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New disclosure laws. I hope you like to sign papers

Tuesday, January 5th, 2010

As of January 10th we have new disclosure laws. Basically, the good faith estimate is supposed to be accurate and if any fees increase the good faith has to be presented to the borrower again so they can agree or disagree.

In the past good faith estimates were a bit of a joke. I constantly would come up against good faith estimates that were completely BS. The old trick lenders would use is quote low up front and high at the end. This is supposed to halt that practice.

We started the new process January 1st, early, because that is the way we roll. As with any new requirement it has issues. Here are two I discovered today.

1) By law we have to disclose within 3 days of taking the application. If your rate is not locked at the time we disclose we will have to re-disclose the good faith estimate and potentially the truth in lending as soon as we lock the rate. What this means: is more paperwork, forms to sign and changing $ amounts.

2) We need to have accurate title fees when we disclose. Title will not have accurate fees until they get the prelim which takes 3-5 days. We have to disclose within 3 days, we cannot wait for title. Which means we have to ask title to give us their best guess. If their fees are higher once they get the prelim we get to re-disclose. What this means: is more paperwork, forms to sign and changing $ amounts.

After really looking at how this works it may protect a few borrowers from high fees but will not protect them from rate crime. Unless it was required for the rate to be locked for the loan process to begin there is always the risk of being quoted low upfront and high once you are half way through. Rates change every day as per the market. Your rate is only as good as your loan consultant is ethical.

The best thing any consumer can do is interview the loan consultants upfront. Ask for recommendations, how they feel about money etc…

All lenders are not the same and you need someone you can trust.

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Good news; for real

Thursday, December 24th, 2009

I have spent the last two weeks trying to figure out how to approach the ever constricting market. The past few weeks it has seemed as though the flow of money was at risk at being turned down or off . With Fannie Mae and Freddie Mac tightening up and FHA critics screaming poor it was starting to look truly dismal. Well, finally a bright spot. The treasury has given Freddie and Fannie an open check book of sorts. This should help loosen things up a touch (I pray).

Well, this seems less than awesome for taxpayers ,without it we very well could face a depression. Not to be a downer but the market is a long way from recovered to a safe level. There are still a multitude of obstacles such as adjusting arms and beaten down homeowners that have to be addressed before the recovery is real. Hopefully this will turn obstacles into opportunities.

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Another reason to live in Sonoma County

Tuesday, December 1st, 2009

Tonight I watched Food Inc. I had read the omnivores dilemma and fast food nation and they had slightly traumatized me but not like the actual Food Inc movie. After this movie I am officially eating localonly. The beauty about Sonoma County is that eating local is an option. In many parts of the state I would need to become a vegetarian but here we have such amazing sources of food that now I just have to shop at Sheltons or the Farmers market. If you have not seen Food Inc check it out. It is life changing. The Government may want to put a little less energy into cotrolling financial institutions and a little more into providing safe food sources.

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Judge blasts bad bank erases mortgage debt

Wednesday, November 25th, 2009

This article is pretty awesome. I am sure it will get appealed and overturned but 10% interest is insane for todays market. They (the bank) could have modified it to a reasonable rate

http://www.nypost.com/p/news/local/judge_kos_mortgage_to_slap_bank_28ZS1oW8Y58z6gu1AQbWMI

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Something wicked this way comes…

Saturday, November 21st, 2009

In the past two weeks mortgage lates have risen to 9.64%. That number lets us know that things are not turning around.

Where this is interesting is where it will lead us to next three years. Starting December 12 Fannie Mae institutes their new more restrictive guidelines. These guidelines essentially make it easier to buy a house with 3% down than 20% down. Sounds contradictory however it is exactly what will happen. The max amount we will be able to qualify at will be 50% on the back end for a conventional, Fannie Mae, loan. So if you are purchasing a house and putting 20% down and your back end debt is 55% you do not qualify via Fannie Mae.

However if you are buying a home and putting a 3.5% down payment that is a gift from your grandma and you have $100 in your checking account and your back end is 55% you will qualify.

What? Right, here’s the deal. While Fannie Mae restricts the back end ratio on conventional loans, FHA is not making any effort to restrict theirs further. What this means is that more people will be doing government FHA loans. Oh and yes FHA as an entity is not doing well right now. They have a lot of bad mortgages…shocking right?

So based on the rising lates we have the potential for another wave of defaults, with the government stalling their release, and then ultimately turning theses defaults into new higher risk government loans. This sounds very expensive to the tax payer. Call me crazy but somehow this does not seem like a good plan. I seriously think that no one in our government has sat down and really looked at how what hand will do will affect the other. It seems more like they are constantly trying to put band aids on a gushing wound. In the long run it would be cheaper to stitchup the gushing wound instead of going through 4 trillion band aids. Just saying…

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There is a rat door…What?

Wednesday, November 18th, 2009

Today my partner Julie went to look at a house with a realtor. The question was could we finance this house. Julie of course forgot her camera but here are the basics. The house was standing. The bathroom was missing fixtures and the carpet was holey in a few spots. It seems like financing would not be an issue however in today’s markets lack of fixtures and missing carpet can be deal killers. In order to finance the house there would have to be fixtures in the bathroom and the carpet would have to be repaired prior to close. It is easy to finance as long as you know what to attack upfront. I would have those items fixed prior to the appraiser coming out. Carpet repair and fixtures are fairly inexpensive so it is worth it to approach it upfront instead of delaying. Now Julie said the house had a rat door….but she did not see rats eeekkk

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“Foreclosures; tide may be turning” AKA Government issues stall tactics

Friday, November 13th, 2009

I love Cnn news. They pull the best stores off the web in order to tell the public what to think . So “To be sure, foreclosure rates are still elevated from a year ago: They’re up 18% compared with October 2008. But the month-over-month decrease followed a 4% drop in filings during September and a 1% fall in August.”

So foreclosure filings are higher but the foreclosure tide may be turning towards recovery? Not sure how more people in foreclosure= recovery but OK Money magazine. The real title should be Government comes up with new inventive techniques to hold foreclosure inventory. How much more tax payer $ do we need to hold these…seriously. Either fix the loans or let them go. Stalling just prolongs the misery but it is cute how they are trying to fix the market. One prob, the new DTI limits Fannie Mae just threw out are going to throw a nice block to the recovery. How are they going to fix that? Oh yeah we still have FHA and a devaluing dollar. Right On.

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