A e ur 8 at 1 Fe ge n Pa ma el rm n d e fo Ma K R B
On
Issue 028 October 2009 TheNicheReport.com
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thru Obscure truths 18 AJudgment Time for Good 26 Working 28 33 the MDIA maze: about the health The jury is in. We need judges to modify the way banks behave.
An update!
of FHA
Wait three days first.
So what happens next?
The year of the Federal Reserve Making sense of 2009.
CONTENTS
18
Issue 028
October 2009
A Time for Good Judgment martin andelman The jury is in. We need judges to modify the way banks behave.
NICHE REPORTS agency & FHA
pg 44
REVERSE
pg 45
HARD MONEY & NON-PRIME
pg 46
PORTFOLIO & ALT-A
pg 47
JUMBO
pg 48
CONSTRUCTION/REHAB
pg 48
COMMERCIAL
pg 49
FOUNDER & PRESIDENT Robert Pegg robert@nichereportonline.com CO-FOUNDER & PRESIDENT David Pegg david@nichereportonline.com MANAGING EDITOR Stewart Mednick stewart@nichereportonline.com
10
Buying and Selling Loans martin goodman founder and president, loanmls.com The good, the bad and the ugly
14
Do You Control the Donuts? david laL president, national real estate council Marketing can leave a bad taste in your mouth.
26
Working Thru the MDIA Maze: An Update! karen deis publisher, mortgagecurrentcy.com Wait three days first.
28
Obscure Truths about the Health of FHA brian montgomery Assistant Secretary for Housing and Federal Housing Commissioner, HUD So what happens next?
6
September 2009
31
Government Affairs Gary Opper president, approved financial corporation Want to have one?
Stage with 40 Center Flagstar Bank The Niche Report A talk about eClosings with Brian Boike, First Vice President, Lending Support
DEPARTMENTS
09 33 37 42 50 54
NOTE FROM THE FOUNDER/ letters to the editor mbs warroom RULES & REGULATIONS HEADLINES TIP OF THE MONTH LENDER & RESOURCE DIRECTORY Bringing up the rear
EDITORIAL / CONTENT MANAGER Kristen Moser kristen@nichereportonline.com ACCOUNTING MANAGER Shawna Ingram shawna@nichereportonline.com Advertising Reps Jessica Grizzle Jessica@nichereportonline.com Mark Moulton mark@nichereportonline.com Production Manager Henry Suchman henry@nichereportonline.com Production Assistant Dawn Exner dawn@nichereportonline.com ADVISORY BOARD Randall Marquis Senior Editor, The Mortgage Lender Implode-O-Meter COLUMNISTS Martin Andelman Karen Deis Matthew Graham Stewart Mednick Adam Quinones CONTRIBUTING AUTHORS Martin Goodman David Lal Brian Montgomery Gary Opper
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Visit us at
CreditAidPro.com or call (866) 957-8564
NOTE FROM THE FOUNDER
It’s officially conference and expo season! First up is the 96th Annual MBA Conference and Expo. If you are in San Diego during October 11th – 13th, please stop by our booth. We’ll also be at NAMB West in Las Vegas on December 6th - 8th. We aren’t your “run of the mill” mortgage industry trade magazine that publishes “safe” content or press releases month in and month out. The reason for our quick ascent as a leading magazine for mortgage professionals is because we bring readers content with edge and grit; we leave the press releases and marketing 101 articles to our competitors. This magazine is for mortgage professionals who are passionate and serious about the industry in which they work. With that said, this is a very exciting issue for a couple of reasons. First, Martin Andelman writes on bankruptcy reform. This feature article is sure to create controversy and fire some folks up. Let the games begin! And second, we are introducing a new column this month called The MBS War Room by Adam Quinones and Matthew Graham of Mortgage News Daily. They will be bringing you an original column each month that will help folks gain a firm grasp on what drives our secondary market. You will not find more knowledgeable, ardent followers of the secondary mortgage market than these two guys. You may also find them at MortgageNewDaily.com, one of the fastest growing mortgage industry news/blog sites with almost 50,000 members.
Keep up the fight,
Robert Pegg
Letters to the Editor Coumo’s Crossing by Martin Andelman I am an appraiser is Salem Oregon. As you would assume, as an appraiser I have read several articles on this topic. This article was by far the most informative article I have read. The only aspect that was not touched on was that certain AMC’s are taking the money from qualified appraisers’ income and taking it out of the country, thus lowering the amount of American based tax dollars. I would like to publish this article on my personal website, as I believe the message needs to be told in as many venues as possible. With articles like this, people in and outside the industry need to be aware of your publication. Thank you for your time, Shad Russo For What It's Worth Appraisals, Inc OregonHomeAppraisals.com
I just received a copy of the article you put out in July this year about the HVCC and Mr. Cuomo. I was impressed! Your part on the HR 3044 was good but would benefit from some updating. So would the rest of the country benefit!
Shad – Thank you for pointing that out, just another reason why HVCC needs to be shut down.
David F. Jensen The Jensen Group, Inc.
To date, this bill has over 82 co-sponsors but in my opinion it is in Death mode. It has been sent to the office of Barney Frank, a close cousin to Andrew, and is filed away securely somewhere to never be seen or heard of again. In the meantime, the appraisers are dying, the housing industry is still in trouble (contrary to media reports) and democracy is still being held hostage. HELP!
TheNicheReport.com
9
Buying and selling loans The good, the bad and the ugly by martin goodman
I
n these stressful economic times, many private money lenders and their investors are looking at acquiring existing loans, or are considering selling loans they currently own. There are many reasons loans are bought and sold. Often times the reason has more to do with the individual situation of the seller than of the note itself, or the condition of the borrower. The most common reasons loans are sold are: for liquidity, dissolution of a partnership, change of financial circumstance, deterioration of the underlying collateral, or the default of a borrower. There are many opportunities for buyers and brokers to acquire loans at a discount to the principal balance which may result in substantially better yields than originating a new loan. Buyers and their brokers should consider several factors when purchasing a note, including the strength and payment history of the borrower, the quality of the underlying collateral securing the loan, and the strength of the guarantors, if any. Loans can be purchased individually or in pools. Although the legal agreement differs for each, the basic process flow is the same whether you are buying or selling one or more loans. For simplicity purposes, I’ll refer to the transaction as a loan asset transaction. The term “loan sale” and “note sale” will also be used interchangeably throughout. The basics of the purchase and sale process are relatively straight forward, but like any transaction, the devil is in the details. Following are eight steps involved in the purchase and sale of loan assets followed by a discussion of the most common pitfalls to avoid throughout the transaction.
Step 1: Confidentiality and Non-Disclosure Agreement It is customary to execute a confidentiality and non10
October 2009
disclosure agreement to protect both parties. Sensitive borrower information is typically exchanged and both parties need to agree to safeguard this information.
Step 2: Make an Offer Make an offer for the loan asset in writing. Work with an attorney who has handled loan purchase and sale agreements in the past and can walk you through the various nuances to the agreement. An entire article can be written on the ins and outs of this agreement, and is a topic for another time. Step 3: Good Faith Deposit and Open Title Typically a seller will provide a good faith deposit to start the process, but this is a point to be negotiated between the parties. It is a lot of work to gather the loan files together and you want to make sure you have a serious buyer before you go through the effort. You should also prequalify the buyer and verify that the funds are in place and that this buyer isn’t going to try and “raise the funds” once they review your files. After a deposit is received, the seller should open a title policy. Most of the time the seller can buy an ALTA assignment endorsement (10.6-06) which insures the assignment vesting and lien position to the new party. The endorsement is less expensive than a full title policy and is recommended if it is available. Step 4: Due Diligence Once a deposit is received, conduct thorough due diligence on the loan asset. Your level of due diligence will vary depending on the asset itself, and on the number of assets you purchase. Most purchasers will conduct an independent appraisal, re-underwrite the loan, examine the chain of title, review the original promissory note, and review all correspondence with the borrower, the trustee,
and any other parties to the loan. There are a number of third party companies that specialize in performing independent due diligence on loan assets and generally charge $250 per loan depending on the type of appraisal and underwriting conducted. Most of the time you will not be able to inspect the interior of the property, or conduct an interview with the borrower, but that can be a point of discussion between you and the loan seller at the time the offer is negotiated.
Step 5: Sign Documents Besides the purchase and sale agreement, two additional documents must be signed in order to transfer ownership of a loan. The first is an assignment, which is a notarized document referencing the original mortgage or deed of trust and is recorded in the same county in which the real property securing the note is located. The second document is a signed endorsement of the original promissory note. This endorsement can be handled by either typing language on the back of the note (e.g. Pay to the order of….) much in the way a check is endorsed when signed over to a third party. If there is not room on the back of the note, another way to endorse the note is by attaching an Allonge which effectively has the same language that would otherwise be placed on the back of the Note. The Allonge must be securely attached and at all times kept with the original promissory note. Example of language that may be used in an Allonge is: THIS ENDORSEMENT IS TO BE ATTACHED TO AND MADE PART OF THAT CERTAIN PROMISSORY NOTE dated Month, Day, Year, made by Borrower Name Here, in favor of ABC Company, the payee, in the original principal amount of $x,xxx,xxx. Such Note is hereby transferred pursuant to the following Endorsement with the same force and effect as if such Endorsement were set forth at the end of such Note: THIS PROMISSORY NOTE is herby Endorsed and Assigned without recourse to: Acme Loan Buying Company PAY TO THE ORDER OF:
Acme Loan Buying Company
__________________________________ Seller
Step 6: Record the Documents The last step is to provide the notarized assignment to the title company to record and issue the policy specified in the title instructions and preliminary title report. Step 7: Exchange Funds Once the document is recorded and confirmed by the title company, funds may be exchanged. Some parties use 12
October 2009
an escrow for this process, or you may use an attorney’s trust account.
Step 8: Notify the Borrower Once the financial exchange is completed, follow the laws with regards to notifying the borrower of the new loan servicer, if any apply. Not every transaction results in a change of servicing, and different laws apply to residential and commercial transactions. Typically, the prior loan servicer provides a “good-bye” letter which indicates the loan servicer is no longer servicing the loan and instructions on where to send payments. Then the new loan servicer sends a “hello” letter introducing them and provide required contact information, and information on where to send payments. Although the eight steps of concluding a loan purchase and sale transaction seem fairly straight forward, there are numerous pitfalls to avoid: Representations and Warranties In a typical loan purchase sale agreement there are representations and warranties that provide certain remedies (e.g. a credit, or loan buy back, etc.) if one party provides false information or the loan is materially different, or the transaction is fraudulent, etc. Be aware that the representations and warranties are only as good as the party making them. Even if you are dealing with a large institution, that institution may not exist after the transaction concludes. Even if the institution does remain in business, recovery may require expensive litigation. The key to avoiding problems is to conduct very thorough due diligence before the transaction is concluded. If you are in doubt of something material to the transaction, notify the seller to get clarification and/or terminate the transaction. Chain of Title The chain of title can be tricky in a loan purchase. Some notes may have been previously transferred several times in the past, and if the vesting is off just slightly from one transfer to the next, or there is a vesting gap between one assignment and the next, it may be very difficult, if not impossible, to resolve. Vesting gaps in title chains are very common and come about because parties receive assignments and then never record them. Other times, a vesting gap occurs because a party receives an assignment, transfers funds, and then discovers the assignment provided is un-recordable for a variety of reasons, or there is just an error which goes undetected. A title policy or assignment endorsement is a good protective measure, but understand that your title policy covers you only after you incur a loss and not upon the
discovery of an error. Consider this example of a potentially prolonged title recovery: Buyer purchases a 2nd lien and shortly thereafter the borrower stops making payments. The lienholder forecloses, and the trustee discovers there is a vesting gap in the assignment of title chain and the trustee will not foreclose. Meanwhile, the borrower continues to pay on the senior lien and the junior lienholder is unable to foreclose or collect on a title claim because the junior lienholder has not technically incurred a loss on the policy. Your loss will only occur when the senior lien forecloses out your position which may or many not happen depending on whether or not the borrower continues to pay the senior lien. Pull the original mortgage or trust deed and every recorded assignment and examine them yourself and make sure you are satisfied that the chain of title is intact.
Property Taxes Most taxing authorities have information available on the internet and you can check to make sure property taxes are not delinquent prior to the purchase of the note. If the property taxes are delinquent, make note of that county’s tax auction procedures and decide if you still wish to continue with the note purchase. Junior Liens If you purchase a junior lien, be sure to obtain verification that the senior lien is current. If the senior lien is not current, be sure you understand your rights to reinstate the lien in the state in which the loan is recorded. In some states junior lien holders may not reinstate senior liens and must instead pay them off, or protect their position at a trustee sale. Verify that the senior lien does not have language in the promissory note which prohibits a second lien to be put in place. If a junior lien is prohibited, obtain the document granting permission to the borrower to obtain the junior lien. Obtain the promissory note of the senior lien holder, if possible. Since promissory notes are not recorded documents, this is often not easily obtainable. If obtained, examine the document for adverse changes in interest rates, balloons, or other terms that may adversely affect your junior position. Promissory Note In many loan sale transactions, the original promissory note cannot be located and the seller offers an Affidavit of Lost Note. Up until a few years ago an Affidavit was sufficient to continue foreclosing, but because of the
increase in the number of foreclosures many judges refuse to permit a foreclosure without the original promissory note. Once you obtain the original note, keep it in a fireproof vault for safekeeping.
Loan Underwriting Many loans contain errors in the original underwriting. Depending on the type of loan, the error could be significant. For example, in a residential loan, an error of more than .125 on the APR presented in the borrower disclosures could enable the borrower to rescind the loan. Re-underwrite the loan as if you were making a new loan and examine every disclosure, the timing of the disclosures, and the details on any applicable rights of cancellations. Independent Confirmation of Loan Terms If permitted in the terms of your loan agreement, it is a good idea to send an Estoppel Certificate to the borrower. The loan Estoppel Certificate is a document which asks the recipient to confirm the terms of the mortgage such as the outstanding balance, interest rate and frequency and due date of payments. Independently verifying that the borrower is in agreement with the loan terms can save a lot of aggravation down the road. Borrower Cooperation In some transactions, the borrower is skeptical that the loan was transferred and may not pay the new note owner, especially in private, non-bank note sale transactions. Anticipate potential borrower confusion and establish a procedure with the note seller in the event they receive payments shortly after the transaction concludes. In addition to the customary “good-bye” letter, you may wish to obtain a separate letter from the note seller to the note buyer confirming the transaction and ensure that the note seller will cooperate in speaking with the borrower if need be to confirm the sale transaction. Purchasing and selling loan assets is a specialized transaction, but like everything else in business, the more you do it, the better you get at it. If you’re buying or selling notes for the first time, be sure to use experienced counsel and spend extra time on your due diligence and the fruits of your labor will pay off with higher yields and fewer unexpected surprises. Martin Goodman is the founder and President of LoanMLS.com, a classified loan advertising site for residential and commercial loans assets. Goodman may be contacted my email at marty@loanmls.com. TheNicheReport.com
13
Do you control the donuts? Marketing can leave a bad taste in your mouth by david lal
O
ver 20 years ago, as I was starting out in the mortgage business, the advice I received from senior brokers was to “stop into realtor’s offices with a box of donuts.” Last year I was participating in an industry roundtable and the powerful head of a major mortgage company related that he provides an allowance for his agents to take donuts to realtor’s offices. I had to smile; some things just never change. Bribing realtors with sugary confections has been and remains a bad idea on so many levels. First, the sugar and empty calories are horrible for our realtor friends. Second, you immediately present yourself as a gofer. You are no longer an equal professional, but the lackey who will do the mortgage paperwork after the professionals have done the real work of selling the property and maybe pick up a latte for the busy agents while you’re at it. Third, and most important, the realtors should be bringing you donuts! Mortgage brokers have been unfairly programmed to “beg” realtors for deals and perform silly services to be in their good graces so they will throw you a bone every now and again. Bottom line: The agent who controls the client deserves the donuts. Mortgage brokers need to spend their energy focusing on attracting clients directly rather than begging others for clients. Begging realtors or other professionals is a weak marketing strategy that will inevitably lead to failure and undermine your professionalism. There are many actions that you can undertake to have your message directly to the consumer. Bring the consumer to the table, let realtors know that you are a performer and let them vie for YOUR referrals. Taking your message directly to consumers requires 14
October 2009
planning and careful thought. It should be based in your strengths and weaknesses and of course your interests. I have spent many hours and in some cases several days coaching agents on how their interests, strengths and weaknesses are all critical to a finely tuned and workable marketing strategy. Recently I had a client who was interested in executing seminars. She had partnered with a realtor, but was footing most of the bill for the seminar (programmed belief that the realtor was more important). Her topic was “first time home buyers.” They were using the headline “Stop paying your landlords mortgage.” They had put on three previous seminars that attracted a combined total of seven people and no real prospects in the end. My first advice was to dump the dead weight realtor “partner”. If your partners are not carrying their share of the load, they are not partners. Trim the fat, before you move on. The second advice was to put the tired clichéd headline to rest. Every resident of the free world has already been asked to “kiss the landlord goodbye” or to “fire him” and so on; additionally, the majority of those who were interested in buying their first homes probably already done so or are fearful of buying in a declining market. I suggested that she change the focus away from “buy your first home” to “get a hot deal”. The seminar now targeted the same group of young professionals that were renting, but the message was decidedly different. The seminar focused on buying properties well under market. She talked about buying pre-foreclosures, REO’s and short sales for 40-60 cents on the dollar. Some additional tweaking in how she promoted her seminars increased her average attendance from two to 20. Best of all more than half of the attendees were interested in buying pre-foreclosures, clients that she can pre-qualify
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AD CODE: MANRXSME1009 a la mode and its products are trademarks or registered trademarks of a la mode, inc. Other brand and product names are trademarks or registered trademarks of their respective owners. All prices, terms, policies, and other items are subject to change without notice. Copyright ©2009 a la mode, inc.
and refer to realtors. NOTE: If you do not know how to properly structure short sales to obtain the deep discounts, you need to learn that before you use this strategy. Yes, she gets a lot of donuts these days. Going forward, mortgage brokers need to explore opportunities that draw prospective buyers to them directly. Seminars are a good way to do this. Unfortunately, most seminars presented by agents frequently end in disappointment, due to a low turnout. The primary reason for low turn out is that the events are not presented as something of importance and of interest. If you open the real estate events section of your local newspaper, frequently you will see listing for seminars with the obvious and dull titles, such as “First Time Homebuyer’s Seminar”, “Financing Your First Home” or “Stop Renting and Start Owning”. These topics are stale. Additionally, be conscience of the fact that loan programs may not be available for the typical no money down first time buyer. New and exciting headlines will begin to target a new group of interested clients. For example, with the seminar described above, our agent wanted to attract upscale renters
who had not yet bought a home. Upscale, because the buyer will need money down or be able to go full doc. Her marketing targeted selected rental areas and publications. Her message needed to motivate these buyers to learn more about why they should buy now, in a declining market. The message was clear, deals were to be had. Her seminar title, “Buying pre-foreclosures at 40 to 60 cents on the dollar” got the attention of first time buyers and investors at large. Building partnerships and working with peers can be very successful, but we must not rely too heavily on the trickling down of potential business. We must create our own powerful tools to attract clients directly. Done correctly, realtors and other professionals will look to you for business as opposed to you always looking to them... David K. Lal is a licensed broker, a frequent trainer on real estate matters and a consultant to top producing mortgage and real estate professionals. Lal currently serves as the president of the non-profit, National Real Estate Council. Join other top agents in a twice a month free Power Conference Calls to learn new strategies, marketing and legal updates at www.nrecweb.org/training. Lal can be reached at david@nrecweb.org or by calling 888-97-4-NREC.
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A Time for Good Judgment The jury is in. We need judges to modify the way banks behave.
by martin andelman kay, first of all… you’re not buying any of this “the recession has ended” nonsense, are you? Because if you’re one of “them,” then I’m really not sure there’s a whole lot I can say to
O
you except maybe… well, no… actually there’s nothing I can say to you that you’ll find interesting. Just go back to trading your stock portfolio, buying REOs, and loading up on Citigroup, or whatever it is that you guys do these days.
To everyone else… I have a question: At this stage of the foreclosure crisis, is there any doubt that we need some sort of lender and mortgage servicer reform? I’m only asking because it’s hard for me to imagine that there’s anyone, at
this stage of what’s definitely not a game, that wouldn’t readily agree, the American Bankers and Mortgage Bankers Associations, Financial Services Roundtable, and American Securitization Forum, et al, notwithstanding. In point of fact, I don’t think there can be any doubt that lenders and mortgage servicers in this country are working solely in their own best interests, and it should be just as clear that those interests are not aligned with the interests of anyone else; not the investors they’re supposed to protect, not the borrowers whose lives have been torn apart but will someday recover, and certainly not our nation as a whole. The Obama administration has tried to address this situation, but to be entirely candid, their efforts to-date have been limited to a voluntary program, offering what many would describe as meager financial incentives, some stern language and a few public relations efforts. And let’s not dress this thing up… it’s not working. In August, the administration made public the servicer “report cards,” the thinking being that the servicers would be publicly shamed into improving their performance relative to their peers, and were the servicing industry capable of shame, or in other words, if the servicers gave a hoot what regular people thought of them, it might have been effective to some degree. As it is, however, all it should have done was show the country that no one, not even the President of the United States, is capable of making the lenders and servicers do what they don’t want to do. President Obama, Secretary Geithner, and just about everyone in Congress tell them to modify mortgages… they write them a check for a few hundred million… and the lenders and servicers say “no problem,” and then return to doing pretty much whatever they darn well please. And why shouldn’t they? What’s the president or anyone else going to do to them? I mean, absent government support, they’re already insolvent. And they know he’s not going to let them fail no matter what. Of course, that’s not how the servicers would describe it… they’d say, to borrow a line from ex-President Bush: “It’s hard work.” And there’s no shortage of highly compensated apologists running about explaining that servicers are “overwhelmed,” as if there should be an outpouring of sympathy from the general public. Poor servicers… having to deal with all those “irresponsible homeowners” who didn’t see the absolute destruction of the capital markets coming around the corner the way
nobody else did. Being a servicer is hard. Boo-hoo.
Judging Servicers I see, so Bank of America expects us to believe that they simply cannot figure out how to answer the phone. Anything over a few thousand calls a day and the place basically shuts down. I understand… it’s hard to answer the phone… all those buttons, don’t you know. Chase? Well poor Chase can’t seem to hire anyone. They’re having a dickens of a time finding good help. Understandable. The financial sector is running at full employment, after all. And as to Wells Fargo? Well, the banking types at Wells just can’t stop losing borrower submitted paperwork… over and over again. It must be hard to stop bank employees from misplacing things. I can’t even listen to this drivel anymore. Bank of America has 40 million credit card holders, and you can call the toll-free number on the back of their cards 24/7, get a live person within a couple of minutes, and he or she can tell you how much interest you paid in 2005 and where you bought gas last Thursday… even if you’re calling on Christmas Eve. Chase could have hired every man, woman and child in the state of Florida by now if they’d wanted to. And Wells Fargo? Okay, fair enough. I have no trouble believing that Wells is telling the truth when they say they can’t stop losing stuff. The story of servicers being overwhelmed might have been mildly interesting 18 months ago… maybe, but today? We’ve given them enough money to float the Titanic, which is metaphorically exactly what they are in terms of their financial realities. So, if they wanted to be efficiently modifying loans, you can bet your soon-to-beforeclosed farm that they’re more than capable of doing so right now. And who could ever forget the dumbest argument of the new millennium: “Loan modifications don’t work because a huge percentage of borrowers re-default.” We should all understand that the term “loan modification” is a synonym for “lower your monthly payment,” so to say “they” don’t work is evidence of a beautiful mind. I remember how I felt when I learned that more than half of the modifications in 2008 resulted in borrowers having a higher monthly payment. I thought to myself: “Hmmm… I wonder if that could be why they’re “not working. Maybe someone should study that.” Morons. The next installment in the servicer’s excuse-of-the-
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month club was the very popular: “It’s not our fault, the investors made us say no.” Oh, did they now? Which investors would those be? Must be the ones that refuse to maximize their own returns? That makes about as much sense as Bank of America being phone challenged. Why would an investor refuse to modify an underwater mortgage in this market, when the alternative is almost always more costly? It’s absurd, and I hate being treated like I’m six. Nonetheless, almost everyone bought into this lie over this past summer, and I think the bankers figured that since you had to read a 600 page pooling and servicing agreement to determine whether they were full of crap or not, no one would. It worked for a while, but now having read quite a bit more on the subject, I’ve come to realize that the vast majority of investors have about the same amount of clout with servicers as do borrowers. Servicers essentially never get fired. And unless there’s some creepy hedge fund lurking in the finely manicured hedges, what it says in most servicing agreements is basically that the servicer must take steps
to maximize the returns for investors, something they almost never do. In a phrase, it’s not the investors that are holding things back. Further proof of this could be seen in September when Impac Funding, an investor that uses Bank of America Home Loans and GMAC to service many of their mortgages, started contacting borrowers directly with offers to help homeowners modify their loans. It seems that Impac had grown tired of sitting back watching their servicers foreclose instead of modify, and in at least one case, a borrower’s loan was modified in 72 hours. When you think about all of the millions of foreclosures that have already transpired, that is absolutely sickening. And according to a source close to Impac, the results have already improved their returns, so what do you know about that. So, what’s the next faux impediment to modifications going to be? Rumor has it that the banks are starting to pull credit reports in conjunction with applications for loan modifications, so that should slow things down pretty good right there. What’s the answer? Well, we could ask Sec. Geithner to give the lenders and servicers another stern talking to,
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but we’ve just ended our sixth straight month of foreclosures above the 300,000 mark, with August coming in at 356,000, give or take, so it’s not exactly a plan likely to inspire widespread confidence. As it stands, we’re forecasted to end 2009 with a staggering 3.6 million foreclosures for the year, and all forecasts point to even more in 2010 and 2011. We could allow the banks, that absent the fairytale accounting rules that shun mark-to-market, and the trillions in government support provided in one form or another, to fail and then impose strict requirements that… oh yeah… sorry… never mind. I was dreaming there for a minute.
Here Comes the Judge The answer is to reform the bankruptcy code to allow ‘judicial foreclosures,” which is simply another way of saying to lenders and servicers: “If you won’t do what you’re supposed to, we’re telling Dad.” A bill that would allow bankruptcy court judges the discretion to write down mortgages on primary residences for homeowners filing bankruptcy has already been defeated twice. These judges are already allowed to do this on just about every other loan… second homes, commercial property… but not on primary residences. I have to admit something… I ignored the bankruptcy reform bills both times. I didn’t even get it. One side called it the “cram down,” which didn’t sound all that appealing to my ears at the time. I was focusing all of my attention on what the administration was going to do to stop the foreclosure crisis and I had no time for “cram down” bills. Shrewd thinking on my part, I’m aware. Here’s the really interesting thing about this proposal that I’ve only recently come to understand: If judges were allowed to write down primary mortgages for those in bankruptcy… they’d rarely if ever be given the chance to do so. The truth about this proposed change to the bankruptcy laws is that it simply creates a meaningful threat to lenders and servicers who refuse to modify mortgages, a big fat stick, if you will. If the $50 billion in incentives that the Making Home Affordable program offers lenders and servicers for modifying mortgages represents a “carrot,” then allowing bankruptcy judges to write down mortgages on primary residences is “the stick”. And I think it’s pretty clear that today’s lenders and servicers need to be hit with a stick in order to get them to do what we, as a nation, very much need them to do. Nothing else has worked, and we are all suffering as a result.
“It’s very discouraging at times,” says attorney Tim McFarlin of McFarlin & Geurts, whose offices are in Southern California. McFarlin is an experienced bankruptcy attorney who expanded his practice to help homeowners in need of loan modifications over a year ago. “We get them done… eventually,” Tim explains, “but that can mean five, six, seven months or longer.” “It’s clear that the servicers aren’t motivated to do anything quickly, there’s often no rhyme or reason to their behavior, and they do everything possible to give attorneys a hard time. I don’t see that changing without some sort of reform that allows for judicial modifications. Unless they see themselves potentially standing before a judge in the future, they’re not going to play nice on their own… why would they? Homeowners in distress are hardly prepared to file lawsuits against giant financial institutions. And the financial institutions know that. They can do pretty much whatever they want with impunity,” explains McFarlin. If its been said once, its been said so many times that its hard to believe that it’s not front page news every single day… our economy cannot recover without the
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foreclosure crisis coming to an end. Foreclosures destroy property values… everyone’s property values. And they breed more foreclosures, because people spend less… corporate profits drop, prices begin to fall… companies layoff workers, unemployment rises and foreclosures increase. Today, more than 40% of foreclosures are being caused by unemployment. There’s no such thing as a jobless recovery, and even if by someone’s definition there is, it’s not something anyone would enjoy. Bernanke’s latest proclamation that the recession is “probably over,” which was largely based on a recent increase in retail sales, failed to mention that the “Cash for Clunkers” program, higher oil prices, and the seasonal impact of back-to-school shopping fueled that rise. Remove those factors and retail sales fell that month by more than they have since my mother was listening to the Andrew Sisters performing live at Atlantic City’s Steel Pier. Unemployment continues to rise, property values continue to fall, and if it weren’t for the $8,000 real estate tax credit, it’s highly unlikely that home sales would be having their fleeting moment in the sun. I know… the
stock market has been going up, but one would be wise to remember that markets that go up without fundamental basis have the very definite tendency to reverse their course abruptly, and often in mid-autumn. I’m not giving advice, by any means, I’m just saying. All of that notwithstanding, the simple fact is that foreclosures are continuing to destroy the value of the mortgage backed securities that are still right where they were last fall… on the balance sheets of our nation’s banks. At some point, we the taxpayers are going to have to buy those assets so our nation’s banks can begin returning to some semblance of normalcy, and the lower the value of those assets, the higher the hit will be to taxpayers. To-date, servicers and most investors have refused to take any losses whatsoever, which is why principal reductions are as rare as Sarah Palin supporters at MoveOn.org, or union leaders at the RNC. And even though most lenders and servicers are participating in the president’s Making Home Affordable program, the decision as to whether a given loan will be modified or its principal reduced, is still voluntary, which is a euphemism
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for “you’ve got to be kidding”.
Judgment Day As of July’s end, when the administration published the “report cards” showing how each servicer was doing related to their efforts to modify loans, everyone on the list was shown to be an underachiever. And we’re not just talking about ‘C’ students here, we’re talking 9% of an eligible 2.7 million homeowners who had received loan modifications; Bank of America, the “Bank of Opportunity,” as I recall, and one of the country’s largest mortgage holders, came in dead last at 4%. We gave the banks a chance to volunteer, we gave them so much money it’s impossible to fathom, and they basically said… “Yawn”… and continued to foreclose at will. The Obama Administration’s plan was to involve a carrot and a stick. The stick was judicial foreclosures; bankruptcy judges being allowed to write down loans on primary residence mortgages for borrowers filing bankruptcy so they could remain in their homes. Candidate Obama promised that he would support this legislation, and President Obama, as recently as last February when he introduced his foreclosure rescue plan, said that it was a crucial component of his new plan as well. But that’s the last anyone has heard from the President on the matter. He didn’t allow its inclusion in the economic stimulus bill, and now it seems that he doesn’t even allow it to come up at press conferences. He said the proposal would have to stand alone, which was another way of saying that it would be doomed to failure. And in case that wasn’t enough, the banking lobby was standing by prepared to spend tens of millions to defeat it. In the second quarter of this year alone, the powerful Mortgage Bankers Association spent $761,000 on lobbying efforts. And that’s when the United States Senate defeated the legislation that would have saved hundreds of thousands of homeowners from foreclosure by allowing judges to modify mortgages. The lending industry saw it as a major victory, A victory? For whom? I’m not sure these guys understand what “victory” means, or at the very least, they appear to have trouble distinguishing between “battle” and “war”. The bankers say that allowing judges to modify mortgages will increase the number of bankruptcy filings and cause interests rates to rise, but these are
two of the weakest arguments ever put forth because the alternative, which is what we’re all living through now, is a deflationary spiral that continues to drag our economy down and lasts for perhaps a decade or longer. Just imagine what this country will look like, if for the next two years things just get progressively worse… and then it really gets bad. Don’t kid yourself… if we don’t stop the foreclosure crisis and soon, that’s exactly where we’re headed. A recent research report published by Deutsche Bank estimated that something like half of all the homeowners in the United States are going to find themselves underwater by 2011, so woo-hoo! Stan Lockhart, an experienced real estate attorney who has represented homeowners trying to obtain loan modifications and also handles bankruptcies, commented: “Bankruptcy reform can’t harm investors because they have nothing now. The market is where the market is. And if homeowners have no hope, if there’s no hope of equity in the future, then homeownership in this country is on borrowed time and perhaps for en entire generation. Can our economy survive under those circumstances… I don’t think it can and that can’t be very attractive to investors, can it?”
Judging the Political Climate Sen. Richard Durbin (D-IL), along with New York’s Sen. Chuck Schumer, have been championing the bill through both of its defeats. The last time it sailed through the House… Citigroup even crossed banking lines to support the bill, and then it died in the Senate at the hands of the banking lobby. To get Citigroup to support the bill, Sen. Durbin agreed to three… um… modifications, pun intended. One: It would apply only to mortgages already in existence at the time the bill passes, and not to loans made after that date. One would think that this compromise would put an end to the objection voiced by lenders that applying it prospectively would result in higher borrowing costs for all homebuyers. Two: In order to qualify for a judicial loan modification, homeowners would be required to contact their lender or servicer at least 10 days before filing for bankruptcy, which would give that lender or servicer one final chance to be, in a word, a mensch. Three: Violations of the Truth in Lending Act, or TILA, wouldn't allow for the debt to be wiped out, as was the case in the original bill. Instead, such violations would 24
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result in a fine, which is how the statute already works outside bankruptcy court. The response by the banking industry? “Thank you for playing, but sorry… no.” And the arguments behind the industry’s latest objections make even less sense than their earlier smokescreen. Try this one: The bill would even apply to million dollar homes, or homes where the homeowner isn’t behind on their payments. This makes me wonder whether perhaps they’ve forgotten that the bill has to do with bankruptcy, and is not simply a way to shop for a lower payment. Or how about: The bill imposes no time limit, so lenders are worried that they could still be dealing with this issue 30 years from now. My personal response would be to say… fine, and give them a 10-year window, if that will make them feel better, but that’s just me. And the industry’s third latest objection? Under certain circumstances related to TILA violations, the entire debt could be forgiven. Supporters point out that this provision only mirrors the penalties for abusive lending that exist outside bankruptcy court. And I would like to add... have these people ever met a judge? And if so, did that judge seem like the kind of guy who’s prone to giving away houses willy nilly? I met a pretty nice judge in traffic court once, but even he only reduced my fine from $280 to $160. Norma Hammes, a bankruptcy attorney who’s practiced for 31 years and now helps homeowners obtain loan modifications, is more than familiar with how lenders and servicers are handling homeowners at risk of foreclosure. According to Hammes: “They (lenders and servicers) are trying to separate the attorneys from their clients. It’s clear that the banks and servicers don’t want homeowners to be represented by counsel. If they were really serious about loan modifications, they’d put the actual contact information of the HAMP Modification Department on their Websites. As it stands, you have to call and call and then wait on the phone for hours before talking to anyone.” “And that’s just the tip of the iceberg,” explains Hammes. “In the Treasury Department’s FAQs, which seem to be the closest thing to published rules, there seems to be a requirement that the lender postpone a foreclosure while a homeowner is under consideration for a HAMP modification, but that’s far from being something on which a homeowner can count. It happens far too often.” Even HUD-approved housing counselors, who the government has consistently praised as being the frontline
professionals trying to modify mortgages for distressed homeowners, express high levels of frustration at the number of brick walls, bureaucratic incompetence, and seemingly unending bewilderment about the program’s rules that they say are all ubiquitous at lenders and servicers.
The Obama Surprise I have to say that most of what I’ve learned about bankruptcy reform and judicial loan modifications, on one side has seemed like common sense, and on the other, predictable resistance. It’s obvious that the lenders and servicers aren’t going to act in anyone’s interests but their own, no matter what they’re asked nicely to do. And it should come as absolutely no surprise that if they’re not threatened by what a judge might do, then there’s no consequence to their actions. Our country is in crisis, and we can’t expect the banks to act for the overall good of our society… that’s not their role… that’s the role of the elected representatives who serve in our government. No surprises there, right? What’s incredibly surprising, to me anyway, is who has aligned themselves with the banking lobby in opposing judicial loan modifications: Ladies and Gentlemen introducing the Obama administration. In late September, Assistant Treasury Secretary Michael Barr, speaking to reporters, said that, “Bankruptcy reform is an additional tool, but it’s not the focus of our efforts to keep people in their homes.” The Wall Street Journal interpreted Barr’s comment as meaning that proponents of the reform should forget about it, because it ain’t happening. The administration talks tough about stopping foreclosures, but then all it does is talk. Now, instead of picking up the stick, all it’s going to try is increasing the number of carrots, and embracing short sales, which has about the same chance of working as the Hope-for-Homeowners program implemented by President Bush that has modified about the same number of mortgages as exist on my block. Short sales are always a problem, because the lender or servicer has to agree that a borrower can sell the home for less than owed, and forgive the difference. If that sounds a lot like getting a bank to agree to a principal reduction or loan modification, you’re right. So, why would offering lenders or servicers a financial incentive that amounts to little more than a couple of sheckles for agreeing to do what they’re not doing now be effective? Well, it wouldn’t silly. I do have some sympathy for the Obama
administration. They don’t have an easy job, and Secretary Geithner unquestionably has his hands full trying to deal with bankers that are acting like spoiled children in oh, so many ways. But he’s creating some of that by not taking a tougher stance, and it could be that the reason for this is that the Democrats don’t want to ruffle any of Wall Street’s financial feathers before the midterm elections in 2010. They remember what happened to Bill Clinton in 1994, and they don’t want to see that happen again. Geithner’s allowing the banks to ignore the accounting rules that forced banks to mark their assets to the market value, and FDIC Chair, Sheila Bair has said that forcing them to comply with FASB’s rules at this point makes little sense. That’s laugh out loud funny… to me anyway. I guess it makes more sense to allow the banks to have balance sheets that are pure fiction. Well, alrighty then. I suppose that is better, especially when you consider that the alternative is National Socialism… I mean nationalization. I understand the nature of the problems faced by the administration, but I have to say that the way they’re handling it does bother me. If a bank can foreclose on a home, and accounting regulations allow that bank to keep that mortgage on their books at its original, albeit now fictional value until the home is actually sold, then you’re allowing the bank to benefit from the foreclosure for some time, anyway. But if, at the same time, you’re telling the country that you’re encouraging loan modifications, well… it seems disingenuous… to me, anyway. In essence, you’re allowing that bank to temporarily re-capitalize itself on the backs of foreclosed homes, and that may be a preferable alternative to going back to congress for more money for banks in advance of the midterms, and I may even understand that political reality. But I’m pretty sure that the families losing their homes won’t be nearly as understanding once inside the voting booth next fall. It may not be something that shows up in the polls today, but the Obama administration, while it won’t be held accountable for everything that happened before, will absolutely be held accountable for fixing the foreclosure crisis. In that regard they have thus far failed, and I think they’re likely to continue to fail unless they change their tune on judicial loan modifications. Of course, I’m just thinking out loud over here. Usually, I’m not one to judge. TheNicheReport.com
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Working thru the Mdia maze: an update! Wait three days first
by karen Deis
I
t will probably be another month or so before we get the FAQs and clarifications from the powers that be, regarding MDIA. However, we have read the mis-interpretations by compliance attorneys, major lenders, in-house ops managers, blogs and emails, and we wanted to not only point out some of the errors, but also print the exact wording from the Federal Register for you to refer. With that being said, even though they may have misinterpreted it, you know the golden rule of lending don’t you? “Those who have the GOLD make the RULES” and you may have to go along with them, even if they are incorrect. Re-Disclosure Waiting Period – There could be a waiting period of up to six days, depending upon HOW the documents are delivered. This applies to REDISCLOSURE ONLY because of APR or changes in loan terms, and does not apply to the FIRST disclosure. This is where WE got it wrong—there are three different ways you can deliver but the bottom line is that you need to track the receipt date and give the consumer three days to review. • If delivered PERSONALLY, the three-day waiting/review period starts the day it has personally been delivered. (Federal Register – Pags 23303) 3. Timing. When redisclosures are necessary because the annual percentage rate has become inaccurate, they must be received by the consumer no later than the third business day
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before consummation. (For redisclosures triggered by other events, the creditor must provide corrected disclosures before consummation. See § 226.17(f ).) If the creditor delivers the corrected disclosures to the consumer in person, consummation may occur any time on the third business day following delivery. If the creditor provides the corrected disclosures by mail, the consumer is considered to have received them three business days after they are placed in the mail, for purposes of determining when the three-business day waiting period required under § 226.19(a)(2)(ii) begins. Creditors that use electronic mail or a courier other than the postal service may also follow this approach
• If delivered ELECTRONICALLY, FedEx, Courier, the three-day waiting period starts the day you can verify receipt. If delivered electronically (by email or link) you must comply with the E-Sign Act of 2001. (Federal Register Page 23293) • The comment also clarifies that creditors that use e-mail or a courier other than the postal service may also follow this approach. For example, if a creditor provides disclosures through a courier service, the creditor may presume that the consumer receives the disclosures three business days after they are deposited with the courier service, for purposes of determining when the three-business-day waiting period required by § 226.19(a)(2)(ii) begins. The Board is not adopting separate rules or presumptions regarding the delivery of disclosures by overnight courier, electronic transmission, or other means. Although these methods may be faster than delivery by regular mail, the Board believes that, in light of the variety of delivery methods and options offered by service providers, it is not feasible to define with sufficient clarity what may be considered acceptable "overnight delivery" or to delineate a separate time period for resumption of receipt for each available delivery method, as previously stated in the supplementary information to the Board’s July 2008 final rule (see 73 FR at 44593; July 30, 2008).
A creditor is not required to use the presumption of receipt to determine when the waiting period required by § 226.19(a) (2)(ii) begins. Thus, if a creditor delivers corrected disclosures electronically consistent with the E–Sign Act or delivers disclosures by overnight courier, the creditor may rely on evidence of actual delivery (such as documentation that the mortgage loan disclosure was delivered by certified mail or overnight delivery or e-mail (if similar documentation is available) to determine when the three-business-day waiting period begins.
• If the re-disclosures are mailed, then it’s three business days to “presume receipt” and another three business days for the consumer to “review” for a total of six days. (Federal Register – page 23292) SUPPLEMENTARY INFORMATION. Also as proposed, the final rule provides that if a creditor places corrected disclosures in the mail, the consumer is deemed to receive the corrected disclosures three business days after they are mailed. Comment 19(a)(2)(ii)–3 clarifies that if the creditor provides the corrected disclosures by mail, the consumer is considered to have received them three business days after they are placed in the mail, for purposes of determining when the three-business-day waiting period required under § 226.19(a) (2)(ii) begins.
APR Re-Disclosure Trigger – Mostly what we have been seeing is that lenders THINK you need to redisclosure if the APR goes UP or DOWN by more than 1/8 percent. It only needs to be re-disclosed if MORE THAN 1/8 percent (.125). If lower, no disclosure is needed. (Federal Register page 23301) (2) All changed terms, if the annual percentage rate at the time of consummation varies from the annual percentage rate disclosed earlier by more than 1⁄8 of 1 percentage point in a regular transaction, or more than 1⁄4 of1 percentage point in an irregular transaction, as defined in § 226.22(a).
The rule specifically states that you only have to redisclose if the APR is more than your LAST disclosure— not your initial one (unless of course this is only the second disclosure). (Federal Register – Pages 23303 – 23304) 4. Basis for annual percentage rate comparison. To determine whether a creditor must make corrected disclosures under § 226.22, a creditor compares (a) what the annual percentage rate will be at consummation to (b) the annual percentage rate stated in the most recent disclosures the creditor made to the consumer. For example, assume consummation for a regular
mortgage transaction is scheduled for Thursday, June 11, the early disclosures provided in May stated an annual percentage rate of 7.00%, and corrected disclosures received by the consumer on Friday, June 5 stated an annual percentage rate of 7.15%: i. On Thursday, June 11, the annual percentage rate will be 7.25%, which exceeds the most recently disclosed annual percentage rate by less than the applicable tolerance. The creditor is not required to make additional corrected disclosures or wait an additional three business days under § 226.19(a)(2). ii. On Thursday, June 11, the annual percentage rate will be 7.30%, which exceeds the most recently disclosed annual percentage rate by more than the applicable tolerance. The creditor must make corrected disclosures such that the consumer receives them on or before Monday, June 8.
ESIGN Act (Electronic Signatures In Global and National Commerce Act) – You will find a lot of references to the ESIGN Act and delivery of the disclosures…so we looked up the act and have included a copy of it for you. What the Act says is that you must insure that the consumer has Internet Access AND that you also confirm that they have the proper software to open the document you are going to send to them. For example, if you plan to deliver the docs in PDF, you need to make sure the consumer has Adobe software to receive it. Believe it or not, some people don’t even have MSWord! Disclaimer: As with all new rules, there may be more/ other notifications, directives and interpretations in the future. Rely on your legal counsel for direction on how these changes will be implemented and how they will affect your individual company. Copyright MortgageCurrentcy.com 2009 Karen Deis, Publisher, MortgageCurrentcy.com, author and speaker in the mortgage industry since 1998. Interpreting the lending rules and regulations in plain language for loan officers, underwriters, processors and owners/managers.
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Obscure truths about the health of fha So what happens next? by Brian Montgomery
T
he FHA critics I suspect are thinking I told you so with Friday's announcement (HUD No. 09-177) that the FHA “reserves” have fallen below 2%. But they would be wise to consider the following episode. The story is legend among the HUD career staff: many, many years ago, an unnamed HUD Secretary upon learning the FHA “reserve” fund had surpassed $20 billion instructed the staff to print a rather large check, imprint it with the dollar amount and make it payable to the White House (whose budget office was looking for revenue). With the check and the photographer in tow, the group proceeded to the White House. With much fanfare, the Secretary presented the check to the White House budget office who was rather surprised at the Secretary’s gesture. Why? What he didn’t know, was that the FHA reserves (technically it is called a “Capital Reserve”) only existed in the ethereal and arcane world of actuarial accounting. In short, each year a contractor hired by HUD estimates 30 years into the future how FHA loans will perform year-by-year. If you are wondering how exact can an opinion of what the economy will be like each year now until 2039 you’re not alone. As a reminder the FHA is a mortgage insurance product plain and simple. It collects premiums from borrowers (revenue) and also pays out claims to lenders when loans go into default and foreclosure (outlays). The contractor estimates whether or not the revenue exceeds the expenditures. The Congress has told HUD that the capital ratio must exceed 2% of
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the economic value of the loan portfolio which today numbers more than 5 million homes. What happens to FHA if the value of those homes continues to erode and thus devalues their value within the FHA portfolio? Or if the economy is sluggish and more people lose their jobs and can no longer make their mortgage payments? While FHA did not take part in the housing boom, it is nonetheless feeling its effects through declining house prices which in turn drives down the economic value of their portfolio. Additionally, one year ago Congress, with much prodding from the FHA, finally banned a form of down payment assistance that utilized so-called “gift” funds. Many of these entities that offered buyers “zero down” loans essentially funneled a donation from the seller through their charity to the borrower. With absolutely no “skin in the game” from the borrower (many of whom had to repay the “gift” when it was added to the sales price) it is no wonder those loans defaulted at a rate 3 times greater than loans without the “gift” down payment. Unfortunately, those loans became 1/3 of FHA’s new loan portfolio by 2007. FHA twice tried to end the practice but was rebuked by the Courts. Congress finally ended the program, but those loans are still in the FHA portfolio and there are hundreds of thousands of them. Coupled with the struggling economy and declining home prices, the FHA loan portfolio must also endure the “gift” down payment loans for many years to come. On the bright side, the last 18 months has put an exclamation point on why we have an FHA. FHA has saved close to a million sub-prime/Alt-a borrowers from
The voice of housing
possible financial ruin by allowing them to refinance into a safe and secure 30 year fixed rate mortgage. And I say “allow” since prospective borrowers must verify income and job history as part of a rigorous underwriting process. Another 2 million qualified borrowers (80% of them first-time homebuyers) have taken advantage of the declining house prices and historically-low interest rates to purchase a home using FHA. And through it all FHA has helped pump more than $400 billion of mortgage activity and liquidity into the market since 2008 and with a higher credit quality borrower whose average FICO score is 700. One can only imagine how much worse our economy would be right now without the FHA. But there are areas of concern with FHA. For more than two years I implored Congress to give FHA the funds for more staff and to upgrade their IT systems whose average age was 18 years. It is still a mystery to me why we never got the much-need funds especially when FHA went from 7%-10% of the mortgage market to close to 30% in a matter of weeks. American taxpayers should be grateful to the FHA career staff who endured that massive run-up in volume without any additional staff. So what happens next? In an effort to increase the capital ratio back above 2% FHA could do some or all of the following: • Tighten underwriting criteria • Increase premiums • Raise the down payment requirements above 3.5% • Overlay a credit score cut-off • Utilize other efficiency and risk management measures And it may be the case that home prices will no longer decrease and thus the economic value of the portfolio could improve on its own. I would add another fix: FHA should strongly consider lowering its loan limits. While the maximum loan limit of $729,000 is only in 75 high-cost counties, another 600 counties have a loan limit between $275,000 and $729,000. With a nationwide median home price of less than $200,000 I think it is time to consider lowering them. I think most Americans are asking themselves that regardless of the location, why is the federal government helping someone buy a $729,000 home or a $600,000 one for that matter? One year from now, FHA will again see how the FHA
The voice of housing
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fund endured the withering economy. While that outcome is not known, what is known is this: the FHA which is celebrating its 75th anniversary this year has performed its counter-cyclical role as designed. And in so doing, saved millions of families from possible foreclosure. That is a success story too few people know, unless you are one of the families FHA helped save. Congress needs to do whatever it can to help ensure FHA is around another 75 years – and beyond.
As FHA Commissioner, Brian Montgomery was responsible for the oversight and modernization of the insurance fund’s $600 billion portfolio. He was also responsible for HUD's regulatory tasks to the housing mission of the GSEs and the manufactured housing industry. Montgomery came to HUD from the Executive Office of the President. At the White House, he contributed to the policy process on a wide range of issues including increase access to affordable housing.
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government affairs? Want to have one?
by Gary Opper
I have come to the conclusion that politics is too serious a matter to be left to the politicians. ~Charles de Gaulle, 1890 – 1970, French president, general and statesman
W
ant to have a great year as chairperson of your government affair committee? Here are some suggestions to create a great year. The author was the former Government Affairs Chairman of the Florida Association of Mortgage Brokers. PRESS RELEASES – Provide press releases with appropriate information on a timely and consistent basis to the general public and the association. Set a goal to release two press releases a month. Write press releases on behalf of your public officials to publicize their accomplishments. This will establish a greater relationship with elected officials at a very cost effective price. You can send press releases to highlight: • Your Government Affairs Goals for the upcoming year • Your President’s new direction for lobbying • Your elected officials attendance at your meeting • Your legislature agenda • Your lobbying accomplishments
LEGISLATIVE UPDATES – Provide your membership an update approximately every two weeks as to what is happening at the Federal and State level regarding legislation that is important to mortgage brokers. The update ideally should be two (2) to three (3) pages. BOARD MEETING – At each board meeting, provide a
program that is interesting, enlightening and entertaining regarding the legislative process. Some easy programs are: • Have an expert speaker speak on “How to Lobby in Your State Capital,” “How to Lobby in Washington,” “How to Lobby at a Local Level” or/ and “How to Create a Grass Roots Program” • Have public officials as speakers • Have an event (reception/breakfast/lunch/cocktail party) for elected officials at each meeting • Have your regulators update the attendees on regulation issues
FUNDRAISERS – At each meeting organize a fundraiser for a candidate or several candidates. REGULATORS ATTENDANCE – Invite your regulators to each local chapter event. Each chapter should establish a relationship with all regional offices. PUBLIC OFFICIAL ATTENDANCE – Invite your Federal, State and Municipal public officials. Each chapter should establish a close personal relationship with key legislators. KEY CONTACT PERSON – Identify and develop a key contact person for each member of the State House of Representative, the State Senate, The United States House of Representatives and the United States Senate. Target banking, finance, appropriations and regulating committees. CONSUMER PROGRAM – Have frequent programs to the appropriate target market for mortgage education. Contact a legislator and ask him or her to contact faithbased organizations to provide audiences for the program. TheNicheReport.com
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This would expose consumers to a wide range of topics, such as, first time home buyer education, how to refinance a house and how to avoid predatory lenders, etc. Your organization will gain an increase in public exposure and would show your effort to stamp out abusive lending..
INCREASED INTERACTION – The Executive Committee and the association’s key contacts should have regularly scheduled interaction with public officials. A DAY IN THE LIFE - Several brokers should shadow multiple elected officials for a day and write articles regarding their experiences. NAMB LEGISLATIVE EVENT – Have your state send its’ largest contingency to the annual trip in Washington. REGIONAL AND COUNTY DELEGATIONS – Create a program to present to your county and/or regional legislation delegations. REGULATORS – Each chapter should host at least two or more programs per year with your regulators as guest or speakers. HUD – Aim High! Invite the Secretary of HUD to speak at a meeting.
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A THEME – Develop a multiple year consistent theme so that people will recognize your organization. This will establish you in the minds of public officials, even though you may not have the financial resources of other organization. It will also differentiate your organization from other similar organizations. LOBBY DAYS – Have a dynamic speaker from either the Legislative Branch or the Executive Branch speak at your lobby day. Teach attendees how to lobby prior to attending this important day. SUMMARY - You do not have to implement all these ideas and suggestions at once to have a great year in Government Affairs. You can implement a few and continue implementing programs as your association gains experience and confidence. Email me if you have any other great ideas or suggestions. Good luck! Gary Opper is President of Approved Financial Corporation, Weston, Florida. Approved Financial Corporation is a licensed mortgage lender. Mr. Opper has been a Mortgage Lender and Note Buyer since 1984. Opper is president of Levie-Opper, a mortgage fraud litigation support firm and is also a mortgage consulting. Opper has a CPA and a CFP license. Opper is past President of the FAMB - Miami Chapter and the FICPA - Gold Coast Chapter and is a member of the NAMB, FAMB, AICPA and the FICPA. Mr. Opper has been the NAMB’s Writer of the Year and Featured Writer of the Year.as well as the FAMB’s Broker of the Year. Mr. Opper is available to speak to your group. Please contact him to arrange a speech for your event. He may be reached at (954) 384-4557, fax: (954) 384-5483, or e mail: opper@approvedfinancial.com.
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MBS WARROOM
MBSWARROOM.COM The Year of the Federal Reserve Making Sense of 2009 by Adam Quinones and Matthew Graham
A
caveat before you start reading: when we read trade publications, our grains of salt are usually at the ready as we start to sift out the actual value of the commentary versus the obligatory embedded sales pitch. To save our time concocting hidden self-promotion, and your time looking out for it, we’ll just give you our top secret sales plan ahead of time: Share something educational that benefits the industry while keeping you, the audience, interested in the idea of reading more in the future. We’ll try to earn your money later, for now, we’ll just get to know each other a little better by discussing the state of the mortgage market and where we're going from here... We’ve all read enough, heard enough, and experienced enough to know how we got here. Whether your personal understanding is informed by real life experience or by a satirical stick figure slide show, we can all agree that loan programs, funding lines, lenders themselves, and even the mighty GSE’s were destroyed or damaged at an unprecedented rate. We can all agree that loan funding sources were rapidly vanishing and the secondary mortgage market was near complete collapse. We can all agree that the mortgage market was in desperate need of liquidity—even resuscitation… The Federal Reserve provided both on November 25, 2008. from the Federal Reserve Press Release:
Purchases of up to $500 billion in MBS will be conducted by asset managers selected via a competitive process with a goal of beginning these purchases before year-end. Spreads of rates on GSE debt and on GSE-guaranteed mortgages have widened appreciably of late. This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally.
The primary outcome of the announcement: COLLAPSE PREVENTED. Certainly the initial market reaction was a welcome change for the industry. Mortgage rates dropped to record lows, loan demand went through the roof, deserted office space filled up, despondent originators stepped off the ledge, and the “it that shall not be named” (REFI BOOM...sssssh) had finally arrived. Although MBS prices did in fact create an unprecedented level of refi activity, unforeseen challenges would follow... Among the most evident consequences of such a meteoric price appreciation was the rapid exhaustion of lender capacity. Preventive cost cutting measures in response to a previously low volume environment left operations departments working with essential staff only. The effects were obvious as turn times lengthened, lock extensions became more expensive, lock desks shut down early, and fallout became the new norm.
TheNicheReport.com
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MBS WARROOM
Aside from counterparty tensions running much higher and the loan process lengthening, another challenge contributed to a new source of confusion and frustration for the industry: The Primary/Secondary Spread was widening. Consumers were hearing government officials and the media referring to mortgage rates in the 4% range. However, because lenders were now attempting to control the size of their pipeline via mortgage rate moderation, originators were unable to offer these rates to borrowers. As a result, many potential purchases and refinances didn’t make it to the closing table as consumers decided to hold out for lower rates. Although this was a minor development in the primary mortgage market, the resulting consequences would contribute to a significant shift in the secondary market's supply/demand equation. After the initial euphoria of Fed buying wore off in late January, the MBS current coupon bottomed out, mortgage rates started creeping into the 5.00s, new loan production moderated, and originators started to wonder if the “it that shall be named” (REFI BOOM..ssshhh!) had come and gone in an instant. More importantly, an accurate read on the secondary market's bias towards new loan production MBS coupons was presented. The previously discussed lender capacity constraints had resulted in higher fall out, less closed loans, and therefore slower MBS prepayment speeds. Prepayment speeds determine, to a great extent, the timing of principle cash flows back to the MBS investor. If forecasts of prepayment speeds are miscalculated, the value of an MBS holder’s portfolio can be drastically effected. The faster the prepayment rate, the quicker cash flows are paid back to the bond investor, and therefore the shorter the life of the fixed income investment. Conversely, when prepay speeds slow down, the average life of the bond's cash flows are extended. This occurs because of the embedded call option in mortgage-backed securities. Plain and Simple: Only the borrower has the option to pay off their mortgage debt. If a borrower's mortgage rate is below current market yields, they will be less likely to refinance. If an investor buys a mortgage-backed security with cash flows supported by borrowers that have mortgage rates near current market, and rates unexpectedly rise, that investor will be holding an MBS that is unlikely to prepay because borrowers will have no incentive to refinance 34
October 2009
(because current market rates are higher). This is called extension risk. Once MBS investors became aware of the operational limitations of lenders and its slowing effect on prepayment speeds, a portion of the mortgage buying community began to overlook the need to hedge prepayment risk. Money managers, hedge funds, and even banks slowly shifted their positions "up in coupon". The downside of this bias: it subtracted from demand side support for "rate sheet influential" MBS coupons and forced the Federal Reserve to become the sole source of liquidity for mortgage originators looking to protect their pipelines from interest rate risk. The Fed's role in the mortgage market had evolved into something it was not prepared to fulfill. On March 18,2009, the Federal Reserve solved that problem. from the March 18, 2008 FOMC Statement: To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.
In the months that followed the Federal Reserve's presence in the secondary mortgage market was glaringly obvious. The Mortgage Banker selling rate on new production coupons averaged approximately $2
The Primary/Secondary spread is the difference between the average par 30 year fixed mortgage rate and the MBS market current coupon
MBS WARROOM
Agricap Programs At-A-Glance
30 year MBS Coupon purchases only. Data as of September 24, 2009.
billon per day while the Fed's official buyers averaged $5 billion bonds purchased per day. MBS prices hit new all time highs and mortgage rates reached new record lows. Status quo had been restored in the golden era of mortgage rates, this was indeed the second phase of “it that shall not be named.� (REFI BOOM...ssshhh!) But summer brought an unfriendly development for mortgage rates. Government stimulus packages were filtering through the economy and the Fed's balance sheet expansion was freeing up credit in the banking system. "Better than expected" economic data became an ongoing trend, talking heads were discussing "green shoots", and an ongoing stock market rally was adding energy to the idea of a V-shaped recovery. Markets were seeing the best evidence for a bottom since the recession began. Optimistic economic outlooks led to the progressive unwinding of risk averse positions in Treasuries. As market participants exited their "flight to safety" trades, benchmark yields rose. Normally this would have negative effects on MBS prices, however the Fed's intervention in the secondary market sheltered the MBS coupon stack from yield curve steepening and kept mortgage rates from rising. Unfortunately it distorted the value of mortgage related bonds in the process. Relative to benchmarks, mortgages were priced far too rich. Combine that with a traditionally bear-biased season for bonds and the ingredients were there for a major correction...and it happened in a hurry. May 27, 2009. BLACK WEDNESDAY: a day when "rate sheet influential" MBS coupons were sold by banks, servicers, pension funds, money managers, insurance companies, and hedge funds. Over $10bn in MBS
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MBS WARROOM
coupons were offloaded from portfolios, an amount not even the Federal Reserve could stand up to. MBS prices plummeted and lenders re-priced for the worse two and three times, pushing mortgage rates to the highest levels of the year. Originators were dejected and borrowers bewildered. The second phase of "it that shall not be named" (REFI BOOM...ssshhh!) had come to an end in just one trading session. As summer progressed, "green shoots" theories died down and bond yields fell as uncertain economic outlooks re-emerged in the marketplace. Eventually the MBS current coupon leveled out in the mid-4s, mortgage rates stabilized near 5.00%, but there was never a third stage of "it that shall not be named" (REFI BOOM...ssshhh!). For mortgages, 2009 has been the year of the Fed. If you’ve originated, processed, underwritten, closed, shipped, sold, purchased, packaged, or securitized a mortgage in 2009….there is a high likelihood that the Federal Reserve purchased your loan. This leads us to a question many are asking... WHAT HAPPENS WHEN THE FED EXITS THE SECONDARY MORTGAGE MARKET? The Federal Reserve will gradually withdraw from the secondary mortgage market, slowly waning us off their support. Subtracting the Federal Reserve's bid will likely back yield spreads out 10 to 15 basis points and increase mortgage rates 40-70 basis points. However, as some form of liquidity backstop will likely be created or re-established (GSEs) to fortify the overseas appetite for AAA yields, the mortgage market will still offer the highest and safest return on principle worldwide. Mortgage securitization will live on....
Adam Quinones is Managing Editor of Mortgage News Daily and co-founder of the MBS War Room. Matt Graham is the creator of the MBS War Room, a first of its kind service bringing institutional quality market data and analysis to mortgage market professionals. Matt and Adam's intraday MBS market commentary can be found on MortgageNewsDaily.com
RULES & REGULATION HEADLINES
Rules & Regulation Headlines October 1, 2009 is the day that will live in infamy—as far as the mortgage industry is concerned! For some reason, most of the gianormous changes in the rules and regs are happening on that date. FHA Condo approvals go away! And all FHA appraisers must be “state” certified—or you buy back the loan. Freddie’s updated underwriting guidelines kick in on October 1 and their 125% Refi Relief goes into effect! Oh, and don’t forget Reg Z: High-Priced Mortgages (HOPEA) and the new Truth In Lending “Advertising Rules”. Are your eyes glazing over yet?
RESPA Rules FAQ’s – They Keep Changing! It all started on August 3, 2009 and who know when it will end! HUD has revised the RESPA Rule FAQ’s at least a halfdozen time and I am sure that by the time you read this, there will be more versions. The answers to the “questions” created EVEN more questions and “answers”. If you have any previous copies of the New RESPA Rule FAQ’s from HUD, throw them away and keep checking this link: http://www.hud.gov/offices/hsg/ramh/res/resparulefaqs.pdf With each new update, HUD is now highlighting the changes in BOLD letters. Kudos’s to HUD for getting those questions answered before the January 1, 2010 mandatory date. The hope is that by the time the GFE goes into effect on January 1, 2010, that most of the questions/issues will be addressed. These interpretive comments only cover the first 10 pages of the FAQ. The balance of the pages cover line-by-line, what to fill in the GFE and HUD1. What is MISSING is info about the HUD1A so stay tuned! • If you start to use the new GFE prior to the 1-1-10 date, you must close the loan using the new HUD 1. This info needs to passed on to your title rep or closing department. • Check with your lender as to who is going to issue the GFE—and if you are a loan originator or mortgage broker, how they plan to monitor the accuracy of your GFE.
Record keeping is going to be your next big hurdle! You must retain e-Sign records for three years! How are you going to do that? Additionally, if you translate into another language (word for word), how do you prove what it says—other than the auditor knowing that language? What was NOT answered? Will the HUD1 need to be translated into the same language? Stay tuned for this one! Oh, and the “changed circumstances record keeping is
going to be a fly in the ointment because the loan officer must “demonstrate” that “information” was inaccurate to begin with. This is one area everyone on the origination team must be familiar with—and what triggers an updated GFE to be re-issued (due to “changed circumstances”). As for New Construction, suggest that you create a form that says, “That any time up until 60 calendar days (not business days), that you/lender MAY issue another GFE. If you don’t have the new construction borrower sign this piece of paper, you may NOT issue another GFE, unless under the “changed circumstances” rule. The Bottom Line: Even though it is several months away, start thinking about systems and procedures within your office on how you plan to monitor, re-disclose and what records to keep when audited. Fannie's Conventional Alternative to the FHA 203k Program – HomeStyle® Renovation Program With all of the foreclosures, there has definitely been a demand for rehabilitation loans to help homeowners not only purchase but make improvements to the home they are purchasing. Many have turned to the FHA 203k program. However, the 203k program has limitations not found with Fannie Mae's HomeStyle Renovation loan. Fannie's HomeStyle Renovation product is available on a negotiated basis. Not all lenders have access to this product. If nothing else, this is a great conversation tool with Realtors, especially those who deal with foreclosure sales. Make sure your PMI companies support and allow this product. If so, owner occupied deals can go as high as 95% (subject to MI). One area often overlooked is the ability to do one unit investment properties to 80% LTV. A nice perk for those who buy foreclosures to fix up and sell or rent. (Mortgage Talking TheNicheReport.com
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RULES & REGULATION HEADLINES Points® Flyer for your agents & investors can be found at www.MortgageCurrentcy.com) Eligible Borrowers: • Individuals • Investors • Non-Profits • Local Government Agencies Eligible Loan Purposes: • Purchase and Renovate Property • Refinance and Renovate Existing Property Eligible Properties: • Owner Occupied 1-4 unit properties • Second Homes and Investment properties (limited to one unit properties) • Manufactured homes are NOT allowed • Approved Condos, Co-op's and PUDs are allowed (LTV restrictions may apply)
Freddie Unveils New HomeSteps Promotion – Purchase Agreement (Expires 10-30-09) Home Buyers get up to 3.5% towards costs and a home
RULES & REGULATION HEADLINES warranty from Freddie for accepted offers until October 30, 2009 (close by year-end). Make sure your agents have signed-up for the Selling Agents program -- they get listed on the site as a resource and receive all the latest promotions from Freddie. The SmartBuy® promotion is a good opportunity to Co-Market with a participating Real Estate Agent. The coupon is filled out on the SmartBuy® page link above by the buyer and then handled by the Realtor - it must be presented to Freddie with initial offer -- Your PA will specify the terms of the contract so no need to track the coupon. Freddie Mac does not offer any special finance program for their REO’s – your loan will be saleable to Freddie, FNMA, RHS, VA, or FHA. Just be sure to follow that program’s guidelines for seller concessions. Freddie Mac Updates List of People NOT TO DO BUSINESS WITH - Exclusionary List (Effective 8-21-09) They are not kidding – Do not employ or use anyone on this list and sell that loan to Freddie. Fannie has not issued one yet—but we’re sure they share the same info. Using someone from that list can also disqualify many other loan programs from FNMA to FHA. The Exclusionary List is Freddie’s “do not use these people for anything mortgage loan related” list. Freddie took steps to update the Exclusionary List off-cycle – I’m pretty sure that means we got it earlier than Fannie’s list! FHA - The Deadline is Here! New FHA Appraiser Requirements (Effective October 1, 2009) Go through your approved appraiser lists now and verify that your FHA appraisers are CERTIFIED with the state, not just REGISTERED. If they are not CERTIFIED you cannot use them for properties with case numbers issued on or after October 1, 2009. Certified and uncertified appraisers alike will still be in the FHA system come October 1, 2009. If you assign an appraisal to a non-certified appraiser the appraisal will be uninsurable. You (the lender) then get to complete (at your expense) a new appraisal performed by a certified appraiser. You MAY NOT charge a borrower for the second appraisal. Keep in mind that you probably won’t catch this faux pas until FHA informs you that your loan is uninsurable. Submitted by MortgageCurrentcy.com.
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CENTER STAGE
CENTER STAGE WITH flagstar bank A talk about eClosings with Brian Boike, First Vice President, Lending Support brought to you BY THE NICHE REPORT
Over the last two years The Niche Report has highlighted many companies in the industry to help you better serve your clients and enhance the success of your business. Flagstar Bank is one of the nation’s largest wholesale mortgage lenders and an established leader in innovative mortgage technology, including its award-winning eClosings. Brian Boike, first vice president, Lending Support at Flagstar Bank, talks about eClosings and how originators can leverage this important technology.
What is the current status of eClosings and its acceptance among your brokers and correspondents? The adoption is moving along at a steady pace and increasing monthly, although we feel it could and should be spreading even more quickly. We’re getting good feedback from customers and feeling good about how it’s taken off. The current marketplace and downturn of the industry as a whole have somewhat slowed the adoption of new technologies such as eClosings. Currently, people are not as focused on it — they’re thinking about regulation change and where the next loan is coming from — but eClosings will be the number one initiative when the market normalizes. How long has Flagstar been doing eClosings? Flagstar started with refinances via our home lending centers in Michigan in 2007; and we’re now doing
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October 2009
eClosings in all 50 states. Currently, eClosings are being done primarily on agency refinances, with both Fannie Mae and Freddie Mac accepting the eNotes. FHA and Ginnie Mae are not active yet, but have shown interest. Our goal at Flagstar is to have 80% of our agency refinances done via eClosings by the end of 2009. We have a little less influence on purchases as the seller’s Realtor often chooses the closing agent. What industry indicators do you use to measure the acceptance/usage of eClosings? We look at a variety of tools such as the MERS eRegistry, which shows us that online eNotes are growing — there are over 130,000 eNotes to date. We also know that some loan modifications are being signed electronically, which is a good use of the technology and solves a more immediate problem. How easy is it switch to eClosings? For Flagstar customers, it is extremely easy to switch as the process is integrated within our well-established paperless workflow. Originators simply click yes when asked if they want to close a loan electronically. Customers can begin doing eClosings as soon as they register with Flagstar. Settlement agents will see the most change to their processes, but with a little training, we’re seeing things go quite smoothly. We encourage settlement agents to take the online training and to work closely with their account executives. We partnered with Fiserv in developing our eClosings platform, and now we
CENTER STAGE have added Stewart Lender Services because they have a national network of experienced and knowledgeable closing agents that we can tap into. What are the benefits of using the eClosings system, and who is the ideal candidate? Really, there are benefits to everyone who is part of the mortgage transaction. For correspondents, their loans are purchased much more quickly, so they can do more loans per month and not worry about line capacity. Because of the increased data integrity of electronic transactions, we often begin reviewing the closing package the day the loan closes and purchase the loan before the correspondent even sends in the paper package. We also post the eNote purchase times on our Web site for correspondents, so they always know exactly how much faster it is. For borrowers, it’s just a simple click to sign an entire closing package versus having to sign many, many pages of a paper loan closing package — saving time and money. For originators, there are no missing documents that have to be found/copied/re-sent; there are no documents missing signatures; there are no shipping costs involved with the process. And everyone gets the added benefit of saving paper, trees, and ultimately, our environment. What can you say to your current and future customers to help them make the change to eClosings? First, the use of eClosings across the industry is absolutely inevitable. Many have seen the efficiencies, moved into it to varying degrees, and they’ll keep moving. While other lenders have had to switch their focus away from technology, Flagstar started at the right time. As is our tendency, we were ahead of the curve on investing in and developing an innovative technology. We were well along with practical eClosings technology before the market went into its current situation, and it was easy for us to continue. Plus, with our size, we are nimble. Technology has been Flagstar’s way from the beginning. It’s another reason originators like doing business with us — it’s easier. The industry in its entirety is moving in this direction and everyone will get there eventually. How does it tie into other Flagstar technologies? eClosings tie in very well to Flagstar’s Web-Based Closing Documents. In fact, it just takes one click of a button. eClosings also allow Flagstar customers to be
paperless start to finish, using our Loantrac platform and our DocVelocity document management and storage system. With DocVelocity, you never have to print out or physically store the closing package at any point. No missing docs or signatures; it’s all there. You get an e-mail, retrieve the closing package, you drop it into DocVelocity for retention, and you’re done — it meets all state requirements. The originator can be paperless start to finish … just as Flagstar is. What’s next with technology for the mortgage process at Flagstar? We are enhancing our systems to comply with new and upcoming compliance and regulation changes, such as RESPA, HVCC, SAFE, HPML, and MDIA. We are offering new tools to help customers comply, easily, securely and much more confidently. We’ve always been committed to using technology to make it easier to do business with Flagstar than with anyone in the industry, so our customers won’t need to go anywhere else. And as always, we’ll be listening to their feedback as to how we can save them time and save them money.
Residential Mortgage Banking Branch Program for Professionals Guaranteed, an established and well-funded Mortgage Banker since 1992, is positioned to continue its prominence in the industry. As a leading FHA Direct Endorsed Lender, we underwrite all files in-house. This allows for faster approvals, common-sense underwriting and timely closings. We are actively seeking relationships with productive mortgage teams and entrepreneurial mortgage professionals.
EXECUTIVE OFFICES: 108 Corporate Park Drive, Suite 301, White Plains, NY 10604 CALL: Kelley Berkheiser or Louis Tesoriero (888) 329-GHMC www.joinguaranteed.com
TIP OF THE MONTH
TIP OF THE MONTH W.I.N. Revisited BY STEWART MEDNICK
I
have been writing this column for just over two years. I was perusing through some of the first articles I wrote as I reminisced over the anxiety I felt as I painfully and passionately typed each word wondering if the audience would enjoy this idea. I wanted each word to be meaningful and each sentence to explode with brilliance and each paragraph to conjure thought provoking stimulation…. Ok, a bit over the top, I know. But, I really wanted to stress that there are different ways to work. There are a variety of actions that, in various combinations, can build and grow your business. I wanted this column, “Tip of the Month,” to be the first page a subscriber would turn to see what new ideas I had to be implemented to make this month’s sales or closings a bit better than last month for you. You are the subscriber. You are my target audience. And since I am still here writing to you and you are still here reading, two years later, we are both doing something right. So what makes a successful business? What drives an ambitious mortgage professional? What are the nuts and bolts to the daily grind that keeps the passion alive and the fire in our bellies lit? A W.I.N.ning strategy may be one of those things. I wrote about this concept in the November 2007 issue of The Niche Report. The opening paragraphs went something like this: The other day, I was chatting with a friend and fellow football coach, Haywood Simmons. Yes, I am an assistant varsity football coach at a local high school. I love the 42
October 2009
game and as a former football player myself, I believe that many lifelong lessons are learned on the grid-iron. Coach Simmons and I were sitting at my kitchen table sipping morning coffee. Every time he raised his mug for a sip, I was mesmerized by the large, multi-jeweled National Championship ring adorning his right hand. He earned the ring in the 1993-1994 season as a defensive tackle for the Wisconsin Badgers football team after beating UCLA in the Rose Bowl. “Hey Coach,” I started, “I bet you have some great stories of the glory days, huh?” “Some of the greatest lessons in life I learned from Head Coach Barry Alvarez. He is, to this day, one of the most influential people in my life. He taught me about the ‘W.I.N.ning Strategy’ I use in my everyday life….” W.I.N. What’s Important Now. I listened intently as I learned about using time wisely and prioritizing events. I started to think of many motivational and time management gurus and how many of the tips I gleaned from them over years seemed to fit nicely into this framework. Mundane, unprofitable and unanticipated tasks have a way of eating up massive chunks of time in any business day. Here are some suggestions for focusing on profitable and important tasks daily with W.I.N. The wonderful aspect of W.I.N. is the ability to easily customize a system to fit anyone’s needs for any event or length of time. In all situations, the first step is to determine relevance of activities to a specific goal. Perhaps you are prioritizing necessary actions to clear conditions on a loan amongst other daily activities like returning phone calls, keeping appointments outside of the office, or
TIP OF THE MONTH responding to emails…. …Assessing which tasks to do immediately can be pooled in two categories: what tasks are prerequisites for goal completion and what tasks makes money. Each task should stage the next one on the list when completed, so a natural progression and smooth transition from task to task transpires. When a task is completed, think to yourself, “What’s Important Now” and move to that task, which should be the next one staged from the newly accomplished task. Seems easy and obvious, but a good way to mentally take a role-call of tasks and the order they will be performed…. Over the years, I have contemplated, expanded and refined many work flow concepts. I still like this because it has an easy elegance about it. What’s Important Now? How do I know what’s important now? I know that I should prioritize. I know I need to keep my eye on the money. But am I logically or emotionally reconciling the next action? I believe there are two methods to making a decision. The preferred method is logical. Logic makes sense. It is a thought-out process and an end to a means may be obtained. The not-so-preferred method is emotional. These decisions are seldom sound actions. We regret these frequently. Emotions suck, to put it bluntly. Emotions get us in trouble. These decisions are snap judgments that reveal themselves in the form of a raised voice, foul language, hasty actions, and lack of listening…especially to logic itself. I will say it again, emotions suck. Tom Hanks summed it up best as a lush baseball manager for a women’s league in the movie A League of Their Own, “Are you crying? There’s no crying in baseball!” Yes, there is no room for emotional decisions, is what he really would like to have said if he was sober (alcohol logic is not open for discussion in this column). Logically, you need to ask: “Where is the pain?” Where do you need to focus to cure the pain? What’s Important Now is subtitled, Where’s the pain because I have a hypodermic needle with morphine ready to kill it! The pain could be a decrease in sales. It could be issues with retention of employees. It could be lack of repeat business from customers. What’s important now is where the weakest link is in your business. So now that I can figure out what really is important, how do I blaze a trail of success? Many people equate success with luck. The most successful are the luckiest.
Ever notice that? Bill Gates is the luckiest man on earth. He just happened to be at the right place at the right time with the right idea pitched to the right people for the right product…. That is just too many “rights.” Luck has many definitions. All the definitions read like a recipe; one part inspiration, another part preparation, another part perspiration, blah, blah, blah. I do not believe in luck, personally. I believe in effort. Effort, to me, has four elements: rigor, persistence, passion, and endurance. Next month, I will break down these elements and apply effort, as I define it, to making sales. To create a new habit, one must continuously reinforce an action over a period of three weeks. Apply the W.I.N.ning strategy through to the next issue, and then see how lucky, uh, effort-y you are. Stewart Mednick is a seasoned mortgage banker and published author. His writing focuses on relationship development, personal empowerment, customer satisfaction, marketing and sales techniques. Stewart is available for marketing consulting, personal coaching and training sessions. If you have a comment or a question for Stewart, contact him at 651-895-5122 or smednick1@netzero.net.
We’ll help you put the pieces together.
Hard Money Loans from $100,000 to $1,500,000
• Minimum Credit 400 • No seasoning • No up front fees • 48 hour closing Lending Territory includes DE, MD, DC, VA, NC, SC, GA and FL. ALL LoANS For buSiNESS or iNVESTMENT purpoSES oNLy For an immediate online approval and commitment letter, go to WWW.FMV1.COM and fill out our loan qualifier. 6019 Tower Court, Alexandria, VA 22304 Phone: 703-823-6800 or 866-908-FMV1 (3681) Fax: 703-997-2499 Paul Fogle or Art Bennett
First Mount Vernon is a privately-owned, equity-based lender which specializes in lending to borrowers who can’t secure funding from traditional financing sources. Loans typically funded within two business days upon receipt of completed package. First Mount Vernon does not make consumer loans. Financing is for business or investment purposes only, secured by real property.
NICHE REPORTS
Agency & FHA Premium Listings
American Pacific Mortgage
Join American Pacific Mortgage and become a direct lender with the option of brokering
(866) 625-9352
Offer a full array of FHA and Agency products, coupled with industryleading underwriting turn times and technology
Flagstar Wholesale Lending (866) 945-9872
Looking for individuals with mortgage experience who possess a high level of ethics and a desire to originate loans the right way
Freedom Mortgage Corp 800-220-9498
Guaranteed Home Mortgage Co., Inc.
Specialized Retail Platform for Experienced Loan Officers
888-572-3602
NEW
Just Mortgage, Inc.
NEW
Stearns Lending
State of the art technology, paper less process, real time updates, VOE Doc type
909-348-1600
Prime Wholesale Lender, supported by our innovative lending technology combined with the best team in the industry
714-513-7777
AGENCY & FHA Lender Listings Powered by TheLoanPost.com Alternative Mortgage Express
800-552-5263
amxloans.com
First Cal
877-224-3262
AME Financial Corp
770-449-8444
amefc.com
Washington Federal
971-645-9140
firstcalwholesale.net washingtonfederal.com/wholesale
American BancShares
305-826-4500
americanbancshares.com
Flagstar Bank
800-945-7700
wholesale.flagstar.com
American Financial Resources (FHA only)
973-588-8530
afrwholesale.com
Florida Capital Bank Mtg
866-295-0014
flcb.com
American Home Equity
714-661-5836
ahedirect.com
Franklin American
606-519-4165
franklinamerican.com
American Partners Bank
800-393-5250
apbwholesale.com
Freedom Mortgage
800-388-1537
freedomwholesale.com
Amtrust Bank (Fannie/Freddie only)
888-321-6446
amtrustgemstone.com
Gateway Funding
800-355-5626
wholesale.gateway-funding.com
Assurity Financial (FHA only)
866-844-7390
Astoria Federal Mortgage
assuritywholesale.com
Global Lending Group
727-530-0110
glgiwholesale.net
astoriamortgage.com
Greystone Financial
877-673-5626
greystonefinancialonline.com
BAC Florida Bank (Fannie/Freddie only)
305-789-8064
bacflorida.com
Bank of America Wholesale
800-669-2825
wholesale.bankofamerica.com
Bank of Ann Arbor (Fannie/Freddie only)
800-807-6337
boaawholesale.com
BankTennessee
901-383-0237
banktnwholesale.com
Century Lending (Fannie/Freddie only)
866-831-5618
centurylending.net
CMG Mortgage
800-501-2001
cmgbanking.com
CNB National Lending, LLC
877-421-4654
cnbnationallending.com
Continental Home Loans
800-540-8838
chlmortgagebankers.com
Direct Mortgage Wholesale
801-924-2300
solutioncenter.biz
Emigrant Mortgage (Fannie/Freddie only) emigrantmortgage.com
800-Emigrant x mid atlantic
GSF Funding
262-373-0790
gsfsales.com
Guaranteed Rate
866-755-0989
griwholesale.com
Home Savings of America
972-235-7366
myhsoa.com
ICON Residential Capital
888-639-5641
iconwholesale.com
ING Mortgage
877-464-0555
ingloans.com/wholesale/index.html
JMAC Lending
877-841-0776
jmaclending.com
Just Mortgage, Inc.
571-271-6120
justmtg.com
Liberty Lending Inc
800-808-5591
libertylendingwholesale.com
Liberty Mortgage
800-940-4032
bbt.com/libertymortgage
M&T Bank Mortgage
804-380-7465
wholesalemortgage.mtb.com
Federal Trust Mortgage
407-323-1833 x 153 federaltrust.com/brokers.com
Mega Capital Funding (Fannie/Freddie only)
818-657-2600
megacapitalfunding.net
Fifth Third
866-492-0072
Merit Mortgage
310-650-0773
meritwholesale.com
53.com/wholesalemortgage
Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.
44
October 2009
NICHE REPORTS
AGENCY & FHA premium niches continued‌ MetLife Home Loans
888-341-6100
wholesale.metlifehomeloans.com
Mortgage Close (Fannie/Freddie only)
866-267-7691
b2b.mortgageclose.com
National Direct Funding (Fannie/Freddie only)
877-772-7790
ndfcorporation.com
National Home Lenders
888-344-0520 x 4 nationalhomelenders.com
Nations Direct Mortgage
866-762-3940
brokerFHA.com
Residential Lending Network
954-334-2059
reslend.com
(Fannie/Freddie only)
Reunion Mortgage
800-941-8321
reunionwholesale.com
Royal Crown Bancorp
877-507-6925
crownloan.com
Security Atlantic (FHA only)
732-738-7100
fhaland.com
Security Mortgage Funding
800-407-8436
smfcloans.com/brokers
NetMore America
509-526-4007
netmoreamerica.com
Nexbank
866-389-6046
nexbank.com
Security National Mortgage
801-264-1060
securitynational.com
NorthStar Lending (Fannie/Freddie only)
866-829-8726
mynorthstarlending.com
Sierra Pacific
800-447-3386
spm1.com
(Fannie/Freddie only)
Pacific Banc Mortgage
949-419-0505
pacificbanc.com
SouthPoint Financial (Fannie/Freddie only) 800-433-1467
spfs.com
Pacific National Bank
305-539-7675
pnb.com
Stearns
stearnswholesale.com
Paramount Residential (FHA only)
951-278-0000
prmglending.net
Phoenix Funding
877-562-6414 x 230 phoenix-funding.com
PMC Bancorp
626-964-4040
pmcmtg.com
Titan Wholesale
775-852-6888 x 225 titan-wholesale.com
Polaris Funding (FL, IN, MI, OH)
866-467-9230
polarishfc.com/
Trust One Mortgage
949-450-1888 x 1284 trustone.com
800-350-5363
SunTrust Wholesale
913-982-2150
stmpartners.com
The Jumbo Lender
800-826-0360
TheJumboLender.com
Preferred Capital (Fannie/Freddie only)
800-454-0109
prefercapital.com
U.S. Bank Consumer Finance
800-803-4212
usbank.com
Premier Mortgage Capital, Inc.
407-367-6500
premierwholesale.com
United Residential Lending
888-875-8326
urlending.com
800-981-8898
Presidents First
877-773-7178
presidentsfirst.com/
United Wholesale Mortgage (FHA only)
Primary Capital
800-699-1286
primarycapital.com
Village Capital and Investment (FHA only) 800-496-7136
uwmco.com villagewholesalelending.com
Provident Funding
800-733-3657 x 1712 pfloans.provident.com
Virgin Money USA
877-937-4887
virginmoneyus.com/mortgage
Reliant Funding
800-850-8056
Wells Fargo
310-283-8411
brokersfirst.com
reliantfunding.us
REVERSE Premium Listings
Guaranteed Home Mortgage Co., Inc.
Specialized Retail Platform for Experienced Loan Officers
888-572-3602
Reverse It! A division of Urban Financial Group, Inc
Reverse Mortgages, fastest turn times in the industry. Training and lead support available.
888-777-3311 REVERSE MORTGAGES Lender Listings Powered by TheLoanPost.com American BancShares
305-817-2165
americanbancshares.com
MetLife Home Loans
888-341-6100
wholesale.metlifehomeloans.com
Arlington Capital Mortgage Corp
800-814-9432
acmcwholesale.com
NetMore America
509-526-4007
netmoreamerica.com
Circle Mortgage Corporation (Fl only)
800-576-1338
circlemortgage.com
Pacific Banc Mortgage
571-340-5593
pacificbanc.com
Continental Home Loans
631-393-3800 x 114 chlmortgagebankers.com
Essex Mortgage
702-893-9200
essexwholesale.com
Quality Life Reverse Mortgage
800-955-7919
qualityliferm.com
Financial Freedom
800-500-5150
financialfreedom.com
Financial Heritage
800-895-2209
financialheritage.com
Generation Mortgage
866-733-6089
GotMortgage.com
760-802-9630
Liberty Reverse Mortgage
866-871-1353
Quik Fund Inc.
813-671-0712
quikfund.com
Silvergate Bank (cml)
858-362-6300
silvergatebank.com
generationmortgage.com
SouthPoint Financial Services
800-433-1467
spfs.com
gotmortgage.com
Sunwest
800-453-7884
swmc.com
libertyreversebroker.com
Wells Fargo Reverse Mortgage
800-336-7359
wellsfargo.com
Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.
TheNicheReport.com
45
NICHE REPORTS
HARD MONEY & NON-PRIME Premium Listings
All Credit Considered Mortgage
Private Money
240-314-0399 X 19
AgriCap Financial Corporation 213-542-5232
Fairview Commercial Lending 866-634-1270
Financial Resources Mortgage 800-950-6913 or ddexter@frmortgageinc.com
First Mount Vernon (866) 908-FMV1 (3681)
First Mount Vernon (866) 908-FMV1 (3681)
NEW
GreenLake Real Estate Fund, LLC
NEW
Gregory Funding LLC
310-462-4637
888-324-3578
Manaseh, Epharim & Associates 770-840-0112
No minimum credit score, foreclosure bailouts, Quick Closings nationwide, commitments in 24 hours Real Estate based private money lender. Commercial & Residential Investment. Refi cash out allowed. Retail,office,multi-family, raw land, development & modular construction are our specialties. Common sense underwriting. No upfront fees! Email or call today. No seasoning requirements, No upfront commitment or processing fees, Minimum credit score 400 - DE, MD, VA, DC, NC, SC, GA, FL
Minimal documentation required, Combined Loan-to-Values to 105% - DE, MD, VA, DC, NC, SC, GA, FL Private direct commercial loans in CA and NV. All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We're eager to lend, so please call today! Private money portfolio lender specializing in funding loans traditional lenders cannot. No credit score requirement. No pre-payment penalty. Up to 70% LTV. Foreclosure ok. Bankruptcy ok. Lending territory: AZ, CA, CO, ID, NV, OR Direct Lender with fast closings. Your source for international and domestic funding.
866-302-6360
Direct lender specializing in short term bridge financing. Interest only. No prepayment penalty. No points upfront. Commitments within 24 hours. Brokers welcomed and protected.
MMG Capital LLC
Asset-based Hard Money Loans; Nationwide Lender
Metro Funding Corp
NEW
Agriculture including facilities and part-time farms, commercial, special purpose properties
310-295-1121 Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.
46
October 2009
NICHE REPORTS
HARD MONEY & NON-PRIME Lender Listings Powered by TheLoanPost.com Advantage Capital Equity Solutions
800-223-3019
adcapequity.com
Investor Funding
864-213-3951
4investorfunding.com
AFC Hardmoney
813-387-3800 x 311
afchardmoney.com
J & J Financial
866-296-8246
10dayloan.com
AgriCap Financial Corporation
213-542-5232
agricap.com
Lakeside Financial Inc.
949-297-4180
nofico.net
All California Home Loans
877-462-3422
aboutcaliforniahomeloans.com
Lib Properties, LTD.
404-256-8600
libloans.com
Alliance Financial, Inc.
866-603-5999
afiloans.com
Ameribank Mortgage
516-833-8834
ameribanksolutions.com
LNB Commercial Capital
321-214-0585
lnbcapital.com
American Acceptance (cml)
800-452-9287
aamonline.com
Magnolia Financial Consultants
601-428-1005
hardmoneymortgages.com
Assurity Financial
866-841-7863
assuritywholesale.com
Meridian Group
800-901-9301
meridiangroupinc.com
avcapital.net
Overland Financial
818-342-2477
overlandfinancial.com
562-864-4006
pacificmortgage.com pbfinancialgrp.com
Avant Capital Partners, LLC. (cml)
212-219-9419
Bay Equity
800-229-3703
bayeq.com
Pacific Mortgage Funding Corp. (cml)
BlueWater Funding, LLC
866-551-2583
bluewaterfundingllc.com
PB Financial Group Corp.
310-289-0900
Brookview Financial
877-734-2211 x 316
brookviewfinancial.com
Piedmont Capital Lending, LLC.
678-292-6984
piedmontcapitallending.com
California Equity Lenders
818-584-2320
calequitylenders.com
Porter Bridge Loan Company (cml)
866-725-1777
porterbridgeloan.com
Portfolio Mortgage Company
480-227-2857
portmort.com
PFA Capital, LLC
800-531-4589
pfacapital.com
Rehab Funding
610-645-9939 x 310
rehabfunding.com
Remington Financial Group
480-905-3239
remingtonfg.com
Right Start Mortgage
800-520-5626
rightstartmortgage.com
SBB Financial
866-358-7238
sbbfinancial.com
SDI Funding
864-233-3337 x 3220 sdifunding.com
SmartServ Solutions
888-633-4778
Swift Funding
727-521-6633
swiftfundingcorp.com
TCRM Commercial Corp. (cml)
212-371-3933
tcrmcommercial.com
The Loan Doctors, Inc. (cml)
954-647-7679
regd506.com
323-377-0979
titanhardmoney.com hardmoney.ning.com
Capital Alliance
415-288-9575
calliance.com
CFA Capital Partners (cml)
914-967-5780
cfacap.com
Crawford Park Financial
626-796-7979
crawfordparkfinancial.com
Cushman Rexrode Capital Corporation (cml) 925-988-7200
cushrex.com
Diamond Bay Investments, Inc.
702-254-9303
diamondbayinvestments.com
Eastern Savings Bank (cml)
800-787-8187
easternsavingsbank.com
Emerald Financial
714-965-6688
Emigrant Mortgage emigrantmortgage.com
800-Emigrant x mid atlantic
eprivatemoney.com
Exeter Holding Ltd.
516-338-7500
exeterholding.com
bronxhardmoney.com
First Credit Commercial Capital Corp. (cml) 407-843-6262
fchardmoney.com
First Mount Vernon Industrial Loan Assn. 703-823-6800
fmv1.com
First Select Capital
888-376-5373
firstselectloans.com
Global Lending Group
727-530-0110
glgiwholesale.net
Titan Hard Money
gmcmortgagecapital.com
Trust Deed Investments, Inc
415-760-2338 818-921-7602
westonemortgagecorp.com
866-303-6301
wholesalelending.com
GMC Mortgage Capital
954-332-3567
HARDDMONEYLOANS.COM
813-516-5210
HARDDMONEYLOANS.COM
West One Mortgage Corporation
Hawkins Capital
801-936-5100
hawkinscap.com
WholesaleLending.com (cml)
portfolio & ALT–A All Credit Considered Mortgage Tim 240-314-0399 X 19
NEW
Gregory Funding LLC 888-324-3578
Manaseh, Epharim and Associates 770-840-0112
Private Money Private money portfolio lender specializing in funding loans traditional lenders cannot. No credit score requirement. No pre-payment penalty. Up to 70% LTV. Foreclosure ok. Bankruptcy ok. Lending territory: AZ, CA, CO, ID, NV, OR Asset lending specialists. Your source for international and domestic funding
Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.
TheNicheReport.com
47
NICHE REPORTS
Jumbo Premium Listings
Flagstar Wholesale Lending 866-945-9872
Fannie Mae High Balance and Freddie Mac Super Conforming products available up to $729,750 loan amounts
Guaranteed Home Mortgage Co., Inc.
Specialized Retail Platform for Experienced Loan Officers
888-572-3602
CONSTRUCTION/REHAB Premium Listings
Financial Resources Mortgage, Inc. 800-950-6913 or ddexter@frmortgageinc.com
Manaseh, Epharim & Associates 770-840-0112
Metro Funding Corp
Real Estate based private money lender. Commercial & Residential Investment. Refi-Cash Out allowed. Retail, office, multi-family, raw land, development & modular construction are our specialties. Common sense underwriting. No upfront fees! Email or call today. New construction and rehab loans for all types of commercial properties. Your source for international and domestic funding.
Direct lender specializing in short term bridge financing. Interest only. No prepayment penalty. No points upfront. Commitments within 24 hours. Brokers welcomed and protected.
866-302-6360
CONSTRUCTION / REHAB Lender Listings Powered by TheLoanPost.com Ameribank Mortgage
516-833-8834
ameribanksolutions.com
Kennedy Funding
201-342-8500
kennedyfunding.com
Assurity Financial
866-841-7863
assuritywholesale.com
M&T Bank Mortgage
804-380-7465
wholesalemortgage.mtb.com
Broker Capital Funding
408-438-6939
brokercap.com
Everbank
415-595-3968
everbankwholesale.com
Excelsion Mortgage
888-578-5441 x 1
ExcelsionBrokers.com
Federal Trust Mortgage
407-323-1833 x 153
federaltrust.com/brokers
Mango Bay Mortgage
561-347-9811
mangobayinc.com
Mission Oaks National Bank
805-889-0301
missionoaksbank.com
Portfolio Mortgage Company
480-775-5150
portmort.com
904-727-7535
unitybank.com
818-921-7602
westonemortgagecorp.com
First Mutual Bank
971-645-9140
washingtonfederal.com/wholesale
Unity Bank
Hawkins Capital
208-908-5596
hawkinscap.com
West One Mortgage Corporation
Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.
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October 2009
NICHE REPORTS
COMMERCIAL Premium Listings
All Credit Considered Mortgage
Private Money
240-314-0399 X 19
AgriCap Financial Corporation 213-542-5232
Fairview Commercial Lending 866-634-1270
Financial Resources Mortgage, Inc. 800-950-6913 or ddexter@frmortgageinc.com
NEW
GreenLake Real Estate Fund, LLC
NEW
Gregory Funding LLC
310-462-4637
888-324-3578
Manaseh, Epharim & Associates 770-840-0112
No minimum credit score, foreclosure bailouts, Quick Closings nationwide, commitments in 24 hours Real Estate based private money lender. Commercial & Residential Investment. Refi-Cash Out allowed. Retail, office, multi-family, raw land, development & modular construction are our specialties. Common sense underwriting. No upfront fees! Email or call today. Private direct commercial loans in CA and NV. All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We're eager to lend, so please call today! Private portfolio lender funding small balance commerical loans up to $1MM. No credit score requirement. No pre-payment penalty. Up to 70% LTV. Foreclosure ok. Bankruptcy ok. Lending territory: AZ, CA, CO, ID, NV, OR Acquisition, Refi’s, and Development Commercial Loans. Your source for international and domestic funding.
866-302-6360
Direct lender specializing in short term bridge financing. Interest only. No prepayment penalty. No points upfront. Commitments within 24 hours. Brokers welcomed and protected.
MMG Capital LLC
Asset-based Hard Money Loans; Nationwide Lender
Metro Funding Corp
NEW
Agriculture -- Farms, Ranches, Facilities. Agricultural Operating/Crop Input Loans.
310-295-1121
ADVERTISE YOUR NICHES HERE WITHIN Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.
TheNicheReport.com
49
NICHE REPORTS
All Credit Considered Mortgage A leading private money company www.weapproveloans.com Contact: Tim Boord Phone: 240-314-0399 X 19 Email: Tim.Boord@accmortgage.com
AgriCap Financial Corporation Commercial real estate loans, bridge financing, farm and agricultural loans, and hard money lending www.agricap.com Contact: Business Development Phone: 213-542-5232 Email: sales@agricap.com
a la mode, inc. Land loans with powerful websites and marketing. Then close fast with eSignatures and workflow tools. www.alamode.com
American Pacific Mortgage Corporation One of the largest independent retail banking and branching companies in the country www.apmortgage.com Contact: Melissa Arntzen Phone: (866) 625-9352 Email: info@apmortgage.com
Applied Business Software Origination and Servicing software for hard money lenders. www.TheMortgageOffice.com Phone: 800-833-3343 Email: leadsmanagement@absnetwork.com
ATTENTION LENDERS!! Buyers of Distressed Debt Email: NicheBuyers@gmail.com
50
October 2009
Best Rate Referrals Specializes in direct marketing services www.bestratereferrals.com Phone: 800-811-1402
Cruise4Two - Cruise Incentives Nations leading Cruise incentive marketing company. Increase your loans today by offering your clients our 5 Day 4 Night Cruise for Two (when they do business through you) at a fraction of the Cruise lines brochure rate, only $159.00 per certificate! www.Cruise4Two.com Contact: Shawn Sarnecki Email: Shawn@Cruise4Two.com Toll Free 866-541-8077 Email: shawn@cruise4Two.com
Credit-Aid Software Use credit repair as a tool to help more customers qualify for loans www.CreditAidPro.com Phone: 866-957-8564
Debt Settlement USA 888-258-5138
DMA Leads Largest, cleanest, most up-to-date lead databases and turnkey direct mail programs that deliver results www.DMALEADS.com Phone: 888-312-9594
DoMoreLoans Loan Officers take your purchase business to the next level www.domoreloans.com Contact: Chris Phone: 949-273-8209 Email: Chris@domoreloans.com
DocMagic The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges. www.docmagic.com Phone: 800-649-1362
ENTITLE DIRECT Savings up to 35% or more on title insurance in 30 states www.EntitleDirect.com/mortgage Phone: 877-936-8485 or 877-9ENTITLE SpecialistCenter@EntitleDirect.com
FAMB www.famb.org 800-289-9983 famb@famb.org
Fairview Commercial Lending Privately funded national hard money (private money) commercial lender. www.FairviewLending.com Phone: 866-634-1270 Fax: 404-634-0319
Financial Resources Mortgage, Inc. www.commercialloanresources.com Contact: David Dexter Phone: 800-950-6913 Email: ddexter@frmortgageinc.com
First Mount Vernon I.L.A. Privately-owned, equity-based lender which specializes in lending to borrowers who require fast closings www.FMV1.com Phone: 703-823-6800 Fax: 703-997-2499
LENDER & RESOURCE DIRECTORY
Flagstar Wholesale Lending One of the largest wholesale and correspondent mortgage lenders in the U.S. www.wholesale.flagstar.com 866.945.9872 wlsc@flagstar.com
Freedom Mortgage Branch Opportunities www.fmbranch.com Phone: 800.220.9498 Email: info@fmbranch.com
Cogent Road Inc. Provides enterprise-wide, Software as a Service (SaaS) applications for the mortgage industry www.fundingsuite.com/demos Phone: 800-848-3162
Gateway Funding Diversified Mortgage Services L.P. A full service mortgage banker offering a diverse product portfolio www.gateway-funding.com Phone: 215-591-0222
Geraci Law Firm Leading expert in the creation of mortgage pools and fractional loan securities offerings www.geracilawfirm.com (949) 379-2600
gotomeeting.com Demonstrate, present, collaborate – right from your PC or MacŽ. Try it free for 30 days promo code: AK16
GreenLake Real Estate Fund Private Commercial Lender in CA & NV Contact: Kamau Coleman Phone: 310-462-4637 Email: kcoleman@greenlakefund.com
Gregory Funding LLC Direct money portfolio lender for AZ, CA, CO, ID, NV, OR www.gregoryfunding.com Phone: 888.324.3578 Email: info@gregoryfunding.com
Guaranteed Home Mortgage Company, Inc. Established and well-funded Mortgage Banker since 1992 www.ghmc.com and www.joinguaranteed.com Contact: Kelley Berkheiser or Louis Tesoriero Phone: (888) 329-GHMC Email: ltesoriero@ghmc.com Influence Lead Management Online advertising to print campaigns and everything in between www.influencedp.com/leadmanagement Phone: 480-321-9006 Email: LM@influencedp.com
Just Mortgage, Inc. Agency/FHA lender, lending in 26 states www.justmtg.com Contact: Dawn Piazza Phone: 571-271-6120 Email: dawn.piazza@justmtg.com
LoanMLS, Inc. www.LoanMLS.com Contact: Robin Aldridge Phone: 858-300-3505 Email: robin@loanmls.com
The Loan Post www.TheloanPost.com Phone: (877) 812-4327 Email: sales@TheLoanPost.com
Loansifter Proprietary online search engine designed to help originators make the right match between loan programs and those who need them www.Loansifter.com Phone: 920-687-1222 Email: Sales@loansifter.com
Manaseh, Epharim & Associates Domestic and international financier, offer up to 100% financing to qualified investors/ borrowers www.meandassociates.com Contact: R.D. Walker Email: info@meandassociates.com Phone: 770-840-0112
Metro Funding Corp Private commercial real estate lender specializing in immediate and creative financing solutions www.metrofundingcorp.com Contact: Jennifer Bernabeo Email: jennifer@metrofundingcorp.com Phone: 866-302-6360
MMG Capital LLC Asset-based Hard Money Lender; Nationwide www.mmgcap.com Contact: Chris Gleason Phone: 310.295.1121 (ext. 301) Email: chris.gleason@mmgcap.com
Mortgage Bankers Association The Mortgage Bankers Association is the national association representing the real estate finance industry http://events.mortgagebankers.org/96th_ Annual Phone: 800-793-6222 Option 3
The Mortgage Lender Implode-O-Meter Tracking the Housing Finance Breakdown... the WHOLE truth www.ml-implode.com Contact: Randall Marquis Phone: 949-722-7005 Email: randall@ml-implode.com
TheNicheReport.com
51
LENDER & RESOURCE DIRECTORY
National Association of Mortgage Brokers The voice of the mortgage broker industry with members in all 50 states and the District of Columbia. NAMB provides education, certification and government affairs representation for the mortgage broker industry www.namb.org Contact: Aubrey Eyer Phone: 703.342.5900 Email: aeyer@namb.org
National Federation of Mortgage Professionals Professional Association Name: Valerie Saunders Contact Phone: 800-289-9983 Email address: info@yournfmp.org
Quick Qualifier Software Create Open House Flyers with finance options. It is easy to learn and easy to use. It is a mortgage calculator www.quickqualifier.com Contact: Thor Skonnord thor@mortgagesoftware.com Direct: 925-754-7444
Stearns Lending A prime wholesale lender committed to helping you achieve your goals by delivering lending services to you and your borrowers www.stearns.com Contact: Debbie Davis Email: ddavis@stearns.com Phone: 714-513-7777
RateLink Providing mortgage professionals with timely and accurate data as a means to a competitive advantage www.ratelink.com Phone: 800-938-5193 Contact: Tom Champion Email: tom.champion@ratelink.com
StreetLinks National Appraisal Services We do one thing, and we do it better than anyone else - appraisal management www.streetlinks.com Email: sales@streetlinks.com Phone: 800-778-4788
Mid-Atlantic Residential Lender/Broker Conference The Mid-Atlantic Lender/Broker Conference is the place to be on November 4, 2009! Register TODAY to take advantage of the early bird rate. See below for details.
WEDNESDAY, NOVEMBER 4, 2009 Waterford at Fair Oaks (great new location this year) 12025 Lee Jackson Memorial Highway, Fairfax, VA 9:30 AM - 4:00 PM WHO SHOULD ATTEND?
Residential real estate finance professionals including:
Loan Officers Mortgage Brokers Senior Mortgage Managers Technology Personnel Marketing Managers Other Industry-Related Professionals
QUESTIONS?
Contact the MBAMW at
info@mbamw.org www.mbamw.org
FULL-DAY CONFERENCE TRADE SHOW FEATURING: 1. Exceptional, timely educational seminars: • • • • • •
Economic Update Surviving in a Challenging Mortgage Market Creating Success and Winning . . .the ‘Yes’ Way Freddie Mac and Fannie Mae Update (tentative) SAFE Licensing Update (tentative) Details are being finalized and will be available soon.
2. Exhibit area featuring companies serving the residential real estate finance industry: • • • • •
Lenders MI companies Title insurance companies Software technology companies and . . . more
3. Great networking opportunities. 4. Lunch is included with each registration at no additional cost.
REGISTRATION ONLY $25 per person ($30 after 10/28/09) ONLINE REGISTRATION: www.mbamw.org
BRINGING UP THE REAR - continued from page 54
I get more letters complaining about IndyMac than any other lender or servicer in the country, although there are others, like Litton, that come in close seconds. I was personally involved in one situation in which an Arizona homeowner, who’s wife had been fighting breast cancer and brain cancer, whose mortgage of $250,000 was $50,000 more than the home’s appraised value, and whose employment was temporarily interrupted by the economic meltdown, was denied a modification. They ultimately lost their home to foreclosure and now it sits empty while the bank pays a maintenance company to mow the lawn. Shrewd, IndyMac… very shrewd… the bank will be lucky to clear $100,000 on the deal… if and when the house sells, which could be some time. And once I was in an attorney’s office listening in while he called IndyMac on behalf of a client seeking a loan modification with the borrower also on the call. When the IndyMac representative finally answered the phone, which took about 30 minutes, her first words shocked me. She said to the borrower: “You know… you don’t have to pay him.” I couldn’t help it. I interrupted and said: “Excuse me. I’m a writer and I was just wondering… how do you know she’s paying him? What if he’s her brother-in-law and doing this for free? Did someone train you to say that? Is that part of your training program there?” And the woman from IndyMac hung up. Nice. Just this past week, I received a call from another attorney who expressed his frustration at IndyMac’s/ One West Bank’s refusal to modify a Freddie Mac mortgage because they said their bank isn’t participating in the HAMP program. The attorney reminded the bank that it didn’t matter because Freddie Mac WAS participating in the program and the mortgage in question was owned by Freddie Mac. The bank representative wasn’t interested. Click… and that was that. So, if you want more information on Mr. Soros’ new bank, look for it online at: www.MOVEOUT.org
Martin Andelman is a staff writer for The Niche Report. He also writes an almost daily column on MLImplode.com called Mandelman Matters. He also publishes a Monthly Museletter and you can follow “Mandelman” on Twitter.
Manaseh, Epharim & Associates Your source for commercial real estate financing. Funding nationwide and internationally!! Rates from 3.9%
Direct Private Lender www.MEANDASSOCIATES.COM 770-840-0112 or 770-840-0113 Fax: 678-302-6444
LIBERAL BILLIONAIRE GEORGE SOROS Major shareholder in IndyMac/One West Bank BY MARTIN ANDELMAN
W
hen it comes to being inflexible and unresponsive to homeowners in need of a loan modification, IndyMac Bank, which has just been renamed “One West Bank,” is legendary. This is the bank that failed spectacularly in July 2008, was taken over by the FDIC, and ended up costing taxpayers something like $11 billion… give or take… I can’t keep track of billions anymore… I’ve moved on to tracking trillions. And the new buyers of this fire sale financial institution that’s deservedly become the poster child for stupid lending tricks, includes billionaire George Soros. Soros, along with billionaire Michael Dell and others, agreed to purchase the bank for $20.7 billion. As of Jan. 31, 2009, IndyMac’s assets totaled $23.5 billion and deposits were $6.4 billion, roughly half the cash and assets the bank had at the time of its failure. The new buyers also got a handy-dandy “loss sharing agreement” from the FDIC, whereby after shouldering the first 20% of any future losses, the FDIC gets stuck with most of the rest. So, I guess you could say they got a deal. A sweetheart of a deal… not to put too fine a point on it. Considering that kind of taxpayer supported deal, and with so-called liberal philanthropist George
Soros as one of the bank’s major shareholders, you might think the new One West Bank would be the last financial institution to be throwing people out of their homes when loan modification would make more sense financially, but you’d be wrong. One West Bank isn’t participating in the President’s program either. Basically, the President of the United States asked the banks of this country to participate in a program designed to stop our economy from circling the drain, after the taxpayers of this country agreed to save the financial institutions who had bankrupted themselves… and this bank said: “No, thank you… no.” Or in other words… F#@k you, Mr. President. They declined to participate. Am I the only one that feels like a 5 year-old just told me he or she wasn’t going to take a bath as requested? Oh really? Get in the damn tub now… one… two… How can George Soros, the liberal philanthropic billionaire who’s money made MoveOn.org the country’s most influential left wing political force, capable of mobilizing hundreds of thousands if not millions of volunteers, influencing millions of voters, and defending ACORN no matter the charge, now owns a bank that’s about as easy to reason with as Kim Jong-il with a migraine? No matter which side you’re on… MoveOn.org was a huge success, now raises untold millions, and occasionally runs ads that would have to make even those on the left… cringe. - continued on page 53
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