already experiencing a new housing boom. Las Vegas housing recovery is still combating the casino business downturn. Many states are just now experiencing drastically falling home values and will not see signs of recovery for some time.
FORECLOSURES SURGE
Foreclosures are up 32% from July 2008, with a reported 360,000+ new foreclosure filings. “In fact, one in every 355 U.S. homes had at least one filing during July. July marks the third time in the last five months where we've seen a new record set for foreclosure activity.” - RealtyTrac
Top Foreclosure States (based on foreclosure filings in July 2009):
1. Nevada 1 in 56
2. California 1 in 123
3. Arizona 1 in 135
THE SHRINKING SUPPLY OF CREDIT
Colonial Bank was the largest remaining player in warehouse lending. Warehouse lenders provide short-term financing to mortgage bankers. On August 14th, Colonial Bank collapsed. Days later on August 22nd, Guaranty Bank, another major warehouse line provider, was seized by the Federal Government at a cost of $3 billion to the FDIC. Guaranty Bank is the 11th largest bank collapse in US history, and the 3rd largest of the year. It was not long ago that these mortgage bankers originated more than 50% of all U.S. home loans using lines of credit provided by warehouse lenders.
“Today, the warehouse lending market is decimated. In 2007 it was worth an estimated $200 billion; now there is just $25 billion available -- 25% of which belongs to Colonial. With Colonial's failure, those funds could become even scarcer.” – Bloomberg
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 08/25/09. 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.
Office: 480-368-2000
Email: aaron@genevafi.com
Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.
Reminder: The $8,000 first time home buyer tax credit ends December 1st, 2009.
DON’T SHOOT THE MESSENGER… OR LOAN OFFICER
Despite what you may be reading or watching on the news these days, banks ARE lending money. Lending guidelines have gotten tighter and you will now be required to put more money down and verify income to qualify for a home mortgage (not yet requiring a blood sample or rights to your first born), but if you qualify money is readily available. So what is the problem?
1. Government
The banking and lending industry has already self regulated itself over the past few years by requiring borrowers to verify income, put more money down, etc. The government, slow to react is now implementing new regulations that seem to only create delays and increased costs that inevitably roll down to the borrower. The Home Valuation Code of Conduct (HVCC) is viewed by most in the industry as a total disaster. Mortgage Disclosure Improvement Act (MDIA) which allows the borrower three extra days to review a document they will not likely understand regardless of timeline has the potential to add to closing turn times.
2. Fannie Mae & Freddie Mac
The two now controlled government mortgage giants are increasingly critical of the mortgages that they will purchase. Banks and lenders that sell to Fannie and Freddie in turn have to scrutinize the loan files in underwriting so they do not get stuck with unsellable loans. This stringent underwriting is also being applied to government FHA and VA mortgages. What does that mean to the customer; slower underwriting turn times and you will be conditioned to death. Be prepared to document and disclose everything.
3. Bank Failures
On August 14th, Colonial Bank collapsed. On August 22nd Guaranty Bank was seized by the FDIC. Both of these institutions were major players in warehouse lending; which means they provided lines of credit to mortgage banks to fund loans with. This will inevitably slow turn times for many lenders as they lose lines once provided by Colonial Bank and Guaranty Bank.
Earlier in the month, Taylor Bean and Whitaker, one of the nation’s largest mortgage banks, failed. When the bank announced it’s closing, it orphaned tens of thousands of loans. If you were unfortunate enough to have a loan placed there when it failed, you got to start all over again with the process. All those orphaned loans needed new homes, which inundated an already overwhelmed system with new loans; that needed to fund yesterday. Banks are just not prepared to handle the volume.
81 FDIC insured banks have failed so far in 2009.
Conclusion
When your loan officer asks for condition after ridiculous condition, and you seem to hit every speed bump in the road, please do not shoot the messenger. Loan officers are not trying to make your life miserable with ridiculous demands and conditions. Loan officers do not write laws that slow an already inefficient industry. Loan officers can not predict bank failures. And loan officers only get compensated for their efforts when your loan funds. If you are working with a competent and experienced loan officer, these issues are not their fault. The process is as equally painful for us, and we choose to do this everyday. Have patience. Provide requested documentation in a timely manner. Do not schedule the movers until you fund. Remember, everyone wants your loan to fund; and it will.
THE HOUSING MARKET TURNS
“More Americans signed sales contracts to buy homes in June than in May, the fifth consecutive month of increases. The National Association of Realtors said its Pending Home Sales Index rose 3.6% during the month. That was 6.7% higher than June 2008. It was the fifth straight month of increases, the first time that has happened since July 2003.” – cnnmoney.com
Sales of existing homes rose in July for the fourth consecutive month. According to the National Association or Realtors home sales were up 7.2% from June, which was the largest monthly increase on record.
The consumer needs to keep in mind that these are National figures. Hardest hit areas such as California, Arizona, and Nevada will likely see the fastest turn around as long as unemployment does not put continued pressure on the housing market. Phoenix is already experiencing a new housing boom. Las Vegas housing recovery is still combating the casino business downturn. Many states are just now experiencing drastically falling home values and will not see signs of recovery for some time.
FORECLOSURES SURGE
Foreclosures are up 32% from July 2008, with a reported 360,000+ new foreclosure filings. “In fact, one in every 355 U.S. homes had at least one filing during July. July marks the third time in the last five months where we've seen a new record set for foreclosure activity.” - RealtyTrac
Top Foreclosure States (based on foreclosure filings in July 2009):
1. Nevada 1 in 56
2. California 1 in 123
3. Arizona 1 in 135
THE SHRINKING SUPPLY OF CREDIT
Colonial Bank was the largest remaining player in warehouse lending. Warehouse lenders provide short-term financing to mortgage bankers. On August 14th, Colonial Bank collapsed. Days later on August 22nd, Guaranty Bank, another major warehouse line provider, was seized by the Federal Government at a cost of $3 billion to the FDIC. Guaranty Bank is the 11th largest bank collapse in US history, and the 3rd largest of the year. It was not long ago that these mortgage bankers originated more than 50% of all U.S. home loans using lines of credit provided by warehouse lenders.
“Today, the warehouse lending market is decimated. In 2007 it was worth an estimated $200 billion; now there is just $25 billion available -- 25% of which belongs to Colonial. With Colonial's failure, those funds could become even scarcer.” – Bloomberg
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 08/25/09. 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.
Office: 480-368-2000
Email: aaron@genevafi.com
Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.
Saturday, July 25, 2009
MARKET UPDATE - AUGUST 2009
FED RESTRICTS COMPENSATION & ADDS DISCLOSURES
Over the last two years, the mortgage industry has done a thorough job at self regulating itself. Guidelines have tightened, appraisals go through strict lender reviews, and complex loan products (i.e. option arms, balloon mortgages, etc.) have been eliminated. Full documentation is required on all loans and the term “stated income” is nothing but a distant memory. Most of the questionable characters in the mortgage business have been forced out. Today we only ask, 30 year fixed conventional, or 30 year fixed FHA. For the Federal Government, and now the Fed, that is just not good enough.
Effective May 1st of 2009, the HVCC (Home Valuation Code of Conduct) went into effect with the intent of eliminating value manipulation by the appraiser and/or loan officer. Three months later, after a devastating impact on the homeowner, a new bill to place an 18 month moratorium on the HVCC is on the table.
H.R. 1728 has passed the House which aims to mandate loan officer licensing (already implemented through S.A.FE. – legislation long overdue), eliminate yield spread premiums to mortgage companies thus reducing consumer options and increasing consumer costs, and potentially further reducing loan programs available to consumers.
Now the Federal Reserve Board wants to regulate mortgage companies’ compensation, and add one more disclosure to the nearly 50 disclosures already part of the mortgage application.
“The Federal Reserve Board Thursday recommended new disclosure rules for homeowners and compensation guidelines for mortgage brokers to correct some abuses of the recent runaway housing market.” – Reuters. “Prospective borrowers would receive a one-page notice of key questions about their loan and see a graph comparing their interest rate to that of a low-risk borrower, the Fed said. Mortgage brokers would not receive greater compensation if they put a borrower into a high-cost loan, under the rules.” - cnnfn.com
Yes, there were abuses in the past when loan officers that lacked integrity “steered” consumers into high cost loans in order to obtain increased compensation from the lenders, i.e. “Big Banks” that created these mortgage programs and paid those loan officers top dollar to sell those high cost mortgages. What the Fed failed to realize, right along with the Federal Government, is that those high cost loan programs have already been eliminated by the industry; and not through government over regulation. The Fed’s comment regarding “low risk” borrower just reinforces the fact that they are out of touch with today’s mortgage industry. “High risk” borrowers are not borrowers; they are renters!
It has also been stated that if yield spread premiums are eliminated that the loan officers could simply charge a 2% origination fee to the consumer instead of the current industry standard of 1%. I am sure the consumer will appreciate paying twice as much for a new mortgage.
The government also will implement new True in Lending regulation starting July 30th, 2009 (more below), and a newer “easier” to understand four page Good Faith Estimate, replacing the current relatively easy to read one page Good Faith Estimate starting January 1st, 2010.
NEW TRUTH IN LENDINGS LAWS GO INTO EFFECT
The Mortgage Disclosure Improvement Act (MDIA) goes into effect July 30th, 2009. The new Truth in Lending regulations increase the time needed to close loans to ensure that the borrowers understand their options and feel comfortable with the loan.
New Changes:
A seven business day waiting period is now required between the date the initial TIL disclosure is provided to the consumer and signing of the loan.
There must be a three business day waiting period between the date a final / redisclosed TIL is received by the consumer and the disbursement of the loan. Same day fundings have been eliminated.
No fees, other than the credit report fee can be charged prior to the Initial TIL disclosure being provided. Upfront fees may not be collected from the borrower until initial disclosures are delivered to the borrower. Therefore, appraisals may not be ordered until the borrower receives initial disclosures.
The final and redisclosed, and initial TIL disclosures shall contain the following statement: "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."
An increase in Annual Percentage Rate (APR) by more than 0.125% requires the Truth in Lending Disclosure to be revised and delivered to the borrower 3 business days before closing.
To prevent delays in closings, everyone needs to understand the new MDIA. For example, if on the day of closing, the title company changes, adds or removes a fee that changes the APR up or down more than .125%, the funding will be delayed by at least three business days. Or, due to an unforeseen delay in closing, an interest rate lock expires, and the APR changes up or down by .125%, new disclosures will need to go out, and the closing will also be further delayed.
HOME SALES UP IN JUNE
Can we say bottom? Not so fast. That would depend on where you are located. Sales of existing homes were up 3.6% in June, nationally. The median price of existing homes fell to $181,800 from $215,000, down over 15% a year earlier. – National Association of Realtors
Markets hardest hit by the housing crisis seem to be on a faster rebound. Las Vegas Nevada and Phoenix Arizona are heating up, and we are not talking about the temperature. Spurred on by devastated values (both markets down over 50% since 2006), low interested rates and an $8,000 first time homebuyer tax credit, sales of homes reached near record levels over the last few months. Many homebuyers find themselves in bidding wars driving purchase prices well over list price.
Will this trend continue? Interest rates are likely to remain low for some time. The Fed has already stated that they are in no hurry to raise short term rates and the government will likely monitor long term rates to assist economic recovery. The $8,000 first time homebuyer tax credit expires December 1st, 2009 forcing many off the fence and into a home. Many in the industry anticipate the deadline to be extended and there are rumors that the tax credit could be increased to $15,000. Barring any unforeseen tragic global event, the housing market may be on its way back up; slowly but surely.
REALTORS FINALLY SPEAK OUT AGAINST THE HVCC
Months prior to the implementation of the HVCC, the NAMB (National Association of Mortgage Brokers) has been in an intense battle to put a stop to this new government regulation; including a law suit which was finally dropped. The NAMB was unsuccessful and the HVCC has been hammering real estate values for almost three months.
The government didn’t listen to the mortgage brokers, but after real estate agents commissions were evaporating what deals were going sideways due to low ball appraisals ordered under the new HVCC law, the much larger NAR (National Association of Realtors) makes a stance against the HVCC.
“The NAR reports that 17% of its members say they have recently lost one sale due to an appraisal coming in way below a purchase price, and 20% of members say they have lost more than one deal because of low appraisals. NAR’s chief economist Lawrence Yun blamed “faulty valuations that keep buyers from getting a loan” as the reason May home sales data weren’t stronger.” – cnnfn.com
It has also been reported that appraisal costs have risen 30% or more since the introduction of the HVCC; which is another increased cost to the homeowner.
To be added to the petition to stop the HVCC, click the link below. Your support is appreciated. HVCC Petition: http://www.hvccpetition.com/
INTEREST RATE UPDATE
Mortgage Type Interest Rate APR
30 Year Fixed 4.875% 5.008%
15 Year Fixed 4.250% 4.476%
Call today for your individual scenario rate quote.
*Interest rates as of 07/24/09. 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. 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.
Office: 480-368-2000
Email: aaron@genevafi.com
Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.
Over the last two years, the mortgage industry has done a thorough job at self regulating itself. Guidelines have tightened, appraisals go through strict lender reviews, and complex loan products (i.e. option arms, balloon mortgages, etc.) have been eliminated. Full documentation is required on all loans and the term “stated income” is nothing but a distant memory. Most of the questionable characters in the mortgage business have been forced out. Today we only ask, 30 year fixed conventional, or 30 year fixed FHA. For the Federal Government, and now the Fed, that is just not good enough.
Effective May 1st of 2009, the HVCC (Home Valuation Code of Conduct) went into effect with the intent of eliminating value manipulation by the appraiser and/or loan officer. Three months later, after a devastating impact on the homeowner, a new bill to place an 18 month moratorium on the HVCC is on the table.
H.R. 1728 has passed the House which aims to mandate loan officer licensing (already implemented through S.A.FE. – legislation long overdue), eliminate yield spread premiums to mortgage companies thus reducing consumer options and increasing consumer costs, and potentially further reducing loan programs available to consumers.
Now the Federal Reserve Board wants to regulate mortgage companies’ compensation, and add one more disclosure to the nearly 50 disclosures already part of the mortgage application.
“The Federal Reserve Board Thursday recommended new disclosure rules for homeowners and compensation guidelines for mortgage brokers to correct some abuses of the recent runaway housing market.” – Reuters. “Prospective borrowers would receive a one-page notice of key questions about their loan and see a graph comparing their interest rate to that of a low-risk borrower, the Fed said. Mortgage brokers would not receive greater compensation if they put a borrower into a high-cost loan, under the rules.” - cnnfn.com
Yes, there were abuses in the past when loan officers that lacked integrity “steered” consumers into high cost loans in order to obtain increased compensation from the lenders, i.e. “Big Banks” that created these mortgage programs and paid those loan officers top dollar to sell those high cost mortgages. What the Fed failed to realize, right along with the Federal Government, is that those high cost loan programs have already been eliminated by the industry; and not through government over regulation. The Fed’s comment regarding “low risk” borrower just reinforces the fact that they are out of touch with today’s mortgage industry. “High risk” borrowers are not borrowers; they are renters!
It has also been stated that if yield spread premiums are eliminated that the loan officers could simply charge a 2% origination fee to the consumer instead of the current industry standard of 1%. I am sure the consumer will appreciate paying twice as much for a new mortgage.
The government also will implement new True in Lending regulation starting July 30th, 2009 (more below), and a newer “easier” to understand four page Good Faith Estimate, replacing the current relatively easy to read one page Good Faith Estimate starting January 1st, 2010.
NEW TRUTH IN LENDINGS LAWS GO INTO EFFECT
The Mortgage Disclosure Improvement Act (MDIA) goes into effect July 30th, 2009. The new Truth in Lending regulations increase the time needed to close loans to ensure that the borrowers understand their options and feel comfortable with the loan.
New Changes:
A seven business day waiting period is now required between the date the initial TIL disclosure is provided to the consumer and signing of the loan.
There must be a three business day waiting period between the date a final / redisclosed TIL is received by the consumer and the disbursement of the loan. Same day fundings have been eliminated.
No fees, other than the credit report fee can be charged prior to the Initial TIL disclosure being provided. Upfront fees may not be collected from the borrower until initial disclosures are delivered to the borrower. Therefore, appraisals may not be ordered until the borrower receives initial disclosures.
The final and redisclosed, and initial TIL disclosures shall contain the following statement: "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."
An increase in Annual Percentage Rate (APR) by more than 0.125% requires the Truth in Lending Disclosure to be revised and delivered to the borrower 3 business days before closing.
To prevent delays in closings, everyone needs to understand the new MDIA. For example, if on the day of closing, the title company changes, adds or removes a fee that changes the APR up or down more than .125%, the funding will be delayed by at least three business days. Or, due to an unforeseen delay in closing, an interest rate lock expires, and the APR changes up or down by .125%, new disclosures will need to go out, and the closing will also be further delayed.
HOME SALES UP IN JUNE
Can we say bottom? Not so fast. That would depend on where you are located. Sales of existing homes were up 3.6% in June, nationally. The median price of existing homes fell to $181,800 from $215,000, down over 15% a year earlier. – National Association of Realtors
Markets hardest hit by the housing crisis seem to be on a faster rebound. Las Vegas Nevada and Phoenix Arizona are heating up, and we are not talking about the temperature. Spurred on by devastated values (both markets down over 50% since 2006), low interested rates and an $8,000 first time homebuyer tax credit, sales of homes reached near record levels over the last few months. Many homebuyers find themselves in bidding wars driving purchase prices well over list price.
Will this trend continue? Interest rates are likely to remain low for some time. The Fed has already stated that they are in no hurry to raise short term rates and the government will likely monitor long term rates to assist economic recovery. The $8,000 first time homebuyer tax credit expires December 1st, 2009 forcing many off the fence and into a home. Many in the industry anticipate the deadline to be extended and there are rumors that the tax credit could be increased to $15,000. Barring any unforeseen tragic global event, the housing market may be on its way back up; slowly but surely.
REALTORS FINALLY SPEAK OUT AGAINST THE HVCC
Months prior to the implementation of the HVCC, the NAMB (National Association of Mortgage Brokers) has been in an intense battle to put a stop to this new government regulation; including a law suit which was finally dropped. The NAMB was unsuccessful and the HVCC has been hammering real estate values for almost three months.
The government didn’t listen to the mortgage brokers, but after real estate agents commissions were evaporating what deals were going sideways due to low ball appraisals ordered under the new HVCC law, the much larger NAR (National Association of Realtors) makes a stance against the HVCC.
“The NAR reports that 17% of its members say they have recently lost one sale due to an appraisal coming in way below a purchase price, and 20% of members say they have lost more than one deal because of low appraisals. NAR’s chief economist Lawrence Yun blamed “faulty valuations that keep buyers from getting a loan” as the reason May home sales data weren’t stronger.” – cnnfn.com
It has also been reported that appraisal costs have risen 30% or more since the introduction of the HVCC; which is another increased cost to the homeowner.
To be added to the petition to stop the HVCC, click the link below. Your support is appreciated. HVCC Petition: http://www.hvccpetition.com/
INTEREST RATE UPDATE
Mortgage Type Interest Rate APR
30 Year Fixed 4.875% 5.008%
15 Year Fixed 4.250% 4.476%
Call today for your individual scenario rate quote.
*Interest rates as of 07/24/09. 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. 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.
Office: 480-368-2000
Email: aaron@genevafi.com
Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.
Monday, July 6, 2009
MARKET UPDATE - JULY 2009
PHOENIX IS ON FIRE!
The real estate market in Greater Phoenix is heating up. In May 9,290 homes were sold. The last time we saw that type of activity was in August of 2005 when just over 10,000 homes were sold.
Although those numbers were the result of low home values due to foreclosures and short sales, it is a good sign for home owners that the market is rebounding.
As the inventory of homes for sale on the market decline, home values will increase. The real estate industry as a whole anticipates that this will take some time. Phoenix saw a 53% decline in value since 2006 and those loses will take a while to erase.
This is not the best news for the new home buyer. Well priced homes under $200k do not sit on the market for long. Over the last few months, 1st time home buyers and investors have flooded the market looking for good deals; and there are a lot of them. Homes are getting swept up fast. It is not uncommon to find bidding wars with accepted offers well above listing price.
HELP STOP H.R. 1728 – WE NEED YOUR HELP
H.R. 1728 has already passed the House and is headed for the Senate. In its entirety, this bill has the potential to devastate the mortgage lending industry and cost the home owner lending options and added fees. Contact your Senators and demand that they vote NO to H.R. 1728.
A quick review:
The bill is dangerously vague and has the potential to:
Eliminate yield spread premiums. Mortgage companies will be forced to charge the borrower in upfront fees; up to 2% of the loan amount in origination fees. Currently mortgage companies can offer “no points” options. Consumers will pay more for mortgages with fewer options.
Mandate lenders to hold a 5% stake in mortgages funded. This could eliminate most if not all mortgage brokers and bankers. Brokers and bankers currently employ seasoned loan officers that can offer the most competitive products and rates to consumers. Most lending institutions do not have the liquidity to carry a 5% stake in the mortgages they lend on. This will greatly reduce consumers’ options to shop for the best mortgage programs and rates. It will also be very difficult to regulate and make the industry even less efficient. Mortgage companies already have a stake in the mortgages they fund through representations and responsibilities to investors.
Eliminate your ability to sell your property through creative financing options. This bill has the potential to make illegal, owner carry backs, lease options, and owner financing.
Eliminate reduced documentation options for self employed borrowers. Stated income and reduced documentation loans have already been eliminated; as you know if you are self employed and have applied for a mortgage in the last year or so. The possibility of a “make sense” option for self employed borrowers to be created would be unlikely; leaving a large segment of the population unable to obtain financing, regardless of credit score and history.
Please take action now. If it passes, it will be hard to ever get your options/rights as a consumer back. Email me with any questions or concerns. – aaron@genevafi.com
NO DOWN PAYMENT MORTGAGES
“After announcing a plan that would have allowed first time homebuyers to use a special tax credit to cover the 3.5% required down payment on an FHA-insured loan, the Dept. of Housing and Urban Development apparently had second thoughts. Late last week HUD released a newly remodeled plan that does not allow the first-time homebuyer tax credit to be used for the down payment.” – cnnmoney.com
HUD did state that the tax credit could be used to cover borrower closing costs, but the 3.5% mandated down payment on FHA mortgages would still have come from the borrowers own funds, or as a gift from an immediate family member or employer. HUD felt that it is important for the home buyer to have at least some “skin in the deal.”
HVCC UPDATE
Representative Travis Childers (D-Mississippi) and Representative Gary Miller (R-California) who serves on the House Financial Services Committee introduced HR 3044 last week in an attempt to force an 18 month moratorium on the Home Valuation Code of Conduct (HVCC) which went into effect May 1st of this year.
The HVCC forced mortgage companies to order conventional appraisals through third party clearing houses know as appraisal management companies (AMC); many which are ironically owned by the “big” banks. The intent of the HVCC was to prevent all interaction between the mortgage lender and the appraiser. Since its implementation, the HVCC has had a devastating impact on many appraisal companies, forcing them from the industry altogether.
The HVCC is also showing a track record of undervaluing properties. “In the past month, we have suddenly been bombarded with many stories of, at the last moment, transactions falling apart because appraisals are coming in unrealistically low,” said National Association of Realtors Chief Economist Lawrence Yun. “As a result it opens up a new round of negotiations between a buyer and a seller or in many cases the buyer just steps away.” – cnbc.com
To be added to the petition to stop the HVCC, click the link below. Your support is appreciated.
HVCC Petition: http://www.hvccpetition.com/
HOUSING STARTS UP
“The nation's builders boosted their production in May, starting new housing units at an annualized rate of 532,000, up 17.2% from the revised estimate of 454,000 in April. The data release, a monthly report from the Census Bureau, also revealed that building permits jumped by 4% to a rate of 518,000 from 498,000 in April.” – cnnmoney.com
DOWN AGAIN? - INTEREST RATE UPDATE
Mortgage Type Interest Rate APR
30 Year Fixed 5.000% 5.288%
15 Year Fixed 4.375% 4.862%
Call today for your individual scenario rate quote.
*Interest rates as of 06/30/09. 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. 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.
Office: 480-368-2000
Email: aaron@genevafi.com
Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.
*If you wish to be removed from this email list, please reply with “REMOVE” in the subject line.
The real estate market in Greater Phoenix is heating up. In May 9,290 homes were sold. The last time we saw that type of activity was in August of 2005 when just over 10,000 homes were sold.
Although those numbers were the result of low home values due to foreclosures and short sales, it is a good sign for home owners that the market is rebounding.
As the inventory of homes for sale on the market decline, home values will increase. The real estate industry as a whole anticipates that this will take some time. Phoenix saw a 53% decline in value since 2006 and those loses will take a while to erase.
This is not the best news for the new home buyer. Well priced homes under $200k do not sit on the market for long. Over the last few months, 1st time home buyers and investors have flooded the market looking for good deals; and there are a lot of them. Homes are getting swept up fast. It is not uncommon to find bidding wars with accepted offers well above listing price.
HELP STOP H.R. 1728 – WE NEED YOUR HELP
H.R. 1728 has already passed the House and is headed for the Senate. In its entirety, this bill has the potential to devastate the mortgage lending industry and cost the home owner lending options and added fees. Contact your Senators and demand that they vote NO to H.R. 1728.
A quick review:
The bill is dangerously vague and has the potential to:
Eliminate yield spread premiums. Mortgage companies will be forced to charge the borrower in upfront fees; up to 2% of the loan amount in origination fees. Currently mortgage companies can offer “no points” options. Consumers will pay more for mortgages with fewer options.
Mandate lenders to hold a 5% stake in mortgages funded. This could eliminate most if not all mortgage brokers and bankers. Brokers and bankers currently employ seasoned loan officers that can offer the most competitive products and rates to consumers. Most lending institutions do not have the liquidity to carry a 5% stake in the mortgages they lend on. This will greatly reduce consumers’ options to shop for the best mortgage programs and rates. It will also be very difficult to regulate and make the industry even less efficient. Mortgage companies already have a stake in the mortgages they fund through representations and responsibilities to investors.
Eliminate your ability to sell your property through creative financing options. This bill has the potential to make illegal, owner carry backs, lease options, and owner financing.
Eliminate reduced documentation options for self employed borrowers. Stated income and reduced documentation loans have already been eliminated; as you know if you are self employed and have applied for a mortgage in the last year or so. The possibility of a “make sense” option for self employed borrowers to be created would be unlikely; leaving a large segment of the population unable to obtain financing, regardless of credit score and history.
Please take action now. If it passes, it will be hard to ever get your options/rights as a consumer back. Email me with any questions or concerns. – aaron@genevafi.com
NO DOWN PAYMENT MORTGAGES
“After announcing a plan that would have allowed first time homebuyers to use a special tax credit to cover the 3.5% required down payment on an FHA-insured loan, the Dept. of Housing and Urban Development apparently had second thoughts. Late last week HUD released a newly remodeled plan that does not allow the first-time homebuyer tax credit to be used for the down payment.” – cnnmoney.com
HUD did state that the tax credit could be used to cover borrower closing costs, but the 3.5% mandated down payment on FHA mortgages would still have come from the borrowers own funds, or as a gift from an immediate family member or employer. HUD felt that it is important for the home buyer to have at least some “skin in the deal.”
HVCC UPDATE
Representative Travis Childers (D-Mississippi) and Representative Gary Miller (R-California) who serves on the House Financial Services Committee introduced HR 3044 last week in an attempt to force an 18 month moratorium on the Home Valuation Code of Conduct (HVCC) which went into effect May 1st of this year.
The HVCC forced mortgage companies to order conventional appraisals through third party clearing houses know as appraisal management companies (AMC); many which are ironically owned by the “big” banks. The intent of the HVCC was to prevent all interaction between the mortgage lender and the appraiser. Since its implementation, the HVCC has had a devastating impact on many appraisal companies, forcing them from the industry altogether.
The HVCC is also showing a track record of undervaluing properties. “In the past month, we have suddenly been bombarded with many stories of, at the last moment, transactions falling apart because appraisals are coming in unrealistically low,” said National Association of Realtors Chief Economist Lawrence Yun. “As a result it opens up a new round of negotiations between a buyer and a seller or in many cases the buyer just steps away.” – cnbc.com
To be added to the petition to stop the HVCC, click the link below. Your support is appreciated.
HVCC Petition: http://www.hvccpetition.com/
HOUSING STARTS UP
“The nation's builders boosted their production in May, starting new housing units at an annualized rate of 532,000, up 17.2% from the revised estimate of 454,000 in April. The data release, a monthly report from the Census Bureau, also revealed that building permits jumped by 4% to a rate of 518,000 from 498,000 in April.” – cnnmoney.com
DOWN AGAIN? - INTEREST RATE UPDATE
Mortgage Type Interest Rate APR
30 Year Fixed 5.000% 5.288%
15 Year Fixed 4.375% 4.862%
Call today for your individual scenario rate quote.
*Interest rates as of 06/30/09. 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. 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.
Office: 480-368-2000
Email: aaron@genevafi.com
Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.
*If you wish to be removed from this email list, please reply with “REMOVE” in the subject line.
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